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The Citgo conspiracy: Opposition figures accuse Guaidó officials of ‘scam’ to liquidate Venezuela’s most prized international asset

Venezuela’s opposition has long accused the Bolivarian government of corruption and mismanagement. But with Citgo on the verge of liquidation, Guaidó’s officials are too incompetent — or too devious — to save it.

by Anya Parampil

Part 8 - Deadly sanctions: a cause to celebrate

On August 5, Trump signed an executive order to place a total blockade and economic embargo on Venezuela. White House National Security Advisor John Bolton praised the move as the harshest measures taken against a country in the Western hemisphere for over thirty years.

In Venezuela, hundreds of thousands of civilians poured into the streets nationwide to denounce the lethal effects of the blockade. While Venezuelan citizens braced for more suffering, Guaidó’s representatives cheered the escalation against their country.

Venezuela’s opposition on Tuesday celebrated a sweeping U.S. sanctions order… saying the measure would protect Venezuela-owned U.S.-based refiner Citgo from seizure by creditors,” reported Reuters, citing sources close to Guaidó.

The Washington Post, meanwhile, pointed out that although US media was preoccupied with the embargo, there was actually “nothing about trade with Venezuela in the new U.S. measure, whose entire focus is on freezing Venezuelan government assets in the United States.

In theory, the asset freeze complicated any attempt to seize Citgo’s shares, leading the Post to argue it was designed as “a desperate, last-ditch effort by the Trump administration to keep Guaidó and the opposition from losing any hope of controlling Citgo”.

For his part, Hernández called characterizations of the executive order as an embargo as “misinformation.” He stated that “what this Executive Order prohibits is a company taking control of Venezuela’s assets… this is the asset protection measure we were requesting.

However, some experts believe the measures are insufficient to protect Citgo.

The executive order, in my opinion, changed basically nothing,” Francisco Rodríguez (of no relation to Jorge Alejandro Rodríguez), a Venezuelan economist and former advisor to opposition candidate Henri Falcon told The Grayzone.

Francisco Rodríguez explained that US-based assets impacted by the measure had already been frozen as a result of previous sanctions.

He interpreted the measure as a “change of posturing in the US… essentially a change in their communication strategy.

If Guaidó’s team truly wished to protect Citgo and other assets belonging to the Republic, other voices among Venezuela’s opposition like Jorge Alejandro Rodríguez have advocated an executive order which includes “all the legal terms to say that Venezuela’s assets cannot be sold, liquidated, or seized.

If the legal mandate was ‘to protect Venezuelan assets for the future recovery of Venezuela,’ then it would be a totally different ballgame,” explained Rodríguez. “That’s why I have deeply criticized [Guaidó officials], and why I find their behavior totally irresponsible.

What’s more, the final authority with regard to sanctions is the Treasury Department’s Office of Foreign Asset Control (OFAC), which has the ability to waive sanctions requirements under any circumstances. 

Let’s say you are the judge and you have to get Crystallex paid,”  Rodríguez posited. “What do you do? You go to OFAC and say, ‘Ok, I have these guys named Exxonmobil, Valero, Shell, BP, and Marathon – large corporations – and I’m auctioning these shares in a couple of weeks, and I need OFAC’s permission to proceed.

Precedent implies that OFAC could approve an exception for debt collectors like Crystallex. On May 21, 2018, OFAC issued a waiver affirming the right of PdVSA’s bondholders to foreclose upon Citgo if Venezuela’s government were to default on their loan, suggesting Crystallex may be afforded the same privilege.

Guaidó officials made a $71 million interest payment to creditors earlier this year, leading critics to slam PdVSA’s Guaidó-appointed executives for appeasing bondholders rather than investing the money in Venezuela. Hernández responded by claiming sanctions prevented them from using the money for anything else.

What that means is that they got authorization from OFAC to make the payment,” Francisco Rodríguez explained, “what that’s telling you is that– if you take [Hernández’s] words at face value– the US government is only allowing them to use the money to pay bondholders, but its not allowing them to use the money to address Venezuela’s humanitarian crisis.

Paying the bondholders, from my point of view, was criminal,” asserted Jorge Alejanadro Rodríguez.

According to Francisco Rodríguez, there appears to be a split between the interests of the US Treasury Department, which would like to see creditors paid off, and the White House, which recognizes the negative impact Citgo’s loss would have on their dream of regime change in Venezuela. It is hard to envision how Guaidó, an inexperienced and previously unknown opposition figure, could recover politically if the country lost its most valuable international asset under his watch.

Protecting Citgo “would be in the best interests of the whole,” said Jorge Alejandro Rodríguez, “but there might be particular interests, specific interests, working for that not to happen.

He suggested that the interest could be, for example, a “large corporation saying: ‘it’s us, this is what we want to do. And I don’t care if the whole of US interests in Venezuela get screwed. I am going to get the best cut [of Citgo].’ Basically you are killing the cow because you want to eat the tenderloin.

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