For the last year, President Donald Trump’s pressure campaign against Venezuela’s dictator has had a loophole. Now it is about to close.
Nicolas Maduro and his inner circle, along with the state oil company, have been shamed and sanctioned. The U.S. has helped lead an international coalition of over 50 countries to recognize the president of Venezuela’s parliament as the country’s interim leader. But Russia has paid no real cost for helping to bring Venezuela’s sanctioned oil to the international market.
On Tuesday, however, the U.S. government announced new sanctions on Rosneft Trading SA, the trading subsidiary of the Russian energy conglomerate, along with Chairman Didier Casimiro. Under the new rules, any U.S. person or person transiting the U.S. will be barred from doing business with Rosneft Trading SA. Any U.S. assets belonging to the company or Casimiro will be frozen.
That’s a major blow to Maduro’s regime. Rosneft Trading handled about half of Venezuela’s 875,000 barrels a day of crude oil exports in January.
Russia’s motivation was not entirely political. In exchange for taking the risk of defying existing U.S. sanctions on Venezuelan oil, Russia pressured the Maduro regime to sell its oil to Rosneft at below-market prices and to prioritize paying off debts to the company.
Elliott Abrams, the U.S. special representative for Venezuela, estimates that in the last year Venezuela has paid off $1.8 billion worth of debt to Rosneft.
"So while Venezuela is undergoing the crisis it is undergoing — the humanitarian crisis, the economic crisis — what is Russia doing?” Abrams asked at a press briefing Tuesday. "Siphoning money out. Not giving aid."
Eric Farnsworth, vice president of the Council of the Americas, told me the new sanctions on Rosneft signal to Russia that it should not be offering more loans to Maduro because presumably Maduro’s debts to Rosneft will be fully paid off this quarter.
The move to sanction Rosneft also signals that Trump is sticking with his strategy to pressure Maduro to allow free and fair elections in Venezuela. There have been stories that Trump has grown frustrated with the stalemate in Caracas. There appeared to be a chance that Trump would relax U.S. policy against Maduro and commit more fully negotiations in Oslo between Maduro’s regime and the country’s democratic opposition.
That didn’t happen. Earlier this month, opposition leader Juan Guaido received a standing ovation at Trump’s State of the Union speech from both Democrats and Republicans. That same week, the Trump administration imposed sanctions on Venezuela’s state airline. Now it has announced sanctions on the company that enabled Maduro to sell his country’s sanctioned oil.
Abrams is now promising more pressure to come in the next weeks and months. That pressure may take new forms, from indictments of Venezuelan officials to a crackdown on U.S. allies such as Turkey and Dubai that have enabled the illicit sale of the country’s gold.
That sends a message to Maduro and his regime: Any hopes that Trump is interested in cutting a deal or softening U.S. strategy are misplaced. Rosneft may still attempt to defy the new U.S. sanctions. But the company’s aid to Maduro is not merely political or altruistic. The price for selling Venezuela’s toxic oil just went up.
Eli Lake is a Bloomberg View columnist. He was the senior national security correspondent for the Daily Beast and covered national security and intelligence for the Washington Times, the New York Sun, and UPI. To read more of his reports, Go Here Now.