Financial Blockade: Chronology of a Strategy to Destroy Venezuela

Misión Verdad against Venezuela are real and palpable mechanisms of destruction of the State, identity and, with it, of Venezuelan society. They form part of a war strategy based on the application of diverse resources and sophisticated tools of financial hegemony against fundamental nodes of national life. Although in Venezuela there are no bombs falling and no U.S. Marines are seen disembarking along the coasts, there is plenty of evidence of ongoing national and international aggression by corporate and political sectors.

In this context, since 1999, the internal manoeuvres of anti-Chávezism have alternated between low-profile mechanisms such as boycott or corporate disinvestment and forceful actions such as the April 2002 coup or the oil strike.

Since 2015, when the then president of the United States, Barack Obama, declared Venezuela as an “unusual and extraordinary threat to the national security of the United States,” the political vanguard and leadership of the anti-Chavez transnational elite that governs in Washington became indisputable, they gave greater firmness to a series of measures that have not only determined the destruction of the national economy but also seriously modified the cultural imagination.

What is understood in its right dimension with the declarations of Jack Lew, former Secretary of the Treasury during the Obama Administration, who affirmed that “sanctions are the silver bullet of U.S. foreign policy because they are much more effective and are cheaper to subjugate their enemies than conventional power, because they have influence in the U.S. financial markets, the central nerve of the globalized economy. Sanctions, thus, are measures of siege to strongholds, as in the medieval era, updated to this new era of intelligent, technologized, globalized power, where each node that touches power is in service of defeating its enemies, according to Lew.

2015: The United States assumes command of anti-Chavism

The financial blockade has mutated from the attack on debt, through the isolation of the U.S. financial system, to the application of espionage techniques that pursue Venezuelan transactions and withhold funds destined for the import of food and medicine.

Since then, Venezuela has suffered the effects of the decline in oil prices due to the United States’ agreement with Saudi Arabia to aggressively increase oil production in order to lower prices and impact important producing countries such as Venezuela, Russia and Iran.

In addition, the economy began to deteriorate due to a lack of income and a Miami-based company created in 2010, called Dólar Today, which artificially devalued the value of the currency in order to start an inflationary escalation. Venezuela lost approximately 60% of its national income that year.

The Executive Order (13692) signed by the Obama Administration in March 2015 launched the financial blockade actions against Venezuela and, with it, the U.S. government made the economic attack against the country a legal matter. Based on the Emergency Law of International Economic Powers, activated at the constitutional level, to provide the administration in turn with tools to “defend” itself from the threat.

Under this pretext, the White House placed its financial system, through the Treasury Department, on alert for Venezuelan financial operations.

Under the pretext of blocking the mobility of unproven personal accounts of seven Venezuelan officials, this legal instrument has attacked the use of the U.S. financial system to import food and medicine by the Venezuelan state.

At the same time, the risk rating agencies, created by the United States to destabilize sovereign countries, published a global map of ” high-risk” countries. This was to complement the economic-financial siege against the Venezuelan government’s recovery plans as a result of the fall in oil prices.

Venezuela was catalogued by the French financial company Coface as the country with the highest country risk in Latin America, similar to African countries that are currently in situations of armed conflict. The “study” was carried out based on the negative ratings of the three major U.S. rating agencies, Standard and Poor’s, Fitch Rating and Moody’s, which were largely responsible for the global financial collapse of 2008.

From 2015 onwards, the country-risk variable began to increase artificially in order to hinder the entry of international financing and, until the first half of 2018, these three major rating agencies have stepped up their attacks against Venezuela, omitting the appropriate debt payments in order to push the country towards default and project a situation of insecurity for international investment.

In this context of siege based on social discontent produced by the fall in oil prices, scarcity, shortage and the wave of looting, the anti-Chávez won the majority in the National Assembly and established a higher base, now from parliamentary instance, for the financial aggressions against Venezuela.

2016: Financial siege and the default that did not arrive

In April 2016, the International Monetary Fund warned of the “economic catastrophe” in Venezuela through a report, generating expectations of collapse, inflation and scarcity to legitimize the actions of economic war carried out by Fedecámaras and Consecomercio, the country’s two main private entities.

