The Iranian oil tanker Fortune slipped into Venezuelan waters in the pre-dawn dark of Monday morning, the first of five tankers from the Islamic Republic of Iran Shipping Lines (IRISL) bringing vitally needed gasoline to a regime the Trump administration has, for years, tried and failed to bring down.
Four days before the Fortune arrived in Venezuelan waters, Secretary of State Michael Pompeo announced that sanctions slapped on Iran’s shipping lines last December will take effect on June 8. The message seemed to get through. The tankers speeded up.
While the Fortune was still unloading 280,000 barrels of the precious fuel, maritime live tracking websites showed three other tankers arrived in Venezuelan waters ahead of schedule. At approximately 1 am EDT Tuesday morning, the Faxom reached its final destination, three days earlier than its posted ETA. The Forest and the Petunia were close behind, also ahead of their scheduled arrival date. The last tanker, the Clavel, was still listed as arriving June 2.
According to the petroleum industry news site Argus Media, the Fortune’s cargo was being distributed under “a tightly rationed system, with some of the gasoline transported by pipeline to other points for truck distribution.” It also cited an unnamed Defense Ministry official saying “some of the supply” could be transhipped to Cuba.
The total cargo on the ships is an estimated 1.5 million barrels, barely enough to last two to three weeks, to make up for lost production from Venezuela’s largest refinery complex that needs serious repair.
The fact that Venezuela is starved for gasoline—even though it has the world’s largest proven reserves of petroleum—is testimony to the corruption and mismanagement that plague the country. In fact, the state-owned oil giant, Petróleos de Venezuela (PDVSA) has crumbled.
At the same time, an avalanche of U.S. sanctions intended to overthrow the government of President Nicolás Maduro has left the country effectively bankrupt. Much of the world, led by the Trump administration, recognizes opposition leader Juan Guaidó as the legitimate president of Venezuela despited a record that as proved both feckless and reckless. So Maduro has built a byzantine network of allies—notably Iran and Russia, but also shady gold traders and sympathetic shipping tycoons, to come to his rescue.
On Venezuela’s Government television channel, Venezolana de Television, Defense Minister Vladimir Padrino announced the Iranian tankers would receive a royal welcome, even if they have to play tag with the U.S. Navy on the high seas:
“When those ships enter our exclusive economic zone, they will be escorted by FANB [Venezuelan navy] vessels and planes to welcome them and thank the Iranian people for their solidarity and cooperation amid the difficulties caused by COVID-19.”
But for all the fanfare surrounding the tankers’ arrival, the stark reality is that Venezuela had to go half way around the world to get refined fuel, underlining the desperation of the Maduro regime—and a risky count-down has begun.
The Trump administration keeps feinting toward military action with an increased naval presence in the Caribbean. It gave covert—but not very secret—aid to a failed coup a year ago, and it recently offered huge rewards for the arrest of Maduro and his top lieutenants, inspiring an operation by disastrously incompetent adventurers organized by a former U.S. Green Beret. Most were killed or captured by Maduro's forces—and by a few Venezuelan fishermen.
But it's the sanctions that really continue to bite. Even with today’s very low prices, how can cash-strapped Venezuela afford the $45 million purchase price for Iran's refined product?
According to Bloomberg News, Maduro turned to Alex Nain Saab Moran, a Colombian national indicted in the U.S. last July on federal money-laundering charges involving a $900 million shipment of Venezuelan gold to Turkey.
Bloomberg reported Saab traveled to Tehran last April with senior executives from PDVSA and negotiated the Iran gasoline deal in exchange for crude oil. According to Bloomberg, Venezuelan officials sent about nine tons of gold—equivalent to US$ 500 million—to Iran on jets owned by Mahan Air, a Tehran-based carrier. In addition to the oil deal, Iran was also sending equipment to repair Venezuela’s decaying refineries and broken gas pumps. Since then, Mahan Air has been placed on the growing U.S Treasury sanction list.
But Venezuela still has to find ways to to get income from its crude oil, which accounts for about 95 percent of the nation’s export revenues.
In January 2019, the U.S. cut off Venezuela’s main client, which was the United States itself. Venezuela lost the market for one third of its oil exports and production dropped to its lowest levels in 75 years. Russia’s oil giant Rosneft stepped in, lending over US$ 6 billion to PDVSA. Through it’s Swiss-based affiliate, Rosneft Trading, Rosneft tankers began transporting 80 percent of Venezuela’s crude oil exports in a loan repayment deal.
The U.S. slapped sanctions on Rosneft Trading. Rosneft itself, the mother company and the crown jewel in Russia’s economy, was not targeted by Treasury. It shut down its operations in Venezuela immediately nonetheless—but only after transferring its Venezuelan crude oil exporting to another Rosneft unit, TNK Trading.
Meanwhile, the image of Iranian tankers arriving in the backyard of the United States is a far departure from what one of Trump’s short-lived cabinet members had envisioned. In February 2018, on the eve of his first whirlwind tour of South America, former Secretary of State Rex Tillerson invoked the 1823 Monroe Doctrine in his speech at the State University of Texas saying it was “as much alive today as the day when it was written.” The doctrine claimed Washington has the right to intervene militarily at any time and anywhere in the western hemisphere to prevent foreign influences from establishing themselves.
In fact, many have done so, from the British to the Soviets, in the nearly two centuries since its proclamation, but the supposed sanctity of the Monroe Doctrine appears to be an article of faint in the confines of the White House and the head of its mercurial occupant.
On April 1, President Trump held one of his rambling news conferences pegged to COVID-19 as the nation grappled with daunting statistics and New York emerged as the new epicenter of the pandemic.
As if out of nowhere, Trump made the startling announcement that he was sending U.S. Navy warships to the Caribbean to combat drug traffickers, and his administration fingered top Venezuelan officials as some of the worst.
“As governments and nations focus on the coronavirus, there is a growing threat that cartels, criminals, terrorists and malign actors will try to exploit the situation for their own gain,” said Trump. “We must not let that happen.”
National Security Adviser Robert O’Brien identified Venezuela directly, saying, “We will continue to execute our maximum pressure policy to counter the Maduro regime’s activities, including drug trafficking.”
Earlier, the Trump administration had indicted Venezuelan President Maduro and members of his inner circle on charges they run a smuggling operation bringing up to 250 tons of cocaine a year to the U.S. They put a price on Maduro’s head of $15 million and the total bounties on offer came to $55 million, prompting the ex-Green Beret Jordan Goudreau to launch the fiasco dubbed Operation Gideon.
In the midst of all this, a shipping tycoon apparently has been delivering gasoline to his native Venezuela. Wilmer Ruperti told AP in an exclusive interview in April that his goal was humanitarian and that he had notified the U.S. Treasury Department which, he claimes, did not object. Ruperti also did not disclose where the refined fuel came from.
As Iranian tankers continue arriving in Venezuela and Russian tankers head out of the Caribbean, it’s apparent that no doctrine, Monroe’s or otherwise, is stopping them. So there are several questions looming larger by the day: Will the U.S. Navy be ordered to stop those ships if there is a repeat performance? How long can Maduro continue like this? And how far is the Trump administration willing to go to bring him down at last?