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The impending proxy war for oil in Venezuela

By Sonny Atumah

Ronald Wilson Reagan (1911- 2004) who served as the 40th President of the United States from 1981 to 1989,  said in his 1984 State of the Union address that: “A nuclear war can never be won and must never be fought.”

Oil-pipeline

That was why he negotiated and signed the Intermediate-Range Nuclear Forces (INF) Treaty INF in 1987, joining defunct Soviet Leader Mikhail Gorbachev in an effort to bring an end to decades of nuclear arms race led by the two countries.

The Intermediate-Range Nuclear Forces (INF) Treaty banned both countries from using short-and medium-range missiles. It was a wise counsel for today’s leaders who are beating the drum of war in Venezuela. Last week, the US President Donald Trump announced that the US would leave the INF he accused the Russians of violating. Russia then did the same.  Would Venezuela become the battle ground for an intending World War 3?

Battle lines seemed to have been drawn as the United States tried to catch President Nicolás Maduro of Venezuela with the sanctions noose and supporting opposition leader Juan Guaidó who declared himself interim President. Venezuela’s socialist leader Maduro, who has led the oil-rich nation since 2013 is supported by Russia.

Who benefits from the proxy war; the United States or Russia? On January 23, the 35 year old National Assembly leader Guaidó, was recognized by the United States, the European Union and Brazil as Venezuela’s leader with pressures for Maduro to step down. But what is the fate of 31 million people who have become victims of self-serving politicians in Venezuela? In his tweeter handle Trump said: The citizens of Venezuela have suffered for too long at the hands of the illegitimate Maduro regime.

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Today, I have officially recognized the President of the Venezuelan National Assembly, Juan Guaido, as the Interim President of Venezuela. It has been a tit-for-tat affair between the United States and Russia. With Trump’s mull over military intervention as an option in Venezuela, Russian President, Vladimir Putin in a clear warning to Washington after Trump’s military threats said: “We condemn any actions that are clearly terrorist in nature, any attempts to change the situation by force.”

Last month, Trump’s national security adviser John Bolton had ”5,000 troops to Colombia” written on his legal pad which was not disputed. In December, Maduro accused Bolton of White House’s plot to assassinate him and overthrow the Venezuelan government. Embattled Maduro is believed to have scoffed President Trump and holding on to power, in spite of threats to use the U.S. military to bring him down.

He had vowed to fight back with the aid of friendly countries. Venezuela’s military force is equipped with Russian tanks, guns and aircraft. The United States enjoyed that privilege years gone by. Russia may have successfully and strategically launched a political milestone in the Americas as two nuclear-capable, long-range Russian Tu-160 bombers reportedly arrived at Maiquetia International Airport outside Caracas, the Venezuelan capital last December, to possibly establish a permanent bomber base in Venezuela.

The Tu-160 Soviet nuclear-capable bomber, travels at maximum and cruise speeds of 2,220 and 960 kilometers per hour respectively, and boasting a flight range of around 12,000 kilometers depending on payload. It appears we are on a new nuclear arms race.

On January 28, President Trump imposed sanctions against Venezuela’s state-owned oil company, Petroleos de Venezuela, PDVSA seeking to cripple the government of embattled Maduro by cutting off its main source of revenue. The financial penalties are expected to block US$7 billion in assets and result in US$11 billion in export losses over the next year for Venezuela’s government, starving it from its most important source of revenue and foreign currency, primarily oil exports. U.S. companies would continue to import Venezuela’s oil, but the funds must not be accessible to the Maduro regime.

Sanctions on PDVSA potentially put at risk as much as a half-million barrels of oil that the United States imports from Venezuela. The United States also exports roughly 100,000 barrels of light oil to Venezuela daily, used for blending so heavy oil can be transported through pipelines to refineries and export terminals.

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PDVSA’s Citgo which operates three refineries with a combined ability to process about 800,000 barrels per day of crude oil into fuels in the U.S. would continue to operate, but revenue must be placed in an escrow account in the United States. Venezuela pays for arms with oil. As the Venezuelan economy went down, it is still struggling to repay its Russian loans of more than US$6 billion. Half is owed to the Russian state with the other half owed to Rosneft by PDVSA.

As Venezuela fell behind on debt payments in 2017 Russia became Venezuela’s lender of last resort. With Citgo which appears to have been the collateral, if sold, could be worth between $6 billion and $9 billion. Russia may lay claim to almost half of a major U.S. oil giant, which has strategic and security implications. Venezuela has the largest oil reserves in the world. The crisis is all about oil!


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