US Suspends Restrictions on Venezuelan Oil, Gold Sectors

The Treasury Department issued four new general licenses this week to suspend certain sanctions on Venezuela after the country's government and opposition formally agreed to work together on conditions for the next presidential election. The general licenses authorize certain transactions involving Venezuela's oil, gas and gold sectors and remove a trading ban on certain Venezuelan sovereign bonds and the debt and equity involving Petroleos de Venezuela (PdVSA), the country’s state-owned energy company. Treasury issued new guidance to explain the changes.

The announcement came after the Nicolas Maduro-led government and the Unitary Platform, a Venezuelan political opposition group, signed an “electoral roadmap agreement” in a move the U.S. hopes will lead to free and fair elections. Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, said the agency’s sanctions policy is to suspend restrictions in response to “democratic developments” in Venezuela. He also stressed that the agency is “prepared to amend or revoke authorizations at any time, should representatives of Maduro fail to follow through on their commitments.”

• New General License 44, valid for six months through April 18, authorizes certain transactions involving PdVSA, and any entity it owns by 50% or more, if those transactions are related to “oil or gas sector operations” in the country. Those include the “production, lifting, sale, and exportation of oil or gas from Venezuela,” the “provision of related goods and services,” payments of related invoices, new investments in oil and gas and certain deliveries of oil or gas to creditors of the Venezuelan government. Treasury said the license will be renewed “only if Venezuela meets its commitments under the electoral roadmap as well as other commitments with respect to those who are wrongfully detained.”
• New General License 43 authorized certain transactions involving CVG Compania General de Mineria de Venezuela CA, also known as Minerven, the Venezuelan state-owned gold mining company, and any entity Minerven owns by 50% or more. The agency said the transactions that are authorized are those that “Treasury assesses would have the effect of reducing black-market trading in gold.” The license doesn’t list an expiration date.

Treasury also said it amended other related licenses to remove the “secondary trading ban” on certain Venezuelan sovereign bonds and PdVSA debt and equity, among other things. The agency stressed that its ban on trading in the primary Venezuelan bond market remains in place. “Treasury assesses that this, too, would have the positive effect of displacing nefarious players in this market, and with negligible financial benefit to the Venezuelan regime,” the agency said. The other affected licenses are General License 3I, General License 5M, General License 9H and General License 45.

The agency also issued new and amended frequently asked questions, including one to clarify that the term “Western Hemisphere” in General License 45 means the countries and areas identified by the State Department on its website as comprising the Western Hemisphere. Other FAQs address the changes made by amendments to the other general licenses.

Other than the set of transactions authorized under the licenses, Nelson said “all other restrictions imposed by the United States on Venezuela remain in place, and we will continue to hold bad actors accountable.”

Democrats applauded the lifting of the sanctions. Rep. Pramila Jayapal, D-Wash., ranking member of the House Judiciary's subcommittee on Immigration Integrity, Security, and Enforcement, said the sanctions had "served to increase migration throughout the region, harmed untold numbers of civilians, and exacerbated the situation at our southern border." She called the measures an "important step in the right direction, and I encourage further measures to reverse" other "broad-based economic sanctions to protect the lives and dignity of Venezuelans.”

Sen. Ben Cardin of Maryland, the top Democrat on the Senate Foreign Relations Committee, said the Treasury announcement "demonstrates how the United States can leverage sanctions strategically to incentivize breakthroughs in negotiations that would otherwise be unlikely to occur." He added that the U.S. should "make it unequivocally clear that any attempt to go against the letter and spirit of this agreement will result" in the snapback of the sanctions.

U.S. sanctions on Venezeula were "always meant to be rolled back should the country take meaningful steps towards restoring its democracy, and human and political rights," said Rep. Gregory Meeks of New York, the top Democrat on the House Foreign Affairs Committee. "Should the Venezuelan government fail to meet those conditions," Meeks said, "so too will our sanction relief reverse."