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One day after the election of the “illegitimate” Constituent Assembly, the US Treasury Department today announced sanctions on Venezuela President Nicholas Maduro that will freeze his personal assets and ban any dealings between him and US citizens. The Treasury press release is available here.
The tough talk continued at an afternoon press conference at the White House as US National Security Advisor HR McMaster pronounced Maduro as a “dictator.”
We believe the sanctions on Maduro and possibly other individuals in the Venezuela government are just the beginning of US actions against the regime, and investors should still expect further steps - including energy sanctions.
The US policy decision on Venezuela was changing in real time throughout the day in Washington. We had believed that the announcement would also include a ban on US exports of light crude and other products to Venezuela but due to the White House reorganization under General Kelly as Chief of Staff, these and other decisions were being slowed down.
Several media reports over the weekend said the Administration was taking energy sanctions on Venezuela crude exports to the US off the table “for now.” However, our view is that energy sanctions remain under active consideration, and there is strong support within the national security council staff for such action.
One indication that there is more yet to come was a statement today from Senator Marco Rubio (R- Florida) who applauded the Maduro sanctions but added he remains “confident the president will keep his clear commitment to impose economic sanctions on the regime if they convene the illegitimate Constituent Assembly.” Rubio's full statement is available here.
We believe Rubio has revealed the catalyst for energy sanctions: the convening of the Constituent Assembly. According to news reports, the newly elected members of the Constituent Assembly will be sworn in on August 3 and the assembly convened 72 hours later. As a result, we may see further US announcements on sanctions late this week or early next week.
Rubio is an important player because he is a strong proponent of energy sanctions as a way to oust Maduro, and he is also close to the NSC staff who prepared the policy option.
It is also important to note that Rubio was the architect of the Trump reversal of the Obama Cuba policy and helped to organize a successful rally in Miami for Trump’s Cuba announcement. Those same groups at the Cuba announcement are ardent supporters of tough US action on Castro-pal Maduro. They see Cuba’s influence behind the Venezuela government’s violent crackdown on opposition and protests.
The Maduro sanctions are only the start, not the end.
