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Yesterday the U.S. Treasury Department announced sanctions that effectively halt U.S. purchases of oil from Venezuela. It's the most drastic step so far in Washington's efforts to push out Venezuela's authoritarian President Nicolas Maduro and help opposition leader Juan Guaido. The U.S. says he is Venezuela's legitimate leader. Reporter John Otis looks at the role that oil sales play in this power struggle.
JOHN OTIS, BYLINE: Venezuela depends on oil for nearly all of its export income. And about 40 percent of its oil is sold to the United States for cash. Venezuela also sells oil to China and Russia, but those proceeds go towards paying back Venezuelan debt. That's why, for the Maduro government, the U.S. is such a vital customer. But now the U.S. has slapped sanctions on Venezuela's state-run oil company known as PDVSA. The U.S. claims that Maduro and his inner circle divert billions in PDVSA profits to their personal accounts and to pay off military officers said to be propping up Maduro's government. Here is U.S. National Security Adviser John Bolton at yesterday's announcement.
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JOHN BOLTON: We have continued to expose the corruption of Maduro and his cronies and today's action ensures they can no longer loot the assets of the Venezuelan people.
OTIS: The Maduro government had been receiving $11 billion annually in U.S. oil sales. Under the sanctions, any further U.S. payments would go not to Maduro but into bank accounts that could be used by Juan Guaido, Venezuela's self-proclaimed interim president. Thus, Maduro is unlikely to keep sending oil North, says Amy Myers Jaffe of the Council on Foreign Relations.
AMY MYERS JAFFE: You're Maduro and you need cash. You're not given cash to Guaido's account, so you're not going to send any oil here - period.
OTIS: On state TV Monday night, Maduro called the sanctions a prelude to a U.S. invasion.
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PRESIDENT NICOLAS MADURO: (Speaking Spanish).
OTIS: He said the U.S. government wants to strip Venezuela of its property, riches and money and then take over our territory. Maduro then addressed the U.S. president.
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MADURO: Donald Trump hunts up Venezuela.
OTIS: Analysts say that Venezuelan oil, which had amounted to 7 percent of American imports, can be replaced and they predict little impact on the U.S. economy. But the sanctions will likely cause even more agony for Venezuela. For starters, the U.S. is one of the few countries with refineries that can process Venezuela's heavy crude. Now Maduro must scramble to find new buyers for the half-million barrels that he used to sell to the U.S. on a daily basis. What's more, a cash crunch resulting from the U.S. sanctions could collapse Venezuela's oil industry, says Francisco Rodriguez, a Venezuelan economist.
FRANCISCO RODRIGUEZ: We will see, if Maduro remains in power, a decline of around 40 percent in Venezuelan oil production within the next few months.
OTIS: All this will mean more misery for average Venezuelans. But Bruce Bagley of the University of Miami says that if sanctions helped force out Maduro it would bring immediate relief to millions.
BRUCE BAGLEY: They're already being hurt. More than three million have left the country - inflation. And the conservative estimate is going to be one million. It could be as high as 10 million. People can't get medicine. They can't get food. They are being jailed and suppressed. There is nothing much left to preserve.
OTIS: However, as recent history in Cuba, Syria and North Korea shows, sanctions are no guarantee of regime change. For NPR News, I'm John Otis. Transcript provided by NPR, Copyright NPR.
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