The Trump administration’s sanctions on Venezuela have succeeded in creating a cash crunch in Caracas. But with Venezuelan President Nicolás Maduro getting close to defaulting on Venezuela’s $150 billion in foreign debt, the Trump administration needs to take steps to protect the United States from the fallout of a default while keeping up the economic pressure against Maduro’s increasingly autocratic government.
Venezuela’s dire fiscal situation represents a success of U.S. sanctions, which deny Maduro the ability to borrow from U.S. investors to prop up his government. But a Venezuelan default could also create unintended consequences for the United States. Venezuela’s state oil company, PDVSA, sells more than 500,000 barrels a day to U.S. refiners, and those sales could be disrupted if Venezuela’s creditors try to seize oil payments to satisfy Venezuela’s debts. In addition, Maduro could try to sell PDVSA’s single biggest asset in the United States, the oil refiner CITGO, as a way of raising cash. The risk to the United States is heightened by the fact that last year Venezuela pledged 49 percent of CITGO as collateral for a Russian loan, raising the specter that Russia could try to take ownership of a large stake in CITGO if Venezuela defaults.
Read the full commentary in The Hill.