The IMF estimates that prices in Venezuela will rise 17.700% in two years

– EL PAÍS America (@elpais_america) April 18, 2017

The National Assembly, in contempt for incorporating three members whose elections were demonstrably fraudulent, approved legal instruments in May and August that declared “null” oil contracts, international investments and the issuance of new debt by the country, thereby attempting to prevent fresh money from entering the coffers of the State.

During 2016 and 2017, Venezuelan accounts in the United States were closed by large private banks, such as Citibank and JP Morgan, because Executive Order 13692 empowered the Treasury Department to use surveillance mechanisms for Venezuela’s financial transactions in the United States.

After the pretext of protecting Venezuela’s financial system from “corrupt officials,” it sought to isolate Venezuela from the U.S. financial system and hinder both its imports and the payment of foreign debt. Commerzbank, Germany’s second-largest bank, also joined in.

In July 2016, the country risk index EMBI, created by JP Morgan Bank, ranked Venezuela with the highest score in the world (2640 points) above countries at war like Ukraine, even though the Venezuelan state paid $6 billion in foreign debt that same year. In September, PDVSA made an offer to swap US$7.1 billion in bonds in order to ease its payments, and the three major U.S. risk rating agencies sought to frighten investors by declaring default if they agreed to the state-owned oil company’s proposal.

2016 closes with the highest country risk in the WORLD – JPMorgan (EMBI+) : #VENEZUELA hoy 30/12/2016 2.168 Points

– Markets and Shares (@marketsyaction) December 30, 2016

In November, JP Morgan issued a false default alert on an alleged PDVSA debt default of 404 million dollars to generate fear in the financial world and damage the image of the state-owned company. The US oil company ConocoPhillips also sued PDVSA before a Delaware court for its bond swap operation to frighten participants and thus cause the operation to fail.

In this aggressive environment against the Venezuelan economy, inflation through the Dólar Today effect closed at approximately 800%, according to figures leaked to some international agencies.

2017: Embargo, Failed Violence, and More Destabilization

In April 2017, the illegally elected president of the National Assembly, Julio Borges, called on more than 20 international banks to sever their economic and financial ties.

While this was happening, regional elections were held with more than 11 million votes in the entire process. Chavismo won 19 out of 23 governorates in elections called by the ANC, in which anti-Chavism political groups such as Acción Democrática and Voluntad Popular participated.

In spite of this, even though in the last three years Venezuela had not failed to honor its international commitments, in November the European company Euroclear, founded by JP Morgan, seized 1,650 million dollars that were destined for the purchase of food and medicine.

The Americas Committee of the International Swaps and Derivatives Association (ISDA) declared Venezuela in default, omitting to pay 70 billion dollars in debt in the last two years. While JP Morgan again increased Venezuela’s country-risk to 2,989 points, the highest figure since 2014, when it stood at 1,458 points.

Risk-rating agency Standard and Poor’s declared Venezuela in “selective default” because it was unable to honor debt commitments as a result of the sanctions limiting the country’s financial transactions in the U.S. payment system. With these maneuvers they tried to open the door to confiscate PDVSA’s assets.

That same November the U.S. bond manager Wilmington Trust accused Corpoelec of not cancelling debt interest in the order of 27 million dollars, just when the country was experiencing a total blockade of means of payment in the U.S. financial system.

As a consequence, a shipment of Primaquina, a medicine used to treat malaria, did not enter the country due to the blockade of a Colombian laboratory called BSN Medical and 23 transactions in the international financial system were returned: a total of 39 million dollars for food, basic supplies and medicines.

In December, 19 other Venezuelan bank accounts abroad were arbitrarily closed by U.S. banks, preventing payments to creditors, while anti-Chávez decided not to participate in the mayoral elections after its defeat in the October regional elections. Chavismo again sweeps away more than 95% of all mayors.

President @NicolasMaduro thus responds the people of Táchira to your loyalty.
Nobody or nothing stops them to vote for the #CONSTITUYENTE

– Javier Alexander Roa (@RoaJavier) July 30, 2017

2018-2019: A huge and multifactorial attack

In January 2018, the current CIA chief and U.S. Secretary of State Mike Pompeo said at a conference at the American Business Institute that the financial sanctions against Venezuela had been coordinated by him directly with President Trump.

