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US tightens financial sanctions against Venezuela

May 22, 2018

President Trump has signed new economic sanctions on Venezuela, banning the purchase of debt owed to Venezuela's government or its state-owned enterprises. The order follows President Maduro's contested election victory.

Venezuela Präsident Nicolas Maduro vom Parlament mit Sondervollmachten ausgestattet
Image: Reuters/J.Silva

The US ratcheted up pressure on Venezuelan President Nicolas Maduro on Monday by further tightening economic sanctions against the cash-starved leftist regime.

The latest round of financial restrictions bars American companies or individuals from purchasing any debt owed to the Venezuelan government or its state-owned enterprises. The order massively restricts the Maduro regime's ability to liquidate assets in a bid to raise much-needed revenue.

Read more: Venezuela's worthless currency turns into bags of money

The latest round of sanctions comes on the back of Maduro's contested re-election on Sunday. The US refused to recognize the election result after Venezuelan officials credited Maduro with taking 68 percent of the ballots, far ahead of his closest rival Henri Falcon, who only managed 21 percent. The main opposition party, the Democratic Unity Roundtable, boycotted the election.

After signing the sanctions order, US President Donald Trump called on Caracas to "hold free and fair elections."

Trump said in a statement: "We call for the Maduro regime to restore democracy, hold free and fair elections, release all political prisoners immediately and unconditionally, and end the repression and economic deprivation of the Venezuelan people."

Trump had previously imposed financial sanctions on individual Venezuelan officials, including Maduro, barring them from passing money through the US financial system.

Earlier, senior officials in the Trump administration decried the Maduro's re-election, with Vice President Mike Pence describing  the vote as a "sham," and Secretary of State Mike Pompeo accusing the leftist regime of committing an "an attack on constitutional order and an affront to Venezuela's tradition of democracy."

Venezuela top diplomat brands new sanctions 'illegal'

Venezuelan Foreign Minister Jorge Arreaza was quick to decry the freshest round of US sanctions, describing them as "illegal measures."

"(The sanctions) are madness, barbaric, and in absolute contradiction to international law," Arreaza said in a short statement. 

Venezuela has been hit by a prolonged economic crisis that has seen the inflation rise by a staggering 16,000 percent and prompted a severe shortage in basic supplies, such as food and medicine. Hundreds of thousands of people had fled the country in the past year, mostly into neighboring Colombia.

While blaming the crisis on US speculators, the Maduro regime has also scrambled to raise funds by selling off government assets.

"We now are seeing literally a smash-and-grab type of behavior by the regime, with anything that isn't bolted down, they're looking to sell off," news agency Reuters quoted an official, speaking on condition of anonymity, as saying. "The region has never seen a kleptocracy like this."

Read more: IEA: Iran, Venezuela may cause oil market turmoil

Maduro facing isolation

Other G20 countries on Monday also threatened to follow Washington's lead. Canada, Australia, Argentina, Mexico and Chile also stated they would not recognize the Venezuelan election result and would evaluate possible sanctions measures.

Meeting on the sidelines of a G20 summit in Buenos Aires, the six countries branded the election as "illegitimate" and said they were "considering possible political, diplomatic and financial sanctions against the authoritarian regime of Maduro."

Read more: Can Germany be a new home for young Venezuelans?

Also on Monday, 14 member states from the so-called Lima Group, a multilateral body seeking to find a peaceful end to the Venezuela crisis, announced they were recalling their ambassadors from Caracas.

The group of countries, most which are Venezuela's South American neighbors, said in a statement that they "do not recognize the legitimacy of the electoral process in the Bolivarian Republic of Venezuela that ended May 20 because it did not comply with the international standards for a democratic, free, fair and transparent process."

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dm/gsw (AP, Reuters, AFP, dpa)