When Iranian tankers were delivering gasoline to Venezuela in May, the situation was tense. With United States sanctions against both countries and the US naval fleet hovering in the Caribbean, President Trump threatened to intervene. Iran’s President countered, stating any interference would bring trouble to Americans too. There was a precedent. When British marines intercepted an Iranian tanker off the shores of Gibraltar in 2019, Iran retaliated and seized a British tanker. This time, the US blinked.
The collaboration of Venezuela and Iran represents a significant challenge to US power. Both endure severe US sanctions. Both are blocked from the all-pervasive US banking system. Both are oil giants—Venezuela with the largest oil reserves in the world, Iran with the fourth largest reserves. Both have a national oil company that limits the way international companies can work with it. Elliott Abrams, US Special Representative for Venezuela, termed them “two pariah states”.
Washington has a stranglehold on Venezuela’s neck, with the goal of regime change. US sanctions are the reason Venezuela required emergency deliveries of gasoline. Its refineries have been shut down, unable to import materials needed for repairs. Washington has regarded Latin America as ‘America’s Backyard’ since the Monroe Doctrine staked out US control of hemisphere in 1823.
Canada has sanctioned Venezuela, too, adopting a similar attitude. Former Foreign Minister and now Deputy Prime Minister Chrystia Freeland claimed the Venezuelan crisis was unfolding in “Canada’s global backyard. This is our neighbourhood… That is why we have been so active.”
The US actively threatens military force and imposes unilateral trade and financial sanctions to torpedo the Venezuelan economy. Meanwhile, Canada trumpets Venezuela’s ‘democracy deficit’ and leads the Lima Group, providing a facade of international support. Canada and eleven Latin American countries formed the Lima Group in 2017, “to explore ways to contribute to the restoration of democracy… through peaceful and negotiated means.” The US is not a member but is active behind the scenes. Members include Brazil, Guatemala and Honduras, themselves questionable in the realms of democracy and human rights, along with Chile and Peru, two countries with large Canadian-dominated mining sectors.
The US-Canada “bad-cop good-cop” routine camouflages other stories involving both oil and gold. Venezuela nationalized its oil industry in 1976 to keep ownership and windfall profits in the country. Though its national oil company PDVSA welcomed joint ventures, US companies wanted to work independently and bring surplus revenues out of the country. Venezuela’s gold industry, with some of the largest deposits in Latin America, was nationalized in 2011. Previously, Canadian mining companies had invested heavily in Venezuela.
The Bolivarian Revolution led by former President Hugo Chávez tapped Venezuela’s nationalized wealth to make dramatic improvements in living standards, literacy, health and education. President Maduro continued Chávez’s policies but was hampered by legal actions from US oil companies and Canadian gold-mining firms and by the 2015 and 2020 collapse in oil prices.
While the Bolivarian revolution was anathema in Washington, Venezuela’s poor and underprivileged were enthusiastic. The elites were not, soliciting US help to return to a neoliberal approach to governance. The US obliged, making numerous attempts at regime change, the latest being in May 2020 when US-led mercenaries from Colombia sought to seize Maduro and fly him to the United States. The US had offered a $15 million bounty for doing so.
A constitutional attempt to oust President Maduro occurred in January 2019. The new Speaker of the National Assembly, Juan Guaidó, swore himself in as Interim President, challenging Maduro’s 2018 re-election as illegitimate. Clearly, he had US and Canadian support. Within hours, both countries recognized Guaidó. Shortly after, so did fifty other countries. Not surprisingly, they comprise the Lima Group and other US allies. Meanwhile, more than 130 other countries continue to support Maduro. Latin America is divided, as is the European Union. Yet, international observers present at the election verified there were no voting irregularities, contrary to Western allegations. Venezuela’s main opposition coalition boycotted the election. The sanctions gave the opposition a strong incentive neither to participate nor to negotiate.
