U.S. reinstates sanctions on Venezuelan gold, says oil is next if Maduro fails to act

The Biden administration reimposed sanctions Tuesday on Venezuela’s gold sector, following a warning the day before that it will do the same with the South American country’s oil exports if the Nicolas Maduro regime fails to fulfill its commitment before the end of April to free political prisoners and allow all presidential candidates to compete in this year’s elections.

The tightening of the screws on Venezuela comes after the Caracas regime disqualified top opposition contender María Corina Machado from participating in the presidential elections set for the second half of the year. State Department spokesman Matthew Miller announced on social media that “in response to the undemocratic actions” of Maduro’s goverment the U.S. “has revoked sanctions relief for the gold sector of Venezuela”.

The restoration of the sanctions on Venezuelan gold is likely to affect the operations of state-ran companies, such as Minerven, that handle a large part of the country’s production of the metal. Before Washington approved the sanctions relief last October, most of the gold produced out of the country’s southern mines was used a form of back-door payment abroad to compensate for Venezuela’s lack of access to the international financial system.

“Unless Maduro and his representatives in Venezuela are able to get back on track, specifically with regard to allowing all presidential candidates to compete in this year’s election, we will not be in a position to renew General License 44, which provides relief to Venezuela’s oil and gas sector when it comes up for renewal in April,” an official with the White House National Security Council told McClatchy.

“We have made clear that all who want to run for president should be allowed the opportunity, and are entitled to a level electoral playing field, to freedom of movement, and to assurances for their physical safety,” the official added.

The Biden administration partially lifted its sanctions against the Maduro government in October after the Caracas socialist regime reached a deal with the Venezuelan opposition setting up a roadmap for holding freer presidential elections this year.

Since the partial lifting of the sanctions, Venezuela, which is deeply reliant on oil income, has negotiated a series of deals with international oil companies seeking to recover the nation’s collapsed oil output, which in July 2020 had reached a record low of 392,000 barrels per day. Venezuela has the largest proven oil reserves in the world, and at one point in its history produced as much as 3 million barrels a day. But its oil revenues collapsed after the Trump administration imposed sanctions in January 2019.

A license approved by Washington last year, which in essence gave the green light for Venezuela to renew oil exports to the United States through international oil companies, had an immediate impact on the nation’s oil industry — Venezuela was able to boost its output to just over 900,000 barrels per day by the start of December, a significant boost to the country’s troubled economy.

White House National Security Council spokesman John Kirby said earlier at a press conference that the administration had different options at its disposal concerning the future of its policy on Venezuela, and that all options are under consideration, given the Maduro government has so far failed to come through with a series of commitments made in an agreement signed in Barbados in October.

The Maduro government “made some commitments about opposition political parties, about free and fair elections and what all that meant, and they have not taken those actions,” Kirby said, urging regime officials “to make the right decisions” before April.

The United States had been waiting for Maduro to comply with the commitments his government made in a series of negotiations held throughout last year with members of the Biden administration.

The talks culminated with the signing in Barbados of two separate accords with opposition leaders to hold presidential elections in the second half of this year. Prior to the signing, representatives of the Biden administration and Maduro held several meetings over the persistent political and economic crisis that has led millions of Venezuelans to seek refuge in neighboring countries and the United States.

As part of its commitments, the regime agreed to lift bans blocking opposition leaders from running for office, implement deep reforms to the often criticized electoral system, allow international observers to monitor the election and free all political prisoners.

In exchange, the Biden administration, which had kept in place sanctions on Venezuelan oil, granted a six-month general license temporarily authorizing transactions involving the oil and gas sector in Venezuela, and a second general license authorizing the operations of state-run Minerven, a previously sanctioned gold-mining enterprise that had been trading on the black market.

According to a Transparency International report, 25% of total income for Venezuela’s gold production went to the Central Bank of Venezuela, 9% to the national treasury, 36% to “strategic partnerships” between the state-owned holding Venezuelan Corporation of Guayana (of which Minerven is a subsidiary) and local private companies. About 30% of the total went to criminal gangs and guerrillas.

In December, after brokering a prisoner swap with Caracas, President Joe Biden expressed optimism that Maduro was ready to proceed with democratic reforms. “We’ve laid down specific requirements for democratic elections,” the president said at the time. “He’s agreed to all of them.”

Washington’s reaction comes days after the government-controlled Venezuelan Supreme Court ruled that opposition leader Machado will not be allowed to run in the presidential elections set for later this year, dealing a significant blow to the democratic transition roadmap established in Barbados.

The ruling against Machado upholds a 15-year ban imposed on her from holding public office. The popular opposition leader won a primary election vote last year, and according to most polls would easily beat ruling Maduro in a presidential election.

Given her high popularity, most analysts believe that Machado’s candidacy posed the biggest challenge the Maduro regime has faced in recent years and that the ruler would do anything in his power to keep her name off the ballot, despite agreeing with the Biden administration that all opposition leaders would be allowed to run for public office.