Is Russia feeling lucky? Putin plays 'chicken' with Trump on Venezuela
President Trump's bold move to put Venezuelan dictator Nicolas Maduro on the narcoterrorist list, a la Manuel Noriega, is starting to trigger some reactions. The big one: All of a sudden Russia's working oil arm, Rosneft, has bailed out on its Venezuelan stake.
According to the Washington Post:
MOSCOW — Russia's state-controlled oil giant Rosneft announced Saturday that it had stopped operations in Venezuela and sold its assets to a company wholly owned by the Russian government, in a shake-up of a key economic lifeline for embattled Venezuelan President Nicolás Maduro.
Rosneft, Russia’s largest oil producer, had taken over an increasing share of Venezuela’s oil industry and reaped huge profits from exporting its crude, propping up the Maduro regime in the process.
But it was unclear whether the move would alter the Russian relationship with Maduro, or whether it amounted to an attempt to dodge U.S. sanctions and assuage the fears of Rosneft’s foreign investors.
Given that Rosneft and the Russian government are effectively the same beast, it seems likely that it was a move to skirt sanctions. The state-linked company said as much, declaring it a move to "defend" the interests of its investors.
If true, the idea would be to fob the losses from sanctions -- and the collapse in Venezuelan oil production itself -- and the low global price of oil at $25 a barrel -- and Venezuela's really low $10 price per barrel of its particular crude -- onto the Russian government, socializing the losses, while keeping any profits private.
Private, of course, means Russian cronies, such as Putin ally (albeit a cranky one) Igor Sechin, and all his pals and investors eager to get out from under the tough boot of U.S. sanctions. Rosneft is a real working company that tries to make profits. Whatever it was that "bought" the stake has no need to turn profits, it's a no-name government operation, and Russia hasn't told anyone what this state company's name is, which might be helpful for avoiding additional sanctions declarations, too. It's hard to sanction a specific company if you don't know its name.
According to Reuters:
The change of ownership announced on Saturday means any future U.S. sanctions on Russian-controlled oil operations in Venezuela would target the Russian government directly.
Which on the surface, suggests that Vladimir Putin is playing chicken with President Trump. "Come 'n' get me," his move seems to be saying.
Which is nonsense, given that Russia in a de facto way controls everything the cash cow Rosneft does, and presumably continues to profit (or at least hold above water in these low-oil-price days). This ought to go over real well back home.
Does Putin really think Trump is not going to sanction the entire Russian government? He must. So the sale is a move to defend his position.
But if so, he might be making a mistake.
Trump's harsh move on Maduro comes right at the time when the global international community was calling upon Trump to lighten sanctions on Venezuela, given the ravages of the coronavirus.
Instead of lighten them, Trump surprised them all and turned the screws on Maduro instead, as noted by Venezuelan dissident journalist Germania Rodriguez Poleo (who comes from a long line of journalists detested by Venezuela's dictatorship):
Interesting timing given the regime & some factions in the opposition and international community have been using the pandemic to lobby for relaxing of sanctions. This is the US response to that. https://t.co/brzA6hEXKy— Germania Rodriguez Poleo (@iamGermania) March 26, 2020
Germania's an entertaining Twitterer to watch, given her scorn for Western "experts" on Venezuela, who always seek to make characters like Putin, Castro and Maduro look reasonable.
The First-World Latin American Experts on their way to defend the Cartel de los Soles. pic.twitter.com/gX4qW8MZKn— Germania Rodriguez Poleo (@iamGermania) March 26, 2020
There may well be something very desperate going on here, because Russia is seeking to assure the Maduro regime. According to the Financial Times:
Venezuelan President Nicolás Maduro has trumpeted renewed Russian backing for his embattled government, suggesting that the exit of Moscow’s state-controlled oil company Rosneft to avoid US sanctions will not affect his most important overseas ally.
Rosneft said on Saturday it had passed all its assets in Venezuela to a new state-controlled Russian entity after the US Treasury sanctioned its trading arm as part of Washington’s campaign of “maximum pressure” to oust Mr Maduro and force fresh elections.
“I received a message from brother president Vladimir Putin, who ratified his integral strategic support for all areas of our [relationship],” the Venezuelan president wrote on Twitter. Russia’s ambassador in Caracas was more direct: “Don’t worry! It’s a transfer of Russian assets in Venezuela to the Russian government directly. We will continue together going forward.”
Russia has provided a vital lifeline for Mr Maduro’s government, allowing it to resist US sanctions despite a collapsing economy. The Kremlin has provided political support and weapons sales, while Rosneft has supplied most of the country’s gasoline and helped market Venezuelan crude overseas after regular buyers dried up when US sanctions were imposed.
Is this no-name Russia company going to have the same quality of expertise as the Rosneft operation? Probably unlikely. Which means the Russian lifeline to Venezuela is unlikely, too, even as Russia seeks to keep its strategic footprint in Venezuela and officially defend the Venezuelan regime. Putin may well have just been getting out, and trying to keep Rosneft as well as Venezuela afloat, something that can only invite another harsh Trump move.