“All Options On Table” – US Threatens Sanctions As Venezuela's Maduro Vows To Create New Constitution
Posted by Tyler Durden on July 18, 2017 10:55 pm
Tags: 2014–17 Venezuelan protests, Americas, Capital Markets, congress, Constituent Assembly, Corruption, Economic policy of the Nicolás Maduro government, FLORIDA, Hugo Chávez, Iran–Venezuela relations, LatAm, Nicolás Maduro, Nicolas Maduro's government, Politics, Politics of Venezuela, recovery, Reuters, Socialist Party, SWIFT, Trump Administration, U.S. Treasury, United States–Venezuela relations, Venezuela
Categories: 2014–17 Venezuelan protests Americas Capital Markets Congress Constituent Assembly Corruption Economic policy of the Nicolás Maduro government Economy Florida Hugo Chávez Iran–Venezuela relations LatAm Nicolás Maduro Nicolas Maduro's government Politics Politics of Venezuela recovery Reuters Socialist Party SWIFT Trump Administration U.S. Treasury United States–Venezuela relations Venezuela
The US is weighing whether to impose sanctions on Venezuela’s defense minister and several other top officials for human-rights violations, according to Bloomberg, citing officials familiar with the government’s deliberations. They added that the action was one of several under consideration by the Trump administration against President Nicolas Maduro’s government.
Despite these and other threats from the US, the country’s embattled leadership remains defiant, vowing to proceed with plans for a controversial new congress despite what it called a “brutal interventionist” threat by Washington to impose economic sanctions, according to Reuters.
The above-mentioned comments – pushing back against what some view as the United States meddling in the affairs of a foreign power – followed the president’s threat to take “strong and swift economic actions” if Maduro goes ahead with the new body. As some have pointed out, his threats relating to Venezuela are sounding increasingly militaristic, prompting taunts from Maduro, who last month dared Trump to “send in the Marines.”
A vote on whether to create the new Congress is set for July 30 – a vote that is widely expected to succeed. The legislative super-body, known as a Constituent Assembly, would help Maduro rewrite the country’s constitution, ultimately helping him consolidate his authority.
As Bloomberg noted, the US Treasury could announce the sanctions, which would freeze the handful officials out of the US financial system, as soon as Tuesday, the people said. Among those named would be Defense Minister Vladimir Padrino Lopez, 54, and Diosdado Cabello, 54, a longtime ally of late President Hugo Chavez and power broker within the ruling Socialist party, they said.
Venezuelan President Nicolas Maduro
The move against top officials – potentially the third round of sanctions against Venezuelans under the Trump administration – are one offshoot of a broader U.S. probe into allegations of Venezuelan corruption that began several years ago and has resulted in some criminal charges. Other Venezuela-related measures are also in the works, the people said, adding that U.S. officials have given briefings on the potential actions in recent weeks to lawmakers including Senator Marco Rubio of Florida. Giving his government’s response, Foreign Minister Samuel Moncada said the July 30 vote for the legislative super-body known as a Constituent Assembly would go ahead anyway, according to Bloomberg.
Moncada say it’s “a dark day for U.S.-Venezuela relations” in a televised address.
“These are unacceptable threats” Moncada says. Venezuela will “thoroughly” review relations with US, he added.
“Nothing and no one can stop the constituent assembly.”
Maduro only narrowly won election in 2013 to replace the late Hugo Chavez.
Foreign Minister Samuel Moncada
Even Venezuela’s neighbors have voiced their opposition to the legislative body.
“The Constituent Assembly should be abandoned to achieve a negotiated, safe and peaceful solution in Venezuela. The whole world is asking for that,” Colombia’s President Juan Manuel Santos tweeted.
Emerging-market investors are also worried that the country will soon run out of cash as its foreign-currency reserves have dwindled to $10 billion, begging the question: Will Venezuela repay its debt? Even leadership change wouldn’t be enough to draw some seasoned Latam investors back into the country’s capital markets.
“We don’t want to pick up pennies in front of a steamroller. Looking at the numbers, they’ve run out of money. These guys are scraping the barrel. They had to sell ‘hunger bonds’ and do a repo transaction with Fintech Advisory Inc. That’s not a sustainable debt model.”
Although the fund has no exposure to Venezuela, Robert Koenigsberger says he expects the recovery value on the nation’s bonds to eventually exceed 65 cents on the dollar. He compares it to Peruvian bonds, which traded in the low single digits in 1990, yet eventually were worth 125 cents through a consensual restructuring in 1996.
“In 30 years, I can’t recall human conditions being so bad beneath a debt stock. When President Nicolas Maduro is gone, some people think there might be a ‘Macri of Venezuela’ that will quickly solve the problem. That’s a bit crazy because the issues are so much more dire.”
Maduro’s beleagured political opponents have been largely marginalized by his administration, part of the president’s clampdown on dissent amid a worsening economic collapse that has led to widespread famine as well as a breakdown in social order. In the streets of Caracas, the Venezuelan capitol, citizens have begun taking the law into their own hands. As we’ve previously reported, the number of lynchings has risen sharply over the past year. Maduro has also ratcheted up the pressure on the country’s top prosecutor, who has emerged as a top antagonist to his regime Maduro. Maduro’s opponents say they drew 7.5 million people onto the streets at the weekend to vote in a symbolic referendum where 98 percent said they disagreed with the assembly plan.
Polls show the ruling Socialist Party would likely be thrashed in any normal vote due to many Venezuelans’ anger against Maduro and over their economic hardships.
And while many question the ‘unriggedness’ of any former and potential election in Venezuela; wouldn’t this be seen by some as “meddling” in the affairs of another country? We are sure there are Congressional probes being readied right now to question the sanctity of democracy itself as the United States steps in the middle of another LatAm crisis… because they have always worked out so well in the past.