People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 25

June 19, 2011

Obama Imposes Sanctions Against Venezuela


Yohannan Chemerapally


VENEZUELA has become the latest country to be put under US economic sanctions for doing business with Iran. In the last week of May, the Obama administration announced that it was imposing sanctions on Venezuela’s state oil company PDVSA --- Petróleos de Venezuela SA --- “for cooperating with Iran’s energy industry.” The US State Department spokesman said dealings with Iran’s oil industry violated the “Iran Sanctions Act” enacted by the US Congress way back in 1996. “We are sending a clear message to the companies around the world; those who continue to irresponsibly support Iran’s energy sector or help facilitate Iran’s effort to evade US sanctions will face significant consequences,” said the US deputy secretary of state, James Steinberg.




The Iran Sanctions Act, which goes much beyond the sanctions mandated by the UN Security Council on Iran, is similar to the Helms-Burton Act which penalises countries trading with Cuba. In 2010, President Barack Obama further toughened the Iran Sanctions Act, penalising firms that supplied refined gasoline to Iran. Though Iran exports huge amounts of crude, it faces a gasoline crunch due the western sanctions imposed on the country from the beginning of the Islamic Revolution in 1979. Refineries which were due for upgradation decades ago are in a decrepit state due to the absence of essential spare parts and machinery.


Since the beginning of the last decade, Washington has been trying to pressurise Iran’s leading trading partners, including India, with varying degrees of success, to cut off economic links with Iran. In the case of India, the US has been partially successful as leading Indian private companies like Reliance Petrochemicals which supplied gasoline, have, fearing reprisals from Washington, sharply cut down business dealings with Iran. The former US secretary of state Condoleezza Rice had publicly warned the Indian government to desist from signing big ticket deals like the Iran-Pakistan-India (IPI) gas pipeline deal.


As the pressure from the West on Teheran to scrap its peaceful nuclear programme has increased, visiting American officials and heads of thinktank have been consistently harping on the need for New Delhi to distance itself from Iran. Otherwise, they warned that the existing close US-India strategic relationship would be adversely impacted. Similar pressures were put on Islamabad but, despite the greater leverage Washington had over Pakistan, the government there went ahead and signed the deal for setting up of the gas pipeline connecting the two countries. Both the Iranian and Pakistani governments have said that the option for India to join in the IGI pipeline is still open.




Venezuela, unlike the two South Asian countries, is not amenable to the US pressures. Under Hugo Chavez, the Venezuelan government has been following a fiercely independent foreign policy, enraging Washington. Along with a core group of Latin American and Caribbean countries, Venezuela has resolutely opposed the hegemonic policies of the US in the region and the world. Chavez was among the first heads of state to condemn the US led NATO war on Libya. Chavez, like many world leaders, had initially expressed his admiration for Barack Obama and had expected that the new president with his emphasis on projecting “soft power” would be at least somewhat different form his predecessor, George W Bush. But three years into the presidency, Obama has shown his real face to the world. He has launched another war in Libya, adding to the wars he has inherited in Afghanistan and Iraq.


In the case of Venezuela, Obama has taken a step which even George W Bush had second thoughts about. Bush Jr was of course no friend of Chavez. During his presidency, Chavez was briefly ousted from power in a 2002 CIA sponsored military coup. But during the Bush presidency, no economic sanctions were imposed on Venezuela for its strong economic ties with Iran. In fact, the US secretary of state, Hillary Clinton, had stated a couple of months ago that there was no evidence to show that Venezuela was violating US laws in its diplomatic and commercial dealings with Iran. But facing re-election, Obama has been pandering to the American right wing, especially the Jewish lobby, which would like America to declare another war, this time against Iran. “Sanctions against the Fatherland of Bolivia! Imposed by the Gringo imperialist? Well, Welcome Mr Obama, don’t forget that we are the children of Bolivar,” Chavez said on his Twitter account. Simon Bolivar, the liberator of Latin America from Spanish colonialism, is the icon of the Venezuelan revolution.




The presidential elections in Venezuela, scheduled next year, could be another factor for Washington’s heightened interest in targeting the revolutionary government. The Obama administration has been openly funding the right wing opposition in Venezuela. Since Obama took over, 40 million dollars have been channelled to the opposition parties and media conglomerates. Obama’s 2012 budget specifically allots an additional 5 million dollars in aid to Venezuelan “civil society” --- a code word for the rabid right wing groups and the influential media outlets they control.


