STEVE INSKEEP, HOST:
Now here's the latest U.S. move against the government of Venezuela. The U.S. Treasury announced new sanctions targeting Venezuela's oil exports. U.S. refineries say they will no longer send cash to Venezuela in exchange for crude oil. Here's Treasury Secretary Steven Mnuchin.
(SOUNDBITE OF ARCHIVED RECORDING)
STEVEN MNUCHIN: The United States is holding accountable those responsible for Venezuela's tragic decline.
INSKEEP: And in a complicated scenario, the United States says it is happy to keep receiving Venezuelan oil but wants to avoid directly paying for it. How's that going to work? Well, NPR's Camila Domonoske is here to try to explain. Good morning.
CAMILA DOMONOSKE, BYLINE: Good morning.
INSKEEP: So what is the basic theory of the U.S. approach of targeting Venezuela's oil at all?
DOMONOSKE: So Venezuela's heavily reliant on its oil exports. And it's specifically heavily dependent on sales to the United States because the U.S. is one of the few remaining sources of cash for the Venezuelan government. And Venezuela's economy is in free fall. It's been collapsing for several years, and the country has massive shortages of food, medicine, electricity, pretty much everything.
INSKEEP: Socialist government management hasn't gone really well. Things have gradually gotten worse, and then you have political chaos as protests have mounted against that government.
DOMONOSKE: Right. So Venezuelan President Nicolas Maduro is increasingly unpopular. He declared victory in a re-election. The election was disputed. And now the opposition leader Juan Guaido has also declared himself president, so, like you said, political chaos. And the United States has a firm position on this. The U.S. has backed Guaido against Maduro. So these sanctions are designed to put as much pressure as possible on Maduro's government in order to attempt to get him out of office.
INSKEEP: OK, so how do the sanctions work?
DOMONOSKE: So the sanctions say that U.S. refineries cannot send money in exchange for oil that they receive from PDVSA, the state-owned oil company. They can still take that oil in if Venezuela's willing to keep sending it, but the billions of dollars of payment that would be put out will go into blocked accounts in the U.S. instead of going to Venezuela.
INSKEEP: Oh, it'd be like - they'd be impounded. They'd be frozen assets that might be going to Venezuela at sometime later or maybe end up with the opposition government at some point.
DOMONOSKE: Exactly. The Treasury Department says if there's a new government in Venezuela, that government will get access to these blocked accounts.
INSKEEP: Why would the U.S. specifically say, Venezuela, it's fine for us to send the oil anyway?
DOMONOSKE: So the reason to leave this channel open, the possibility of receiving this crude oil, the Trump administration wants to push Maduro out of office. But they don't necessarily want to totally disrupt the oil industry. For one thing, U.S. refineries on the Gulf Coast have been buying this oil. And it would be really disruptive for them to not have any access to it at all. It could also affect world oil markets.
INSKEEP: Wait a minute. So the United States needs the oil that it doesn't want to pay for?
DOMONOSKE: We have been taking that oil in and processing it. Whether we need it is a little bit of a point in dispute. Venezuela's oil production has already dropped significantly over the last several years. So refineries that used to be pretty dependent on this crude oil are less dependent on it now than they used to be. But that said, it is a significant factor in some refineries on the coast.
INSKEEP: Any particular reason the Maduro government would allow the oil to continue being sent even though they would not be receiving payment anytime soon, if ever?
DOMONOSKE: So like I said, Venezuela's really reliant on cash money from the U.S. And one reason is because there aren't a lot of people around the world who are buying Venezuelan oil and paying money for it. Russia and China are taking oil in, but they aren't paying for it either. They're accepting it as debt payment, so it is possible. We'll have to see if that money is still a motivating factor for Venezuela if it's temporarily frozen.
INSKEEP: Camila, thanks for the update - really appreciate it.
DOMONOSKE: Yeah, thank you.
INSKEEP: That's NPR's Camila Domonoske.
(SOUNDBITE OF ROCKET MINER'S "OLD GHOSTS") Transcript provided by NPR, Copyright NPR.
