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Venezuela Is Doing Business With Blacklisted Russian Companies And Congress Is Worried

At least three Russian companies operating in Venezuela are currently sanctioned by the US, sparking concern in Congress.

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CARACAS, Venezuela — Venezuela’s embattled government, increasingly alienated from its Latin American neighbors, has been doing business with US-blacklisted Russian companies, allowing Moscow to shore up its influence in the Western Hemisphere and raising bipartisan concern in Congress.

State oil company Rosneft, Gazprombank, the third-largest bank in Russia, and the military manufacturer Rostec were added to the US Treasury’s Office of Foreign Assets Control sanctions list in 2014 in response to Moscow’s support for rebels in Ukraine and annexation of Crimea.

Since then, Russia and Venezuela, two of the US’ main adversaries, have grown closer as the two have looked for ways to pull themselves out of the economic doldrums.

“There is cooperation at the highest strategic levels with Russia, not only in the energy, military, industrial and agricultural areas, but also in the political area,” Venezuela’s Foreign Minister Delcy Rodríguez told BuzzFeed News on Saturday.

Rodríguez's Russian counterparts echo that sentiment. There is “a new impetus to the entire range of Russian-Venezuelan relations,” the Russian Ministry of Foreign Affairs said in a statement in February, four months after the presidents of both countries met in Istanbul. According to the statement, there is an “intensive dialogue” between the two countries.

Venezuela is also working with energy exporter giant Inter Rao, which is not on the US’ blacklist.

The ties between Caracas and Moscow, strong under former Venezuelan president Hugo Chávez, have picked up a second wind under President Nicolás Maduro as Russia looks for markets outside the US’s influence that are unconcerned with the difficulty in dodging American sanctions. That in turn has begun to stir worries in Washington.

Sens. Ben Cardin and Marco Rubio introduced legislation addressing the crisis in Venezuela on Wednesday, including new financial sanctions on individuals “responsible for undermining democratic processes” and providing $10 million in humanitarian aid to the Venezuelan people.

The senators expressed concern over the transaction between Venezuela’s state-run oil company PDVSA and Rosneft. Rosneft might walk away with a 49.9% stake of Citgo, a US-affiliate of PDVSA, if the troubled Venezuelan oil giant defaults.

On Thursday, two members of the House Foreign Affairs Committee, ranking member Rep. Eliot Engel and former chairwoman Rep. Ileana Ros-Lehtinen, sent a letter to President Donald Trump urging him to push for a review of the situation in Venezuela at the United Nations Security Council.

As Venezuela spirals further into autocratic rule, growing insecurity, and a protracted shortage of food and medicine, pressure from governments in the Western Hemisphere to restore democracy continues to deepen, further alienating the oil-rich nation from the rest of the world. Rodríguez announced last week that Venezuela is withdrawing from the Organization of American States, which includes all 35 countries in the Western Hemisphere.

Sustained protests against Maduro’s rule intensified after the Supreme Court temporarily stripped Congress of its powers in March. Opposition leaders said the ruling intended to give Maduro the power to create joined oil ventures without congressional approval.

Prompted about this accusation, Rodríguez said that it was part of the international hysteria surrounding Venezuela in which the government is portrayed as authoritarian when it is, in reality, resolving internal conflicts peacefully and effectively.

Despite these assurances from Maduro’s administration, foreign companies have been leaving Venezuela in a steady stream, either because of government-mandated price freezes or out of fear of a state takeover. On Tuesday, GM announced it had ceased operations in Venezuela after a judge ordered the seizure of its plant last month.

While the country has inched closer to a full-blown shut down, Russia has been moving in to fill the vacuum left by departing companies.

“Maduro has very few options to turn to,” Shannon K. O’Neil, senior fellow for Latin America studies at the Council of Foreign Relations, told BuzzFeed News, while Russia, on the other hand, “is looking to expand its own political leverage and influence.”

The ongoing crisis in Venezuela has led to thousands of people emigrating to countries like Colombia, Panama, Mexico, and Spain. Those who remain in Venezuela are struggling to find and purchase food; the basic food basket, a list of necessary items for family units, in March cost just over one million bolivares, or more than 16 times the monthly minimum wage, according to local reports.

Tensions with the US have also deepened. In February, the US Treasury blacklisted Venezuelan Vice President Tareck El Aissami for allegedly aiding drug traffickers. President Donald Trump met at the White House with Lilian Tintori, the wife of one of the most well-known leaders of the opposition, Leopoldo Lopez.

Despite this, Citgo is still active in US politics. The company made a $500,000 donation to Trump’s inauguration. Corey Lewandowski, Trump’s initial campaign manager, signed a lobbying contract with Citgo last month through a firm he co-founded, Politico reported this week.

In the midst of renewed protests, Maduro announced that he would arm 500,000 militias around the country earlier this month. Venezuela has made several weapons deals with Rostec in recent years, raising concerns in the US of an arms race in Latin America.

“Sanctions have revitalized our efforts,” Rostec deputy general director Dmitriy Shugaev told Echo of Moscow radio station in 2015. “We continue to look for new markets, and we promote our cooperation with other countries, in particular with Latin America.”

Nowhere is Russia’s growing influence more visible than in Sabaneta, Chavez’s hometown, where a 20-feet-high sculpture of the late leader, has been erected. It was donated by Rosneft.

John Hudson contributed to this report from Washington.

Karla Zabludovsky is the Mexico bureau chief and Latin America correspondent for BuzzFeed News and is based in Mexico City.

Contact Karla Zabludovsky at karla.zabludovsky@buzzfeed.com.

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