US broadly eases Venezuela oil sanctions after election deal
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[October 19, 2023]
By Matt Spetalnick and Marianna Parraga
WASHINGTON (Reuters) - The Biden administration on Wednesday broadly
eased sanctions on Venezuela's oil sector in response to a deal reached
between the government and opposition parties for the 2024 election -
the most extensive rollback of Trump-era restrictions on Caracas.
A new general license issued by the U.S. Treasury Department authorized
OPEC member Venezuela, which had been under crushing sanctions since
2019, to produce and export oil to its chosen markets for the next six
months without limitation.
U.S. Secretary of State Antony Blinken welcomed President Nicolas
Maduro's electoral concessions but said Washington has given him until
the end of November to begin lifting bans on opposition presidential
candidates and start releasing political prisoners and "wrongfully
detained" Americans.
A senior State Department official, speaking to Reuters on condition of
anonymity, threatened to reverse sanctions relief measures unless Maduro
takes such action.
The U.S. moves follow months of negotiations in which Washington had
pressed Caracas for concrete actions toward democratic elections in
return for lifting some - but not all - of the tough sanctions imposed
under former U.S. President Donald Trump.
It also represents a significant step in the increased engagement of
President Joe Biden's administration with Maduro on issues ranging from
energy to migration, a shift from Trump's "maximum pressure" campaign
against the socialist government.
Venezuela ruling party official Jorge Rodriguez, who leads the
government's negotiating team at talks with the opposition, said on
state television later on Wednesday that the sanctions relief affected
all oil activities.
"The possibility of any person or company coming to Venezuela to invest
is totally open," he said.
Maduro's government and the opposition reached an agreement in Barbados
on Tuesday on electoral guarantees for an internationally monitored vote
to be held in the second half of 2024. But the deal stopped short of
Maduro agreeing to reinstate opposition candidates who had been barred
from public office.
Blinken said in a statement that the U.S. was acting "consistent with
our longstanding commitment to provide U.S. sanctions relief in response
to concrete steps toward competitive elections and respect for human
rights and fundamental freedoms."
Wednesday's announcements alleviated some of the toughest sanctions that
Venezuela has faced but it left in place a number of other restrictions.
Even so, the U.S. measures could reopen Venezuela's doors to dozens of
oil companies with frozen or reduced operations in Venezuela.
The U.S. imposed harsh sanctions on Venezuela to punish Maduro's
government following his 2018 re-election, which the U.S. and other
Western governments rejected as a sham. Since 2019, U.S. sanctions have
banned state-run oil company PDVSA from exporting to its chosen markets.
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Venezuela's President Nicolas Maduro speaks during a meeting with
Iranian President Ebrahim Raisi at the Miraflores Palace, in
Caracas, Venezuela June 12, 2023. REUTERS/Leonardo Fernandez Viloria/File
Photo
TROUBLED VENEZUELAN OIL SECTOR
The changes announced on Wednesday include the issuance of a
six-month general license allowing the production, sale and export
of Venezuela's crude and gas, without limitations on customers or
destinations, and another general license authorizing dealings with
Minerven – the Venezuelan state-owned gold mining company.
The U.S. Treasury Department said in a statement, however, that it
was prepared to revoke those authorizations at any time if
representatives of Maduro fail to follow through on their
commitments in the deal with the opposition.
Treasury also removed the secondary trading ban on certain
Venezuelan sovereign bonds and state-run oil company PDVSA debt and
equity, though a ban on trading in the primary Venezuelan bond
market remains in place, it said.
The U.S. has been seeking ways to boost global flows of oil to
alleviate high prices caused by sanctions on Russia and OPEC+
decisions to reduce output.
But the chances Venezuela's exports could offset those cuts are slim
absent a big increase in investment in the country's crippled oil
sector, oil industry experts said.
Two decades of mismanagement and insufficient investment, coupled
with U.S. oil sanctions since 2019, are expected to stymie state-run
PDVSA's ability to make a quick comeback to cash-paying oil markets
and offer its crude at fair prices.
Talks between the government and the opposition, meant to provide a
way out of Venezuela's long-running political and economic crisis,
were held on Tuesday for the first time in nearly a year. They
agreed to further meetings at an unspecified date.
The deal they announced said each side can choose its 2024 candidate
according to its internal rules but did not reverse bans on some
opposition figures - including Oct. 22 primary frontrunner Maria
Corina Machado - that prevent them from holding office.
Opposition sources said they have not given up on trying to get
those bans lifted.
(Reporting by Matt Spetalnick; additional reporting by Marianna
Parraga, Mayela Armas, Vivian Sequera, Deisy Buitrago, David Alire;
Editing by Josie Kao, Lisa Shumaker and Grant McCool)
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