Trump sanctions Rosneft, Russia's largest oil company, for aiding Maduro in Venezuela

The Trump administration announced significant new sanctions on Tuesday targeting Rosneft, Russia’s largest oil company, for helping Venezuelan leader Nicolás Maduro circumvent U.S. sanctions.

The Treasury Department blocked all U.S. assets of Rosneft´s subsidiary, Rosneft Trading S.A., and its director, Didier Casimiro.

But the sanctions will also affect “anyone engaging in activity” with the Russian company, senior administration officials said, characterizing Rosneft as the “primary culprit” of a campaign to evade Washington’s pressure on the Maduro regime.

Although the measure announced on Tuesday does not prevent Rosneft from continuing trade of Venezuelan oil, it will broadly impact the company’s operations. The sanctions expose those who maintain business with its subsidiary to U.S. penalties — even if the transactions are not related to Venezuela, a senior U.S. official said.

The official expected that banks and other financial institutions should refrain from engaging with the blacklisted company.

“This is a reaction to the growing and increasingly central role of Rosneft in the affairs of Venezuela,” one senior administration official said, “with Rosneft now trading over half of the oil now coming out of Venezuela, and actively evading sanctions — engaging in ruses, engaging in deception.”

Rosneft said Tuesday that the sanctions are an “outrage,” according to a Reuters report citing the TASS news agency. A company representative who spoke on a local Russian radio station denied that Rosneft had engaged in any illegal activities regarding Venezuela.

White House officials acknowledged earlier this month that sanctions on the Russian state-run firm were “on the table.” But President Donald Trump’s decision to proceed marks a significant escalation in his pressure campaign against Maduro and a rare confrontation with Russia’s president, Vladimir Putin.

“It’s essentially a secondary sanction,” said Fernando Cutz, a former Director for South America at the National Security Council during the Trump administration who is now at the Wilson Center. “That is a huge and consequential action — Rosneft is a huge company.”

Officials said they were confident that Tuesday’s action would not rattle oil markets, despite private concerns within the administration in recent months that such a move might destabilize prices.

Trump is said to have cleared Tuesday’s sanctions directly. “This decision was cleared by the president himself,” a senior administration official said.

Secretary of State Mike Pompeo discussed the sanctions with Russian Foreign Minister Sergey Lavrov on Saturday, another official said, and John Sullivan, the U.S. ambassador to Russia, met with the Russian foreign minister to discuss the coming sanctions on Rosneft on Monday in Moscow.

The officials did not say whether Trump had spoken directly with Putin regarding the decision.

The administration has accused Rosneft of sending tankers to Venezuelan ports without their tracking systems on — a violation of international law and a lifeline from sanctions on Venezuela’s own state-run oil company, PDVSA, that has allowed Maduro to indirectly sell oil to China and India. Officials also said that Rosneft was orchestrating a strategy of transferring Venezuelan oil in international waters for shipment to Asia and West Africa.

In recent months, much of Rosneft’s cooperation with PDVSA has been an open secret: Venezuelan and Russian media reported in October that Rosneft was even in talks for a full takeover of PDVSA in exchange for debt relief.

In prepared statements, Treasury Secretary Steve Mnuchin described Rosneft’s operations as the “looting of Venezuela’s oil assets.” Pompeo said that its activity had “propped up the dictatorial Maduro, enabling his repression of the Venezuelan people.”

Trump vowed to increase pressure on the Maduro regime in his State of the Union address, where he hosted Juan Guaidó, the president of Venezuela’s National Assembly who is recognized by the United States and 59 other countries as the nation’s interim president.

During that visit, a senior administration official told reporters that the White House was concerned about the behavior of Rosneft in Venezuela.

“Whether it’s Rosneft, whether it’s Reliance, whether it’s Repsol, whether it’s Chevron here in the United States, I would tread cautiously towards their activities in Venezuela that are in support, directly or indirectly, of the Maduro dictatorship — because, as I said, we’re halfway through our maximum pressure campaign, and we’re only moving in one direction, and that is forward,” the official continued. “And their activities are clearly of concern.”

At a press conference on Tuesday morning, the U.S. special envoy for Venezuela, Elliott Abrams, said that although the Spanish oil company Repsol has complied with U.S. laws and sanctions, “we expect some of Repsol’s (Venezuela-related) activities going forward would have to change.”

Abrams also said that the U.S. government was making “a great effort” to deter companies and customers, mainly from India and China, from buying Venezuelan oil.

Maduro’s grip on power in Venezuela has led nearly 5 million people — 16% of its population — to flee the country, creating the largest ever humanitarian crisis in the Western Hemisphere.

The Trump administration has gradually escalated sanctions on Maduro over time. But Cuba and Russia have provided lifelines to the regime in Caracas, providing Maduro with staying power.

“Russia, using Rosneft, has taken our wealth for its benefit, regardless of the suffering of the Venezuelan people,” Guaidó’s appointed ambassador to the U.S., Carlos Vecchio, said on Twitter. “It has become the country that has given the greatest support to the worst tyranny in the region. It is responsible for the tragedy as well.”

Briefing reporters on the decision, senior administration officials described the sanctions on Rosneft as the latest major step in a continuing pressure campaign on the regime: “We are probably at 50 or 60 percent,” one official said. “We hope to never have to get to 100% maximum pressure.”

The officials named one senior Rosneft Trading official in particular as a designated subject of the new sanctions: Casimiro, its president and chairman of its board of directors.

Republicans and Democrats in Congress had asked Trump to take action against the Russian government for intervening in the Venezuelan crisis.

“The United States must have a clear view on the situation in question: Putin will support the Maduro regime at almost any cost, provided that it prevents Venezuela from returning to democracy, frustrates the objectives of U.S. policy and undermines the stability and security of the democracies in Latin America,” Florida Sen. Marco Rubio wrote in an op-ed for The Hill.

Florida Democratic Rep. Debbie Mucarsel-Powell said Tuesday’s sanction had been needed for a long time and asked for “a more comprehensive strategy on Venezuela that brings in our global allies to increase the effectiveness of our diplomatic and humanitarian efforts.”

“Additionally, we must extend immigration relief to Venezuelans in the United States, so we urge Senate Republicans and the president to support our bipartisan TPS bill,” she added, referring to Temporary Protected Status.

Trump’s relationship with Russia has been the subject of fascination and speculation since the early days of his presidential campaign, when he praised Putin’s style of leadership and doggedly avoided criticism of the Kremlin. The president’s campaign was investigated by a special counsel over concerns it had coordinated with the Russian government to interfere in the 2016 election.

Since then, Trump has called for better relations with Moscow, and has only reluctantly imposed sanctions on Russian institutions over the course of his presidency. Even after Congress in 2017 passed sanctions against Russia on a bipartisan, veto-proof basis over its election meddling, Trump has largely declined to enforce them.

In 2019, the president withheld military assistance from a newly elected government in Ukraine as it engaged in battle with Russian-backed forces on its eastern border, leveraging the aid for investigations into his political rivals, according to congressional testimony from government officials. The episode led to Trump’s impeachment.

Now, with the administration proceeding with rare sanctions on Russia’s largest oil company — it has been sanctioned before, by the Obama administration over the Ukraine crisis — the question is whether Trump will stick to them.

“Even if the president says, let’s do this, what if he gets a call from Putin asking him to back off — what does he do?” Cutz, the former Trump aide, asked. “It’s going to be like a little angel and a little devil on his shoulder.”

Photo: © Rayner Pena/DPA/Abaca Press/TNS President Nicolas Maduro speaks to supporters during a rally in Caracas, Venezuela, on Feb. 27, 2018.