Venezuela OFAC Sanctions Program

Venezuela OFAC Sanctions Program

The Venezuela-related sanctions program implemented by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) represents an important part of the U.S. government’s policy towards Venezuela. These sanctions aim to pressure the Maduro regime in Venezuela while also trying to avoid harming the people of Venezuela.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. The Venezuela-related sanctions specifically target individuals, entities, and sectors of the Venezuelan economy connected to the Maduro regime and other bad actors. The sanctions use the blocking of assets and restrictions on transactions and trade to accomplish these goals.

Background on U.S.-Venezuela Relations

The United States has had complicated relations with Venezuela going back many decades. During the 20th century, Venezuela was a major oil exporter to the U.S. and an important economic and political partner in Latin America. But tensions grew over ideological differences, especially after Hugo Chavez was elected president of Venezuela in 1998.

Chavez pushed a socialist and anti-American agenda for Venezuela that was continued by his successor, Nicolas Maduro, who took power in 2013. The Maduro government cracked down on political dissent and expanded the state’s role in Venezuela’s economy. The U.S. government has accused Maduro of corruption, human rights abuses, and undermining Venezuela’s democracy.

As the political and economic situation in Venezuela deteriorated, the U.S. increasingly used sanctions as a foreign policy tool. Major sanctions programs were enacted in 2014, 2017, and 2019 targeting Venezuelan individuals, entities, and sectors of the economy linked to the Maduro regime.

Legal Basis for Venezuela Sanctions

The legal basis for the Venezuela sanctions comes from several sources:

• Executive orders issued by the President based on authority granted by federal laws like the International Emergency Economic Powers Act (IEEPA)
• Public laws passed by Congress, like the Venezuela Defense of Human Rights and Civil Society Act of 2014
• Determinations made by the Secretary of State related to narcotics trafficking and terrorism

Some of the major executive orders underpinning the Venezuela sanctions program are E.O. 13692 from 2015, E.O. 13808 from 2017, and E.O. 13884 from 2019.

Types of Venezuela Sanctions

The Venezuela sanctions program utilizes different types of sanctions tools:

• Asset blocking – U.S. persons are prohibited from engaging in transactions with blocked persons and must freeze any assets blocked persons have under U.S. jurisdiction.
• Trade restrictions – Restrictions on exports, imports, financing, etc. related to dealings with Venezuela.
• Entity listings – Certain Venezuelan companies and organizations are put on restricted entity lists like the Specially Designated Nationals (SDN) list.
• Visa restrictions – Individuals connected to the Maduro regime can have their U.S. visas revoked or be barred from entering the U.S.

While the Venezuela sanctions have increased over time, they are still considered “targeted” or “selective” sanctions rather than comprehensive sanctions that prohibit nearly all dealings with a country.

Goals of the Venezuela Sanctions

According to the U.S. government, the goals of the Venezuela sanctions program are to:

• Apply pressure on the Maduro regime to change its authoritarian behavior and hold free and fair elections
• Restrict the Maduro regime’s access to U.S. financial markets and sources of revenue
• Combat public corruption by Venezuelan officials and hold human rights abusers accountable
• Support the people of Venezuela and a transition to democracy

However, some policy experts argue that broad economic sanctions often hurt ordinary citizens more than regime elites. There is debate about whether the Venezuela sanctions have been effective in achieving U.S. goals.

Key Elements of the Venezuela Sanctions Regime

Some of the major elements of the Venezuela sanctions program include:

• Restrictions on dealings in Venezuelan government debt and equity – This cuts off sources of financing for the Maduro regime.
• Petroleum sanctions – Sanctions target Venezuela’s state oil company PDVSA which is a key revenue source.
• Gold sector sanctions – Sanctions prohibit U.S. persons from dealing in gold originating from Venezuela.
• Targeting regime elites – Sanctioning individuals connected to Maduro like government and military officials.
• General License exemptions – Some transactions are exempt from sanctions prohibitions through general licenses issued by OFAC.

While the sanctions have expanded, they still contain exemptions and carve-outs to avoid humanitarian impacts on the people of Venezuela.

Recent Developments

In 2022, the Biden administration eased some sanctions on Venezuela’s oil sector to allow Chevron to resume limited oil extraction operations in Venezuela. This was an effort to open up dialogue between the U.S. and Maduro government. However, broader oil sanctions remain in place.

License allowing Chevron to negotiate with Venezuela

In May 2022, OFAC issued a 6-month general license authorizing Chevron to negotiate potential future activities in Venezuela. This could pave the way for Chevron to be involved in Venezuela’s oil industry again if sanctions further ease.

Sanctions relief tied to negotiations

The U.S. has offered targeted sanctions relief to Venezuela if negotiations with the opposition restart and progress is made towards new elections. Some individual sanctions were lifted in 2022, but broader relief awaits political breakthroughs.

Expanded enforcement

OFAC continued enhanced enforcement efforts against sanctions evasion related to Venezuela in 2022-2023. This included designations of individuals, entities, aircraft, and vessels engaged in evasion schemes.

New SDN designations

Dozens of Venezuelan individuals and entities were added to the SDN list in 2022-2023, including government officials, governors, and companies like an airline and hotel chain. This expands sanctions’ reach.

Focus on gold sector

There is increased attention on targeting gold smuggling networks helping Venezuela evade gold sanctions. The U.S. is pushing Turkey and the UAE to crack down on Venezuelan gold imports.