Archive for the ‘Venezuela’ Category



Venezuela Joins the Axis of Evil

Posted by at 11:44 pm on November 12, 2014
Category: BISVenezuela

Venezuela Capitol Building by Márcio Cabral de Moura via [CC-BY-2.0 (]It is probably safe to say that no one was particularly shocked earlier this week when the Bureau of Industry and Security added Venezuela to the list of countries (currently Russia and China) to which certain dual use items may not be exported if these items are for military end use. The specific items subject to this restriction are those listed in Supplement 2 to Part 744 of the Export Administration Regulations. These items include, among other things, certain composite materials, lasers, and aircraft navigational equipment.

The rule was adopted in final form and went into immediate effect on November 7.

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Sen. Landrieu Attempts to Clarify the Record … But Doesn’t

Posted by at 8:28 pm on September 10, 2014
Category: Economic SanctionsOFACSDN ListVenezuela

Sen. Landrieu [Official Portrait, Public Domain]

On Sunday, in Lafayette, LA, The Advertiser printed an opinion from Sen. Mary Landrieu entitled, “Sanctions, as written, will hurt La. workers.”  While we hoped Sen. Landrieu was writing to clarify the record in response to our post last week, she was writing instead to respond to an earlier opinion in The Advertiser written by Sen. Marco Rubio and Rep. Bill Cassidy.

Sen. Landrieu began by referring to the Lake Charles, LA oil refinery as “owned by Citgo, a Venezuelan company with a strong and respected reputation in Louisiana.”  Citgo, however, is quite clearly a U.S. company, founded and incorporated in the United States over a hundred years ago.  It became wholly owned U.S. subsidiary of Petróleos de Venezuela, the Venezuelan national oil company, in 1990, but remained a U.S. company.  The hawkish view on U.S. sanctions is, of course, that Citgo, even though a U.S. company employing U.S. persons, is not immune from the conduct of its foreign parent if, in this case, Petróleos de Venezuela’s conduct were found to be at variance with U.S. economic sanctions and was added to the SDN List, its subsidiary Citgo would be equally blocked and unable to employ U.S. workers.

In her opinion, Sen. Landrieu continued to defend her opposition to the Venezuela Defense of Human Rights and Civil Society Act of 2014 because she believed that “the legislation as written was too vague” and “will continue to oppose it unless the language of this resolution makes crystal clear that there will be no threat to the [Lake Charles] refinery.”  But, as we pointed out last week, Sen. Landrieu’s references to amending the Act have led to no clear (crystal or otherwise) suggestions on how to do so.  We think we can help her out.

The Act, like other sanctions bills, already permits the President to waive the application of sanctions against a person if he determines that such waiver is necessary for the “national security interests of the United States.”  The amendment we recommend to Sen. Landrieu is to rewrite the waiver in Section 5(c)(1) to read, “The President may waive the application of sanctions under subsection (b) with respect to a person if the President determines that such a waiver is in the national security or economic interests of the United States.”  By adding simply “or economic” to the waiver condition, the President has another avenue to defend not imposing sanctions against otherwise sanctionable foreign persons.  Again, as we pointed out last week, the President would not take lightly a decision to block Citgo’s assets in Louisiana or anywhere else in United States.  Congress, moreover, would be hard-pressed to oppose a waiver if the President were able to show that imposing sanctions would have tremendous economic ramifications.

If Sen. Landrieu wants to take the position that U.S. economic sanctions against human rights violators can’t come with a cost that significantly harms the U.S. economy, there is a way to protect that interest.  Whether or not her position wins the day on the Senate floor, we think the only practical way to do so is to give the President more discretion in how he may choose not to impose sanctions.  A tidy addition of the two words “or economic” should do the trick and put to bed another odd episode of “How a Bill Becomes a Law.”


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Bizarre Sanctions Battle Brews in the Bayou

Posted by at 9:34 am on September 6, 2014
Category: Economic SanctionsOFACSanctionsSDN ListVenezuela

By User:Lunarsurface (Own work) [GFDL (, CC-BY-SA-3.0 ( or CC-BY-SA-2.5-2.0-1.0 (], via Wikimedia Commons

With the calendar turning to September, Sen. Mary Landrieu will be displayed prominently in election media coverage as an incumbent in the proverbial hot seat.  The most intriguing fodder her opponents have used against her has been her curious opposition to the Venezuela Defense of Human Rights and Civil Society Act of 2014.  The House passed its version by voice vote in May, but the Act has stalled in the Senate principally because Landrieu’s opposition has derailed others from bringing the Act to vote through unanimous consent.

The Act includes sanctions against individuals and entities associated with the Venezuelan government that the President determines committed, directed or “materially assisted, sponsored, or provided significant … support for” those who have committed or directed human rights abuses against anti-government protestors in that country.  Like many similar sanctions bills, Congress would give the President wide discretion in determining whether persons meet standards like “materially assisted” or provided “significant” support.  The Act would certainly not require the President to designate any company affiliated with the Venezuelan government as an SDN and, as a result, block their U.S. assets.

Sen. Landrieu, however, has opposed the bill out of fear that 2,000 workers at a Citgo oil refinery in Louisiana may be at jeopardy.  She has said that “once a simple sentence that protects these hard working Louisianans is added to the bill, I will be happy to support the legislation.”  So, what would Sen. Landrieu’s “simple sentence” look like?  It can’t possibly be a carve out for 2,000 workers at a Louisiana Citgo refinery; then every member of Congress with a Citgo presence in their state would want similar protection for their constituents.  It can’t possibly be a carve out to protect any U.S. companies owned by a Venezuelan parent, like Citgo is; then the sanctions would be bereft of any heft to affect possible change in Venezuela.