The Obama administration has other reasons to be unhappy with the developments in the region. Due to the initiatives by Chavez and the many likeminded leaders who had since risen to power, regional integration has received a fillip. Trade ties between the countries of the region have increased tremendously --- slowly but surely replacing the traditional economic links with the US. Most of the Latin American countries are cold to the idea of a free trade pact with the US. China, Russia and even Iran have started doing business in a big way in Latin America, once the exclusive preserve of the American empire. Even close allies of the US like Colombia have started distancing themselves from Washington. After the election of Juan Manuel Santos as the new president of Colombia, relations with Venezuela, its immediate neighbour, have dramatically improved. Bogotá, which under the previous president, Alviro Uribe, blindly looked up to Washington for guidance, seems to have now opted for friendship with Caracas.


Santos and Chavez recently played a key role in facilitating the return of Manuel Zelaya back to Honduras in the last week of May. Zelaya was ousted from the Honduran presidency in a military coup in 2009. Under the agreement, the Honduran government agreed to allow Zelaya to function freely and participate in the politics of the country. As a quid pro quo, Honduras was readmitted into the Organisation of American States (OAS) after its suspension from the organisation in 2009. The majority in the international community had refused to recognise the legitimacy of the Honduran government after the military coup. The Colombian president publicly praised the role of Chavez in bringing about national reconciliation in Honduras.   




Under the sanctions imposed by the Obama administration on Venezuela, the PDVSA, which is a significant contributor to the oil driven Venezuelan economy, is barred from competing for the US government contracts and prohibited from seeking aces to the US Export-Import Bank. The sanctions, however, do not affect the PDVSA subsidiary, CITGO, which owns oil refineries and gas stations in the US. These days CITGO supplies 1.4 million barrels a day to the US, which is significant, as it amounts to 10 per cent of America’s annual oil imports. The American economy continues to be heavily dependent on the Venezuelan crude. Despite the ups and downs in the relationship between the two countries since the late nineties, the oil trade between the two countries has never been adversely impacted so far.


But Chavez has warned that if push comes to shove, he will retaliate by cutting off Venezuelan oil from the American market. Washington and Caracas are currently engaged in a diplomatic tug of war involving Obama’s choice of ambassador to Venezuela. The Venezuelan government has refused to receive Larry Palmer as the American envoy because of his stated views on Venezuela. In remarks to the US Senate Foreign Relations Committee last July, Palmer had made disparaging remarks about the government of Venezuela. He had said that Venezuela is supporting the leftist rebels in Colombia and said that the country poses a danger to America’s national interests.


Sparing the CITGO while imposing sanctions on the parent company has in no way appeased the Venezuelan government. Senior government officials including the petroleum minister, Rafael Ramirez, have described the US action as a gross interference in the domestic affairs of the country and a violation of its sovereignty. Joined by ordinary Venezuelans, PDVSA workers have already staged two massive demonstrations in the last week of May in the capital Caracas to protest against Washington’s latest provocations. The PDVSA is no ordinary state institution. It is directly involved in running hospitals and schools in the poor neighbourhoods. The PDVSA has also used the money it has gained from high oil prices to fund social programmes. In his speech at a protest march on May 29, the Venezuela’s oil minister said that the PDVSA symbolises “universal health care, free education and food cooperatives.” Venezuela’s oil, he said, “brings justice to our people.”




Ramirez said that the real motive of the US in targeting PDVSA was to monopolise the world’s oil supply. He said that it was not an accident that Libya was singled out for invasion among Arab countries. He pointed out that Libya was the biggest oil producer in Africa. He said that oil is the real motive of the US to single out Iran as well. The nuclear issue is only a pretext, Ramirez emphasised. Iraq too, the minister added, was invaded for its oil. Member states of the regional grouping, the Bolivarian Alliance for the Peoples of America (ALBA), expressed their “indignation and rejection” of the US government’s actions against Venezuela. The eight-member grouping, which includes Cuba, Nicaragua, Ecuador and Bolivia, called for a “definitive end” to the US acts of aggression against Venezuela.


In a separate statement, the government of Ecuador has described the US government’s decision as a “violation of international law.” Chilean parliamentarians said the US action was an aggression not only against Venezuela but “against all Latin American countries.” The Chilean legislators said that the US policy towards Venezuela and other OPEC nations like Iraq, Libya and Iran “has only one name, one objective, one common denominator --- oil.”