Trump Administration Freezes the Assets of Venezuela’s Maduro Government and Issues 25 New and Amended General Licenses Authorizing Specific Transactions
V&E Export Controls Update, August 7, 2019
Late on August 5, 2019, President Trump released Executive Order 13884 blocking all property and interests in property of the Government of Venezuela. The executive order cites “continued usurpation of power by Nicolas Maduro and persons affiliated with him,” human rights abuses, interference with the media and freedom of expression, and “ongoing attempts to undermine Interim President Juan Guaidó” and the National Assembly he controls. In separate guidance on these upgraded sanctions, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) has made it clear that “U.S. persons are not prohibited from engaging in transactions involving the country or people of Venezuela,” so long as no blocked person or prohibited conduct is involved.
Property of the Government of Venezuela includes the property of entities owned or controlled, directly or indirectly, by the Government of Venezuela. Any such property that is in the United States, or in the control of a U.S. person, is “blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” The executive order prohibits providing goods or services to or for any blocked person and receiving any goods or services from a blocked person. Consistent with other sanctions regimes, the executive order also prohibits any transaction designed to evade or avoid the sanctions, any transaction that causes a violation of the sanctions, and any conspiracy to violate the sanctions.
In addition to these primary sanctions, the executive order allows the Secretary of the Treasury, in consultation with the Secretary of State, to block the property of any individual or entity that has materially assisted, supported, or provided goods or services to or in support of any person blocked under the executive order. This threat of secondary sanctions is directed at non-U.S. companies contemplating business with the Maduro regime.
This new executive order continues the progression of increasingly tougher sanctions against the Maduro regime in Venezuela, started by President Obama in 2015 with an executive order targeting human rights abuses and blocking an initial set of Venezuelan government and military officials. Since then, the Trump Administration has expanded the sanctions against Venezuela through six additional executive orders and by designating the state-owned energy company, Petróleos de Venezuela, S.A. (“PdVSA”), as a Specially Designated National (“SDN”) on January 28, 2019.
Along with the new executive order, OFAC issued 12 amended general licenses and 13 new general licenses authorizing certain transactions with specific Venezuelan-controlled companies and banks; transactions involving medicine, medical and agricultural equipment; transactions related to use of ports, airports, telecommunications, internet and mail; and other specific transactions. Among others:
- General License 28 authorizes activities necessary to wind down operations, contracts and other agreements with the Government of Venezuela through midnight on September 3, 2019.
- General License 31 authorizes transactions involving the Guaidó Government, the National Assembly, and ambassadors, representatives, corporate board members and others appointed by Guaidó.
As the Trump Administration continues to ratchet up Venezuela sanctions, companies wishing to do business in Venezuela should closely monitor these dynamic developments on a per-transaction basis. OFAC frequently amends general licenses issued under the Venezuela sanctions regime, as it does with other sanctions regimes, and activities that were authorized one day may be prohibited the next. The situation with Venezuela should be expected to evolve with little notice.
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