Sanctions Against Venezuela Considered Likely to Increase

Even with an already high volume of U.S.-imposed sanctions on Venezuela’s oil and economic sectors within the first few months of 2019, the sanctions are only likely to increase, said Johann Strauss, an international trade lawyer at Akin Gump.

Speaking during an April 18 webcast hosted by the law firm, Strauss drew from recent comments by Secretary of State Mike Pompeo and the latest Treasury enforcement actions to say the U.S. is “likely to step up some designations to really put pressure on the [Nicolas] Maduro regime.” Strauss said Venezuela has been a major area of concern for his clients, some of whom own businesses that operate in the Venezuelan oil trade or deal in Venezuelan bonds. “They’re very curious about what these sanctions mean,” Strauss said. “The goal of these sanctions is to really change Venezuela’s behavior. But that hasn’t happened.”

While there are at least 54 nations that recognize Juan Guaido as Venezuela’s president, including the U.S., there are still “major players” that still recognize Maduro, making U.S. sanctions less effective, Strauss said. Those countries include Russia and China, who Strauss said continue to trade with Venezuela. “The fact is, if a lot of countries are still not on board with sanctions, then there’s a lot of avenues for Venezuela to continue to do business that the sanctions were intended to [stop],” Strauss said.

After Guaido voiced opposition to Maduro and announced his intent to seize the Venezuelan presidency, the U.S. in January enacted “a series of stepped-up measures against Venezuela” to “really essentially force the government to recognize Guaido as the president, Strauss said. Those measures included U.S. sanctions imposed on Venezuelan state-run oil company Petroleos de Venezuela in January, the designation of four Venezuelan governors in February and the designation of Venezuela’s state-run metal mining company CVG Compania General de Mineria de Venezuela CA in March. Most recently, the Treasury's Office of Foreign Assets Control announced on April 17 sanctions against the Central Bank of Venezuela and its director (see 1904170053).

In addition, the U.S. has expressed intentions “to focus on enforcing against companies that engage in trade [with Venezuela],” Strauss said. On April 5, OFAC sanctioned two Liberia- and Greece-based shipping companies for delivering oil from Venezuela to Cuba. “[The U.S.] is effectively broadening the scope of secondary sanctions,” Strauss said. “For a lot of companies, and a lot of our clients that operate in the export-import of crude oil, this is significant.”