At the same time, eleven Venezuelan and PDVSA bonds, worth 1.241 billion dollars, could not be paid to their creditors because of the obstacle of the sanctions. The National Assembly (still in contempt) signed an agreement in which it criminalized the Venezuelan cryptoactive Petro, reaffirming its interest in keeping the country without sources of financing.

In March, the Trump Administration, by executive order, declared illegal the purchase or other Petro-related transactions by U.S. companies and citizens. With this maneuver they legalized the agreement of the National Assembly affecting the initial pre-sale and the resources that would enter the country in a context where another 2,500 million Venezuelan dollars were retained in U.S. banks. Much of this money was to be used to pay international creditors.

In that month, fifteen Venezuelan athletes were unable to travel to the qualifying event for the 2018 Central American and Caribbean Games (CAC) in Mexico due to financial sanctions that prevented them from processing payments for logistics. Once this stumbling block was overcome, the other drama was that Colombia blocked its air space for these athletes to make the trip.

The Colombian government blocked 400,000 kilos of food in CLAP boxes that were to enter the country to strengthen this program with which more than 6 million families are fed throughout the country.

In April, the United States and Colombia created a financial intelligence group to block the import of food and medicines, internationalizing financial suffocation. And in May, the U.S. oil company ConocoPhillips executed a series of embargoes against PDVSA’s assets for claiming a 2.4 billion dollar arbitration award demanded of the International Chamber of Commerce.

This maneuver not only affected its installed capacity in the international arena, but also limited the country’s income from the sale of crude oil, intensifying the damage to the heart of the national economy and seeking to further dissolve the social fabric that sustains part of the stability.

This was joined by the Canadian-owned mining company Rusoro, which filed a lawsuit seeking to join the assets of Citgo and some of PDVSA as payment for an arbitration award of 1.2 billion dollars. The Canadian contractor SNC-Lavalin also sued PDVSA for more than 25 million dollars for alleged non-payment of debt, before a New York court.

Thus, the United States reinforced its policy of financial suffocation and sequestration of Venezuelan resources by limiting both the sale of Venezuelan oil assets on U.S. soil and the settlement of accounts receivable, in response to the presidential triumph of Chavismo on May 20.

In turn, the countries of the Lima Group agreed, following Trump’s policy, to use the financial intelligence of their respective states to pursue Venezuela’s transactions, accounts and financial operations. The result of all this was a steep decline in imports, which went from 60 billion dollars a year between 2011 and 2013 to a total of 12 billion in 2017.

One of the culminating points of this phase of aggression, without a doubt, is the embargo of PDVSA’s company on U.S. territory, Citgo, announced by the director of the National Security Council, John Bolton, in keeping with the imposition of an oil embargo against the country.

This seeks to further damage the ability to obtain financing for Venezuela and, therefore, pay for imports, given that the effects of this virtual embargo are immediately “atrocious”, according to The New York Times, considering that in the first week of Venezuelan oil sales to the United States were reduced by 40%.

Thus, the scenario of a “humanitarian crisis” has been configured that serves the interventionist pretensions that underpin Juan Guaidó’s interim in the framework of a definitive strategy to assault resources and national dignity.

Deconfiguring the country is the fundamental objective

Historical data show that the financial blockade has set the stage for the intervention and international recognition of a parallel government (Libya scenario), create economic incentives for mercenary movements stimulated by the CIA (Yugoslavia scenario), weaken the armed force of a government not aligned with Washington and strengthen the firepower of paramilitary groups (Syria scenario), fracture the political-military high command using the insecurity of the population as a means of political pressure (Cuba scenario) or the affectation of the oil industry and internal conditions to impede energy development as a political weapon (Iran scenario).

The financial blockade against Venezuela is aimed at the massive destruction of the national economy, the dismantling of the social achievements of the Chávez era and the devastation of the poorest population which, since 1998, has proved to be the most solid political base of Chavismo, and especially the undermining of national confidence that the country’s internal strengths (its population and strategic resources) could provide the necessary resources to regain stability. In short: to deny altogether the right of a nation to constitute itself in the face of difficulties, and to decide its own future beyond the decisions taken in a few offices far from the country.

Translation by Internationalist 360°