This week, Sen. Marco Rubio entered the fray in a letter to Sen. Harry Reid to ensure the Act is brought to the Senate floor for a vote over Sen. Landrieu’s opposition.  In his letter, Sen. Rubio described the Act as “target[ing] individuals only and pose[] no threat to American jobs or Venezuelan firms.”  Not so fast, Marco, the Act includes sanctions against “persons.”  Someone forgot to tell Sen. Rubio that every OFAC sanctions regime defines persons to mean individuals and entities.  Someone also forgot to tell him about the three Citgo storage facilities, hundreds of gas stations and thousands of affiliated jobs the company has in Florida.

One upshot of this situation is that members of Congress don’t understand how U.S. economic sanctions work.  It is odd that Sen. Landrieu has stuck her political neck out in a situation where the President would be the one under the Act who would have to designate Petróleos de Venezuela, Citgo’s Venezuelan parent, as an SDN if he determined it met the conditions under the Act.  Doing so would not be a decision taken lightly and would have repercussions beyond just Louisiana (ask any Boston Red Sox fan about what would happen to the Citgo sign above left field).  It is also odd that Sen. Rubio would put his name to a letter that declares no U.S. jobs would be threatened by these sanctions.  The fact is that threat remains under the Act, no matter how unlikely, and the President, not Congress, would be in control of imposing sanctions.

A simple moral to this story is a classroom adage: Read Carefully and Think Critically.  Here’s hoping politicians start doing a little bit more of both.

Clif adds: In my somewhat more cynical view, the likelihood that members of Congress will ever “Read Carefully and Think Critically” is exactly equal to the likelihood that I will ever debut as Wotan in a production of The Ring Cycle at the Met.

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Making Law By Press Conference

Posted by at 8:23 pm on June 8, 2011
Category: Venezuela

Ileana Ros-Lehtinen
ABOVE:Asst. Sec. Steinberg

On May 24, the State Department announced sanctions against a number of companies including Petróleos de Venezuela (“PDVSA”). According to the State Department press release, PDVSA was sanctioned under the Iran Sanctions Act (“ISA”) of 1996, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (“CISADA) of 2010 because of alleged shipments of a gasoline additive to Iran between December 2010 and March 2011. The specific sanctions imposed appear to be, at least according to the press release, a ban on U.S. government procurement, Ex-Im Bank financing, and the grant of any export licenses to PDVSA.

The exact scope of these sanctions is unknown because as of today, more than two weeks later, the State Department hasn’t done anything but issue a press release, mention the sanctions in a special press briefing by Assistant Secretary of State James Steinberg, and provide atelephonic background briefing to certain members of the press. But a Federal Register notice? Nope. The State Department hasn’t even filed the notice for future publication in the Federal Register. Without such filing, under section 1507 of the Federal Register Act, the sanctions have no effect against a person unless the State Department can prove that they have actual notice of the sanctions.

Leaving aside the technicalities of the Federal Register Act, administrative action solely by press release violates the basic principle that this is a country of written laws that are not secret and are available to everyone. No matter how annoyed the Department of State is with Hugo Chavez and Iran, that is no reason to suspend these basic principles.

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Arizona Man Indicted for Exporting Military Aircraft Engines to Venezuela

Posted by at 8:52 pm on November 4, 2010
Category: Arms ExportCriminal PenaltiesVenezuela

OV-10 BroncoAn Arizona man and his company Marsh Aviation have been indicted for conspiring to provide defense services to the Venezuelan Air Force and exporting military aircraft engine to Venezuela without the required licenses. The engines in question were Garrett T-76 turboprop engines used by the Venezuelan Air Force’s Bronco OV-10 multi-mission aircraft.

According to the indictment, Marsh Aviation was contacted on March 5, 2007, by a former officer of the Venezuelan Air Force who offered to represent the company before the Venezuelan Air Force with respect to the T-76 engines. The former officer acknowledged the U.S. arms embargo against Venezuela but stated that he knew of ways to avoid the embargo. Three days later $1.8 million dollars was wired into the personal account of the CEO of Marsh Aviation.

Thereafter in May 2007 there was further correspondence between Marsh and the former Venezuelan officer regarding the “completion” of Marsh’s contract to overhaul and to upgrade the T-76 engines. Thereafter, the engines were disassembled and exported to Venezuela as parts for the TPE331 engine, the civilian version of the T-76. A Marsh Aviation employee was then sent to Venezuela to put the engines back together.

The indictment states that the conspiracy began in November 2005 which provides some additional information as to what might have been going on here. The arms embargo against Venezuela went into place on August 17, 2006. What may have happened here was that the Venezuelan engines were shipped to Marsh in late 2005 and were still there when the embargo went into effect. Also it is likely that Marsh had finished some of the overhaul but wasn’t going to be paid until the engines were delivered to Venezuela. The arms embargo effectively confiscated from Marsh Aviation the money it was due under the contract.

When Marsh was contacted by the former Venezuelan officer, who likely was the one who cooked up the T-76/TPE331 switcheroo scheme as a means to for “completion” of the contract, Marsh jumped at the idea. Marsh might even have believed that the scheme was legal given the near identity of the two engines. Venezuela then sent Marsh $1.8 million dollars three days later. And the rest is history.

Granted this is largely speculation on my part. But it seems a reasonable speculation. And it is a reminder of one of the risks of defense exports — namely, that a U.S. exporter can be left holding the bag when an arms embargo intervenes between the beginning and end of a contract that will require the export of a defense article.

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Copyright © 2010 Clif Burns. All Rights Reserved.
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