U.S. Imposes Economic Sanctions on Venezuela for Iran Links
It was not as far as they should have gone, but the Obama Administration has, finally, imposed sanctions on PDVSA – a state-run Venezuelan oil company – for doing business with state sponsor of terrorism Iran.
“The sanctions we have imposed will cut off PDVSA’s access to U.S. Government contracts, U.S. Export–Import [bank] financing and licenses for controlled technologies,” said Deputy Secretary of State James Steinberg during a press conference yesterday. Steinberg added however that the “sanctions will not prevent PDVSA’s sale of oil to the United States or other markets, and the sanctions do not affect the operations of PDVSA’s subsidiaries.”
The move is long overdue and it did not go over very well with the Chavez thugocracy. It is the first time that the Obama Administration has take a concrete action to send a signal to the Chavez regime that their on notice that relations with the Iranian mullahs will come at a price. While it will not stop the import of CiTGO oil to the U.S., Joseph Kennedy and Rep. Charlie Rangel are likely very pleased at that, access to the U.S. market of other PDVSA holdings is a good place to start.
If you are a U.S. company, or a foreign company that does business with the U.S. or that employs U.S. persons, you’ll need to pay closer attention to commercial transactions with Venezuela’s energy sector. The beauty of these regulations is that, in practice, they can interconnect at places that can crimp business transactions not immediately noticeable. The folks in Venezuela can chest pump all they want and say this is no big deal, but, it is not good for them and they know it.
Is this the start of a tougher line against the Cuban and the Venezuelan regimes? Tough to tell, but not likely. In the case of Venezuela, it long ago earned a spot as a state sponsor of terror under U.S. law, however, that move is sure to set off a series of regulatory and political mine fields that will upset regional dynamics. It should be done, but there are other steps that can be taken in the interim, yesterday’s announcement is a move in the right direction.
In addition to PDVSA, six other companies from several other countries were sanctioned yesterday under the Iran Sanctions Act (ISA) of 1996, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010. You can read more about it here.