The Trump administration froze all Venezuelan government assets in a dramatic escalation of tensions with Nicolás Maduro that places his socialist administration alongside a short list of adversaries from Cuba, North Korea, Syria and Iran that have been targeted by such aggressive U.S. actions.
The ban, blocking American companies and individuals from doing business with Maduro's government and its top supporters, took effect immediately Monday and is the first of its kind in the Western Hemisphere in more than three decades, following an asset freeze against Gen. Manuel Noriega's government in Panama and a trade embargo on the Sandinista leadership in Nicaragua in the 1980s.
While the order falls short of an outright trade embargo — notably, it spares Venezuela's still sizable private sector — it represents the most sweeping U.S. action to remove Maduro since the Trump administration recognized opposition leader Juan Guaidó as Venezuela's rightful leader in January. Critically, it also exposes foreign entities doing business with the Maduro government to U.S. retaliation.
"The apparent goal is to give the U.S. the ability to apply the law beyond its borders to allies of Maduro like China, Russia, Cuba, Iran and Turkey," said Russ Dallen, the Miami-based head of Caracas Capital Markets brokerage. "Should those foreign entities continue doing business with Maduro they can have their U.S. assets seized."
The executive order signed by President Donald Trump justified the move by citing Maduro's "continued usurpation of power" and human rights abuses by security forces loyal to him.
U.S. National Security Adviser John Bolton hinted earlier Monday that far-reaching U.S. action was close at hand. Speaking to reporters on the eve of an international conference in Peru to show support for Guaidó, he said that the U.S. was readying measures "that will show the determination that the United States has to get a peaceful transfer of power."
Russia, which has staunchly backed Maduro, denounced the U.S. action. Konstantin Kosachev, the head of the Russian upper house's international affairs committee, said Tuesday the move amounts to "international banditry." He added in remarks carried by the state RIA Novosti news agency that it represents an "open meddling into Venezuela's internal affairs."
The measures are likely to exacerbate suffering in an already moribund economy marked by six-digit hyperinflation and a deep, multi-year contraction that surpasses that of the Great Depression in the U.S.
Previous sanctions targeting the South American nation's oil industry, the source of almost all of its export earnings, have already accelerated a crash in oil production that started with Maduro's election in 2013 following the death of his mentor Hugo Chavez.
More than 100 officials and government insiders also have had their U.S. assets frozen and blocked from doing business with Americans. As part of the executive order, Americans or U.S. companies that do business with such individuals face penalties. The same Maduro supporters will also be banned from entering the U.S.
Exceptions will be allowed for the delivery of food, medicine and clothing. Transactions with Venezuela's still sizable private sector do not appear to be affected either. It's unclear how the actions will affect American oil giant Chevron, which last month received a three-month exemption from the U.S. Treasury to allow it to continue drilling for oil with state-run oil monopoly PDVSA.
The Maduro government has yet to respond. But Guaidó celebrated the U.S. action, saying it would protect Houston-based oil company CITGO, Venezuela's most valuable overseas asset, from attempts by Maduro to mortgage its assets.
"Any individual, company, institution or nation that tries to do business with the regime will be seen by the international justice system as collaborating with and sustaining a dictatorship," Guaidó said in a series of late-night Tweets. "They will be subject to sanctions and considered an accomplice to crimes."
Geoff Ramsey, a researcher at the Washington Office on Latin America, said that the measures will aggravate a humanitarian crisis even with the exceptions in place to protect the most vulnerable as Western banks avoid processing even legitimate transactions.
"The truth is that no financial institution wants to run afoul of the Treasury Department," he said.
Instead of doubling down on the same embargo strategy that has failed for decades to produce regime change in communist Cuba, he thinks the U.S. should do more to support ongoing negotiations being sponsored by Norway between Maduro and Guaidó representatives.
Bolton and U.S. Commerce Secretary Wilbur Ross are representing the United States at what host Peru has dubbed the International Conference for Democracy in Venezuela, a gathering of 59 nations that with few exceptions back Guaidó and consider Maduro's reelection last year to be fraudulent.
Moments after the executive order was announced, Bolton tweeted that he was looking ahead to what he hopes will be a "productive" day in Lima, Peru.