U.S. sanctions Venezuela and 14 nations limit diplomatic ties after Maduro claims win

Marcos Carbono, along with hundreds of Venezuelan exiles in Miami, protest the presidential election in Venezuela at the Venezuelan consulate on Brickell Avenue on Sunday, May 20, 2018.
Marcos Carbono, along with hundreds of Venezuelan exiles in Miami, protest the presidential election in Venezuela at the Venezuelan consulate on Brickell Avenue on Sunday, May 20, 2018.

The international community leveled a barrage of criticism at Venezuela Monday, as the White House rolled out new sanctions and more than a dozen countries rejected Sunday’s “sham” elections that handed President Nicolás Maduro a new six-year term.

On Monday, President Donald Trump signed an order prohibiting U.S. citizens — or people in the United States — from purchasing Venezuelan debt or accepting an equity stake in property that is majority owned by the Venezuelan government. The last provision seems aimed at CITGO — the U.S. oil company that is majority owned by Venezuela's state-run petroleum company, PDVSA.

Senior administration officials said the goal of the executive order was to prevent corrupt Venezuelan officials from lining their own pockets by selling Venezuelan debt as collateral for cash — debt that the nation's people would be saddled with in the future.

"The region has never seen a kleptocracy like this," an official told reporters in Washington on the condition of anonymity. "We’ve never seen a country as wealthy in terms of natural resources and in human capital as Venezuela is, driven into such an economic death spiral so quickly by such a small group of individuals determined to enrich themselves at the expense of millions of people. "

Closer to Caracas, the 14 nations that are part of the “Lima Group” said they would be limiting diplomatic ties with Venezuela and would study blocking all future loans to the nation.

The rebukes come less than 24 hours after Maduro won a new term, which will run from 2019-2025, in a controversial election that his rivals and critics say was marred by fraud.

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In a statement, the Lima Group said its members did not recognize the “legitimacy” of the vote, had agreed to “reduce the level of diplomatic relations with Venezuela” and were recalling their ambassadors for consultation.

The Lima Group is comprised of Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Guyana, Honduras, Mexico, Panama, Paraguay, Peru and Saint Lucia.

U.S. Sen. Marco Rubio, R-FL., applauded the new White House sanctions and called on Venezuelan political leaders to remove Maduro.

“Nicolás Maduro told his supporters that pulling off a fake election would be a reset that would result in less sanctions and less isolation,” Rubio said in a statement. “Instead, he faces more sanctions and is more isolated than ever. Maduro’s days in power are numbered.”

Read More: White House condemns "sham" Venezuelan vote

While the Lima Group did not announce immediate sanctions, it said it would lobby international lenders not to offer loans to Venezuela that did not have prior approval from the opposition-held National Assembly.

That could be a serious blow for the cash-strapped nation that needs external funding to import food and medicine.

Maduro and his allies have sidelined the National Assembly, which was elected in 2015, and have allowed a new super-body, the National Constituent Assembly, to usurp most of its functions.

In addition, the Lima Group said it would “intensify and broaden” the exchange of financial information to identify Venezuelan companies and individuals “who could be involved in acts of corruption, money laundering and other illicit activity.”

Monday’s actions are likely just the first wave of more sanctions, said Francisco Monaldi, with the Baker Institute,

a nonpartisan public policy think tank at Rice University.

“I expect that in the next few days and weeks, we will continue seeing the number of countries that have not recognized these elections in the Western Hemisphere and Europe tightening sanctions and making it harder for the Venezuelan government to keep [behaving] the way they have been behaving,” he told a conference held by the Atlantic Council in Washington, D.C.

The Trump administration had already slapped more than 60 former and current officials with sanctions and prohibited U.S. companies from dealing in Venezuelan debt.

Secretary of State Mike Pompeo slammed the Maduro government for stacking the courts with biased judges, banning opposition candidates and offering food to starving Venezuelans in exchange for political support. In a statement, he called the election an "attack on constitutional order" and said the United States would bring "swift economic and diplomatic actions" to support democracy in Venezuela.

Some believe that harsher measures against Venezuela’s critical oil industry are yet to come.

Venezuela’s government is defending Sunday’s election, where Maduro beat his rival, Henri Falcón, the former governor of Lara state, 68 percent to 21 percent. Evangelical pastor Javier Bertucci won just 11 percent. An opposition boycott dampened the race, and just 46 percent of registered voters cast ballots — the lowest level in two decades.

On Sunday, the president of the National Electoral Council, Tibisay Lucena, said that Venezuela had “spoken” and that the international community needed to “respect” the outcome.

And Venezuela isn’t completely isolated. Cuba, Iran, Russia, Bolivia, El Salvador and others have congratulated Maduro on his victory.

But his political win will do little to help resolve the country’s pressing problems. Venezuela is being hammered by five-digit inflation, power and water outages and sporadic food and water shortages. The collapse has led more than 1.5 million people to flee the nation in recent years — many of them to Colombia, Brazil, Peru and Chile, which are part of the Lima Group.

In its statement Monday, the bloc said it will be holding a regional meeting to deal with the migration issue, which is emerging as a major humanitarian crisis.

Beatriz Borjes, the director of Venezuela’s Center for Justice and Peace, a human rights group, said Sunday’s election is likely to accelerate the flow of migrants.

“If you ask Venezuelans right now they say they don’t have hope,” she said. “This is the death of hope for Venezuelans.”