After President Donald Trump restricted the ability of the cash-strapped Venezuelan government to access U.S. debt markets to get funding, there were passionate reactions Friday in Caracas, Havana and Miami.
A group of Venezuelans who live in Cuba protested. They marched for a couple of blocks in Havana’s Vedado neighborhood and they asked Venezuelan President Nicolas Maduro to “go hard” against Trump. In Caracas, the Venezuelan military held military drills.
Cuban and Venezuelan diplomats expect Trump’s executive order to escalate tensions. Maduro warned the U.S. was aiming for a “commercial, oil and financial blockade” and compared the sanctions to the U.S. embargo imposed on the island after the Cuban Missile Crisis.
“The worst aggressions to Venezuela in the last 200 years,” Venezuelan Foreign Minister Jorge Arreaza said. He also accused the U.S. of wanting to “starve the Venezuelan people.”
Although the restriction moves forward from targeting individuals, it is far from an oil embargo. The U.S. Treasury Secretary Seven Mnuchin said Trump’s order was focused on new securities by making it illegal for U.S. financial institutions to trade new bonds with the Venezuelan government.
“These measures will undermine Maduro’s ability to pay off political cronies and regime supporters,” Mnuchin said.
Arquimedes Rivero is among the Venezuelans living in Miami-Dade County and Cuban-American lawmakers who support the U.S. sanctions, because they believe that they will not have an effect on the ongoing humanitarian crisis, but on the government corruption that is causing it.
Venezuelan officials “are not helping the people,” Rivero said in Doral, a city known as “Dorazuela” for its large population of Venezuelan refugees. “The money is going to their pockets and this way you stop them from receiving that money.”
Human rights activists have been critical of bond buyers relying on the Venezuelan “hunger bonds,” which have proven to pay yields. Despite food and medicine shortages and political pressure, Maduro hasn’t defaulted on payments.
Investors haven’t been afraid to invest on PDVSA, the Venezuelan state-owned oil company, because the Venezuelan government also counts on loans from China and Russia. The new U.S. restrictions apply to newly sold bonds, but they do not affect the existing bonds in secondary markets.
The Venezuelan government, including PDVSA, has about $4 billion in debt payments due this year, but only about $9.7 billion in international reserves. Most of the reserves consist of gold ingots. Venezuela risks a default on ballooning debt.
While Trump’s administration is aiming to pressure Maduro, the new sanctions do not prohibit investors from buying the bonds that Goldman Sachs Asset Management purchased earlier this year. Trump also hasn’t done anything about Citgo, Venezuela’s biggest asset in the U.S.
“It’s tempting to say that all bond buyers should just stay away from the notes to protest Venezuela’s lamentable conditions,” Bloomberg’s Lisa Abromowicz wrote. “But in reality, investing decisions rarely come from the heart, and the head has a tough time saying no to real money.”
Democrats in Venezuela continue to face repression and censorship. The population of political prisoners and the exodus is growing. Undocumented refugees are moving to the United States to face Trump’s tough policy on immigration.
The human rights violations reported in Venezuela are congruent with the repression seen in Cuba, Russia and China. Some critics in Miami believe the sanctions need to expand to oil imports. Others want Trump to move forward with a military option. But the radical moves could hurt U.S. financial interests and worsen the humanitarian crisis in Venezuela.
Vice President Mike Pence tweeted the U.S. was not about to “stand by as Venezuela crumbles.”
The new measures “are carefully calibrated to deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule, protect the United States financial system from complicity in Venezuela’s corruption and in the impoverishment of the Venezuelan people and allow humanitarian assistance,” The White House said in a statement.
The Associated Press’ Jennifer Peltz, Joshua Goodman and Fabiola Sanchez contributed to this report.
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