PDVSA, once a beacon of what a national oil company should look like, has fallen into disgrace thanks to the "socialist" government of Hugo Chavez. As reported by various newspapers today, the State Department has sanctioned the state-run Venezuelan oil corporation PDVSA for its dealings with Iran.
According to the US Government, Venezuela violated the Iran Sanctions Act of 1996 when it recently shipped over $50 million worth of refined oil supplies to Iran.
This US Legislative act punishes any US or foreign company that invests over $20 million for developing petroleum resources in Iran. Clearly, the $50 recently invested by PDVSA more than doubles this congressional threshold. You can find the original text of the 1996 Act by clicking HERE.
In Section 3 of the 1996 Act, the Congress has declared that "it is the policy of the United States to deny Iran the ability to support acts of international terrorism and to fund the development and acquisition of weapons of mass destruction and the means to deliver them by limiting the development of Iran's ability to explore for, extract, refine, or transport by pipeline petroleum resources of Iran."
The same section also declares that the sanctions apply when a person or company has made an investment in Iran's oil section of more than $20 million "that directly and significantly contributed to the enhancement of Iran's ability to develop petroleum resources of Iran."
Clearly, PDVSA's proven actions fall within the scope of this legislation. And, as such, the United States Federal Government has the right, if not the legal obligation, to impose the sanctions upon Venezuela. Simple as that.
The three sanctions, however, do not go far enough to deter Venezuela from dealing with Iran. The sanctions are the following:
- Prohibiting PDVSA from gaining US government contracts (just PDVSA, not subsidiaries such as Citgo, so Venezuela can still make profit out of Citgo)- A ban on Export Import (Exim) Bank financing (not very important, as Exim Bank stopped lending to Venezuela before the PDVSA strike and lockout in 2003)
- A ban on new export licenses for PDVSA, whereas old ones will be respected.
Under current US law (the 1996 Act previously referred to), the State Department could have chosen from the following six sanctions:
- denial of Export-Import Bank of the United States assistance;
- denial of export licenses for exports to the violating company;
- prohibition on loans or credits from U.S. financial institutions of over $10 million in any 12-month period;
- prohibition on designation as a primary dealer for U.S. government debt instruments;
- prohibition on serving as an agent of the United States or as a repository for U.S. government funds;
- denial of U.S. government procurement opportunities (consistent with World Trade Organization obligations); and
- a ban on all or some imports of the violating company.
Clearly, these sanctions are not the harshest ones that the US government could have taken. The most catastrophic one would be banning all imports from PDVSA onto the US, because Venezuela exports over 40% of its oil to the US. And Venezuela's economy is highly dependent on the oil that it exports. So the US was actually just making a point with these sanctions, rather than just wanting to break Venezuela's economy.
Representative Connie Mack said that PDVSA is just one example of many about how the Venezuelan President supports Iran.
Echoing the article published yesterday by Ambassador Roger Noriega, I would like to see the United States and the world investigate the increasingly troubling and close relationship that Iran and Venezuela have. Mr. Noriega said in his article, with which I wholeheartedly agree:
Among the other activities that must be investigated fully and sanctioned urgently are:—Iran’s mining of uranium and other strategic minerals in Venezuela, Ecuador, Bolivia, and elsewhere.
—Iran’s use of the Venezuelan banking system to circumvent UN sanctions and to project its network into key neighboring countries, such as Brazil.
—Chávez’s material support for a sprawling Hezbollah terrorist network for drug-trafficking, fund-raising, recruitment, training, and operations in the Americas.
—The presence of Iranian military installations, weapons, and other equipment in Venezuelan territory.
Above all, the decision by the administration to sanction PDVSA’s illicit behavior is a tribute to the tenacity of congressional leaders who have demanded action that the administration hold Chávez’s lawless regime accountable. These measures demonstrate the critical role that law enforcement agencies will play in undermining this growing threat.
When proof is found and exposed of all of the above accusations, the "democratic" and "benign" charade of the Venezuelan government will at once fall off.
Not only does the government of Hugo Chavez has known ties to the Colombian FARC guerrilla, it also is increasing its alliance to international terrorists like Hezbollah and the Iranian government. All of this goes against international standards that sanction Iran. Remember that it's not only the US that has held the sanctions, it is also the United Nations through the Security Council, European Union, Canada, Australia, South Korea, Japan, Switzerland, etc.
The world cannot possibly tolerate a government that provides assistance to terrorists, drug traffickers, and governments with nuclear ambitions like Iran. The world cannot afford to have a government in Latin America that helps Iran circumvent international sanctions, favoring its internationally-feared nuclear program.
The State's Department's sanctions, while not going far enough to avoid Venezuelan dealings with Iran, are a starting point for all the investigation that should be taking place. They also are a harsh statement from a world power that show that Hugo Chavez's shenanigans with Iran will not be tolerated.
Citing Ambassador Noriega once more, I want to conclude this lengthy post with the following quote from his article:
"The significance of today’s announcement reaches well beyond the several targeted measures. It represents a powerful message to the financial markets, the banking community, and legitimate businesses in the United States and elsewhere that transactions with PDVSA or the government of Venezuela are very risky business.Starting today, the Venezuelan people will begin to see the dire consequences of Chávez’s liaisons with bandit regimes, terrorists, and drug traffickers. And, as the depth and breadth of Chávez’s alliance with Iran is exposed, the world will know that the regime in Caracas has become an indispensable co-conspirator with Iran’s terror network and illegal nuclear program."