US sanctions are crippling. After the Obama Administration targeted individual Venezuelans, President Trump upped the ante, imposing a succession of financial and oil sanctions. They freeze Venezuelan funds held abroad in banks and financial institutions. They prohibit US institutions from dealings in debt or equity issued by Venezuela or its national oil company PDVSA. They restrict PDVSA’s large US subsidiary CITGO from remitting dividends to Venezuela. They ban Americans from engaging in Venezuela’s gold sector. They compel all US exploration and oilfield service companies to abandon Venezuela. Moreover, the sanctions effectively bar Venezuelan oil from the US market. Venezuelan exports then foundered. In 2019, they were the lowest in 75 years.
Former National Security Advisor John Bolton bragged the sanctions would block PDVSA assets totalling $7 billion, and PDVSA would lose $11 billion of export proceeds in 2019. Preposterously, he claimed the sanctions were intended to alleviate “the poverty and the starvation and the humanitarian crisis” gripping Venezuela. More candidly, he told Fox News, “It will make a big difference to the United States economically if we could have American oil companies invest and produce the oil capabilities in Venezuela.”
Russia and China had long provided a lifeline, making huge investment loans to Venezuela and receiving crude oil in repayment. They played a crucial role in marketing Venezuelan oil, as PDVSA turned increasingly to the Asian market to replace US refiners. Russia’s Rosneft and Chinese companies traded the oil as middlemen. Rosneft also supplied diluent no longer available from US refiners—a vital component in extra-heavy crude production, reducing its viscosity and enabling transportation.
In 2019, Washington resolved to end this lifeline. It warned non-American companies worldwide to cease business with Venezuela. It pressured into bankruptcy two Mexican companies trading with Venezuela in an oil-for-food swap. It sanctioned four shipping companies for carrying Venezuelan crude. It forced Chinese companies to suspend imports, though they evidently continue importing indirectly (ship-to-ship transfers). When Washington sanctioned two Rosneft subsidiaries, the company sold its Venezuelan assets to a Russian state enterprise which assumed the risk. Rosneft is a giant oil company and, while the Russian government is its largest shareholder, BP and Qatar have significant shareholdings too.
Washington and Ottawa saw the coronavirus pandemic as a new opportunity to unseat Maduro. They refused to lift sanctions, even temporarily. Instead, Washington charged Maduro and other top Venezuelans with narco-terrorism and drug trafficking, offering huge bounties for their arrest or conviction. On April 1, an auspicious date, Trump doubled the US deployment of warships and surveillance aircraft in the Caribbean. Offering no evidence, he alleged Venezuela had become a primary sea route for cocaine to the United States.
The result of all these sanctions is great hardship to the Venezuelan people. A 2019 study by US economists Mark Weisbrot and Jeffrey Sachs documented the overwhelming impact on the civilian population. Sanctions have prevented stabilization of the economy, disproportionately harmed the poorest and most vulnerable Venezuelans, and caused more than 40,000 deaths.
The enormous effort to secure regime change in Venezuela raises a question: Why is Venezuela viewed as problematic–and not Brazil or Honduras whose democracy deficits are obvious? Are Venezuela’s resources the underlying reason? Past US interventions have resulted in tragic consequences and ongoing chaos (Afghanistan, Iraq, Libya, Syria, Ukraine). Under the Charters of the United Nations and the Organization of American States (OAS) no country may interfere in the internal affairs of another. Canada and the US have signed both charters. Neither the UN nor the OAS has endorsed the sanctions. Only Venezuelans can decide who governs their country.
Conveniently, Canadian oil sands have benefited from the sanctions, as US refiners substituted Alberta bitumen for Venezuelan heavy crude. The severe sanctions go beyond economic competition—they represent economic warfare and a method of “collective punishment” against Venezuelans. Sanctions also impede the required political process needed within Venezuela itself.
Is this the policy Canadians want our government to pursue? Iran and Venezuela have shown courage in challenging US hegemony against all the odds. Where is Canada’s courage?
John Foster is the author of Oil and World Politics: The real story of today’s conflict zones (Lorimer Books, 2018).