When Washington rolled out broad and deep economic sanctions on Venezuela this week it said it was putting the South American nation on par with other “rogue states” like North Korea, Iran, Syria and Cuba.
But there are some key differences between the Venezuelan sanctions and the Cuban embargo, now in its 57th year. While there is still much that is unknown about how the sanctions will be implemented, here are some takeaways:
▪ The Cuban embargo prohibits transactions with all Cuban nationals, including the government, individuals and private companies, unless they’ve been specifically exempted with special “licenses.”
The Venezuelan sanctions, in contrast, specifically target the Venezuelan government, its agencies and the more than 100 people and companies that have been previously flagged by the U.S. Treasury Department. Even so, the Venezuelan measures could have a far greater chilling effect on business.
“Even though trade with purely private actors technically may be permitted, and notwithstanding particular authorizations, given the Venezuelan government’s dominant role in the economy, as a practical matter it may be difficult to engage in trade that does not implicate the government,” said Kirkland & Ellis lawyers Mario Mancuso and Anthony Rapa.
▪ Unlike the Cuban embargo, Monday’s executive order is tailor-made for Venezuela’s complicated political situation. The measure freezes assets belonging to the Nicolás Maduro regime, but not those under the control of Interim President Juan Guaidó. One of the key aims of the sanctions is to isolate Maduro but bolster Guaidó, whom Washington and more than 50 other nations recognize as the nation’s sole legitimate leader. Accordingly, the new sanctions allow transactions with the opposition-controlled National Assembly and Guaidó appointees, including the directors of the Citgo oil company, a U.S. subsidiary of Venezuela’s PDVSA oil company.
▪ The Venezuela sanctions also make exceptions for humanitarian aid, remittances and...Twitter. The Treasury amended 12 licenses and issued an additional 13 to authorize transactions related to humanitarian aid and internet services (including social networks), mail, telecommunications, and emergency medical attention, even if it involves dealing with the Venezuelan government. In addition, it allows companies to sell medicine and food to the state and for individuals to send non-commercial remittances.
▪ Unlike the Cuban embargo, the Venezuelan sanctions don’t include travel restrictions on U.S. citizens traveling to the South American country. Even so, U.S. citizens are required to apply for visas to visit Venezuela even as tourists. And since there are no longer any Venezuelan consulates in the United States, that process has become complicated.
▪ Monday’s sanctions also make distinctions within Venezuela’s oil sector differently. Analysts said the measure appears to take aim at Russian oil giant Rosneft and China’s PetroChina, which have been receiving a large part of Venezuela’s crude exports ever since the U.S. largely blocked imports in January. The new sanctions can be used to go after Chinese, Russian, Cuban and Turkish companies if they keep end-running U.S. efforts. Citgo, however, will remain sanction-free since it’s under the control of the Guaidó administration. Even so, the U.S. subsidiary is in a delicate spot, saddled with debt run up by the regime in Caracas. In addition, Chevron and a few other international companies that provide services to state-run PDVSA can keep operating in the country under special licenses.