I was watching Marco Rubio testify before a Congressional committee this morning. I'm interested because I live in Canada and we are one of the countries in the Western Hemisphere that are now supposed to be under the thumb of the United States.
So I paid attention when Rubio explained how the protection racket works with Venezuela because Canada will soon be next on the list. I'll quote directly form his testimony below but here's how I think it works.
America is using its military power to blockade Venezuelan ports and prevent any oil from being shipped except under special circumstances. The sale of oil to foreign countries must be approved by the United States and the United States will determine the price—usually the current market price. The payment won't go to Venezuela, instead it will be deposited into special accounts, for example in Qatar, that will be controlled by members of the Trump administration.
Venezuela can apply to use this money but only for the benefit of the Venezuelan people. For example, Venezuela could use it to fund the police or purchase medicine and equipment from the United States. They can also use it to buy light crude oil that can be used to dilute their heavy crude. They used to buy this from Russia but now they are buying it all from the United States.
Members of the Trump administration will decide which projects to fund. Unused money from the sale of Venezuelan oil might become the property of the USA (or its leaders).
Marc Rubio forgot to mention the legal and ethical justification of such a scheme but I'm sure he'll explain it later on. Other countries in the Western Hemisphere are interested.
From The United States Department of State.
And one of the tools that’s available to us is the fact that we have sanctions on oil. There is oil that is sanctioned that cannot move from Venezuela because of our quarantine. And so what we did is we entered into an arrangement with them, and the arrangement is this. On the oil that is sanctioned and quarantined, we will allow you to move it to market. We will allow you to move it to market at market prices – not at the discount China was getting. In return, the funds from that will be deposited into an account that we will have oversight over, and you will spend that money for the benefit of the Venezuelan people.
Why was that important? Venezuela was running out of storage capacity, okay. They were producing oil. They were drilling oil. They had nowhere to put it. They had nowhere to move it. And they were facing a fiscal crunch; they needed money in the immediacy to fund the police officer, the sanitation workers, the daily operations of government.
And so we’ve been able to create a short-term mechanism. This is not going to be the permanent mechanism, but this is a short-term mechanism in which the needs of the Venezuelan people can be met through a process that we’ve created, where they will submit every month a budget of this is what we need funded. We will provide for them at the front end what that money cannot be used for. And they have been very cooperative in this regard. In fact, they have pledged to use a substantial amount of those funds to purchase medicine and equipment directly from the United States. In fact, one of the things they need is diluent*, or diluent* depending how you want to pronounce it. And that basically is the light crude that you need to mix with their heavy crude in order for the oil to be able to be mixed and moved. They’re getting – they used to get 100 percent of that from Russia. They are now getting 100 percent of that from the United States.
So we’re using that short-term mechanism both to stabilize the country but also to make sure that the oil proceeds that are currently being generated through the licenses we’ll now begin to issue on the sanctioned oil goes to the benefit of the Venezuelan people, not to fund the system that existed in the past.
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