The White House held a National Security Council principals committee meeting today to formalize new financial measures to confront Venezuela President Nicholas Maduro – including sanctions on Venezuela oil. We expect the Treasury and State Departments to announce the new policy as soon as today.
As we said in our weekend client note on Venezuela, the administration's expanding policy seeks to turn off cash to the Maduro regime to separate Maduro from the military. Another part of the strategy involves getting Venezuela government funds in the US and abroad as well as on-going revenues owed to Maduro's government diverted to the US-recognized government of President Juan Guiado, who also serves as President of the National Assembly.
Details of the oil sanctions may not be complete with the announcement as today is the first day back after the government shutdown for Treasury's Office of Foreign Assets Control (OFAC) that would implement the sanctions policy. However, we believe the sanctions will at least impact oil sales of imports to the US but also may be eyed at oil sales world-wide.
The administration also plans to continue working the international community to disavow Maduro and recognize Guiado as the legitimate President of Venezuela.
In addition, Axios reported today that Trump also once again raised the possibility of US military action in Venezuela in a meeting with Senator Lindsay Graham. Graham told Axios that "Trump's really hawkish on Venezuela." We have reported in past client notes that Trump considers military action to be a true option and has compared it to US military intervention in Panama to oust former President Manuel Noriega from power. In addition, the Secretary of State Mike Pompeo last Friday appointed Elliott Abrams, former state department and NSC official in previous administrations, to be the new coordinator of US Venezuela policy. Abrams, while in the Reagan administration, had recommended military action in Panama. President Reagan rejected the recommendation but his successor President George H.W. Bush implemented Abrams plan.
Stay tuned for much more US action on Venezuela in the coming days and weeks.