VENEZUELA’S most prized and lucrative foreign asset, the US-based oil subsidiary CITGO, is on the brink of being broken up to satisfy creditors against the Venezuelan state. The move is part and parcel of the US government’s drive to destroy its economy and bring about regime change in the country.

In pursuit of this goal, the US government has since 2017 imposed crushing economic and trade sanctions on Venezuela, including an oil embargo, a blanket ban on all dealings with Caracas, secondary sanctions and freezing or seizing a number of Venezuelan assets abroad.

The illegal sanctions have resulted in losses of $150 billion to the country, while around $11bn in deposits in banks and funds abroad have been seized or frozen, including $1.2bn gold deposits in the Bank of England.

In addition to this, Venezuelan state assets abroad such as the CITGO corporation, a subsidiary of Venezuela’s state oil company PDVSA, in the United States have also been seized.

Until its seizure, CITGO was a key part of Venezuela’s economy. It has three refineries in the US and over 4,000 gas stations, generating yearly dividends of between $500 to $1bn and with a net worth estimated at between $8-10bn.

In January 2019, the Trump administration recognised Juan Guaido as the self-proclaimed “interim president” of Venezuela and froze all CITGO assets. Cutting CITGO off from the elected Maduro government in Caracas paved the way for control of the company to be handed over to Guaido, whose ad hoc appointed CITGO board was approved by a US court in August 2019.

But months later came the first in a series of US court moves by bondholders and creditors to seize CITGO shares as compensation for defaulted bonds or international arbitration awards.

Several of these claims stem from moves made by the Hugo Chavez government to assert control over Venezuela’s oil industry and natural resources, leading to conflicts with multinational corporations.

Despite the Venezuelan government reaching an agreement in 2018 with Canadian mining company Crystallex to settle an arbitration award totalling $1.4bn, a Delaware court approved a bid in October 2019 by Crystallex to seize shares as compensation for the award.

The judgement could not be enforced at the time as the US Treasury banned all transactions involving a defaulted 2020 bond of CITGO’s parent company, PDVSA, which had 50.1 per cent of CITGO’s stock pledged as collateral.

But other claims against CITGO continued to pile up. In September 2021 Guaido’s lawyers quietly dropped an appeal against a compensation award of $968 million to Rusoro Mining made by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) for the 2011 nationalisation of its mining operations in the Bolivar state by the Chavez government.

A month later, the US oil giant ConocoPhillips won a default ruling in a federal court to enforce an $8.5bn arbitration award, made by the ICISD as compensation for the 2007 nationalisation of its oil projects in Venezuela, after Guaido’s lawyers failed to respond to the court in over a year.

This overly relaxed handling of legal proceedings by Guaido and his associates has been viewed with suspicion given their record for corruption, with accusations made about conflicts of interest and a lack of transparency.

Despite these court rulings piling up, any seizing or auctioning of CITGO shares continued to be barred by the US Treasury Department’s Office of Foreign Assets Control (OFAC) in an attempt to protect opposition-held companies such as CITGO. Until recently, the US authorities have renewed orders on a yearly or six-monthly basis banning the seizure of Venezuelan assets without a special licence.

However, the raft of companies seeking compensation awards has continued its legal battles in a push for money. Last October, Canadian mining company Crystallex saw Delaware Judge Leonard P Stark set the ball rolling on the auctioning of CITGO’s shares, which would enable it to collect its $1.4 billion compensation award. But any sale still remained subject to being authorised by the Treasury Department.

The ousting of Guaido as “interim president” by the right-wing Venezuelan opposition in December 2022 may have changed US calculations about protecting CITGO from compensation claims by PDVSA bondholders and others. A month later, the US Treasury Department extended the ban on PDVSA 2020 bond transactions, but only for three months, instead of the usual six or 12 months.

The door to the ransacking of CITGO to satisfy such claims was blown wide open by the latest US court judgement in March that the claimant companies had the right to seize shares of CITGO after they convinced the court that CITGO had no immunity against these claims, on the grounds that it was the “alter ego” of the so-called “interim government” of Venezuela.

Venezuelan economist and political commentator Francisco Rodriguez has condemned Guaido and his appointed board for their mismanagement of CITGO’s affairs, saying: “It is inexcusable that, after spending tens of millions of dollars on lawyers, the ‘interim government’ has made such basic errors. The fact they have done so casts serious doubts on the integrity of those who were in charge of conducting these matters.”

This is yet another example of why we must stand up for Venezuela’s national sovereignty and oppose illegal US regime-change efforts on all fronts. Support the Venezuela Solidarity Campaign today.

A rally, End Sanctions on Venezuela: US out of Latin America, will be held online on Thursday April 27 at 6.30pm— www.mstar.link/VenezRally.

Speakers include Tariq Ali,  Mickey Brady MP, Kate Hudson, Andrew Murray, Carlos Ron, Camila Escalante, Luke Daniels and Venezuelan ambassador H.E. Rocio Maneiro. Sarah Woolley of the BFAWU will chair.

Join the VSC at www.venezuelasolidarity.co.uk.