Russia Gave to Citgo, Then Citgo Gave to Trump
Many big oil companies funded Trump’s inauguration. Only one is deeply in debt to the Kremlin.
The oil company’s half-million donation to Donald Trump’s Inaugural Committee wasn’t illegal. But it certainly wasn’t moral. And the cash may have come from the Kremlin, at least indirectly.
Recently released Federal Election Commission filings show that Citgo, the U.S. subsidiary of the Venezuelan oil company Petróleos de Venezuela (known as PDVSA) gave Trump more money than Shell or Walmart. The donation is unusual for PDVSA: Citgo had not donated to previous presidential inaugural committees.
Citgo’s donation to the Trump Inaugural Committee and the horrifying images emerging from Venezuela’s weeks of brutally repressed protests (26 killed, 437 injured, and 1,289 arrested—according to Venezuela’s attorney general; Venezuelan prisoner rights NGO Foro Penal says 1,536 have been “detained” as of April 25) are connected: Russian money and influence is behind both of them. Some of those detained are tortured in Venezuela’s equivalent of CIA headquarters, known as “The Tomb,” for its subterranean torture chambers. The Inaugural Committee donation came days after Citgo (a Delaware-incorporated company with operational headquarters in Houston) mortgaged 49.9 percent of its holdings to Rosneft, an oil company controlled by the Kremlin. That enabled Citgo’s parent company PDVSA to make its bond payments. Rosneft is sanctioned by the U.S. Treasury Department. So is its CEO, Igor Sechin, “Russia’s Darth Vader.” One of the most feared men in Russia, Sechin is close to Vladimir Putin and is one of Putin’s key instruments of geopolitical power. Net net: If Venezuela defaults on its bond payments, Rosneft (i.e., Putin & Co.) could own several refineries, nine pipelines, and distribution terminals all across the Eastern U.S., from Texas to Maine, without any government oversight. If the Russians end up owning Citgo, they will be using American consumers to fund their autocracy and Assad’s brutality in Syria.
“We are extremely concerned that Rosneft’s control of a major U.S. energy supplier could pose a grave threat to American energy security, impact the flow and price of gasoline for American consumers, and expose critical U.S. infrastructure to national security threats,” a bipartisan group of six senators wrote in a letter to Treasury Secretary Steven Mnuchin earlier this month.
The U.S. government is playing catch up. House Committee on Foreign Affairs Subcommittee on the Western Hemisphere’s Chairman and Ranking Member have both called for an investigation and CFIUS review to find out “if Rosneft is already the owner of Citgo.” (CFIUS is the multi-agency Committee on Foreign Investment in the United States, made up of the secretary of the Treasury, secretary of Justice, secretary of Homeland Security, secretary of Commerce, secretary of Defense, secretary of State, secretary of Energy, the U.S. Trade Representative, and the head of the Office of Science and Technology Policy.) The Citgo acquisition never underwent a CFIUS review: not when PDVSA bought 50 percent in 1986, nor when it bought the remained in 1990.
Venezuela was then an ally of the United States. That is no longer the case: The Venezuelan regime under former President Hugo Chávez and since have become avowed enemies of the U.S. and allied themselves closely with Russia, Iran, China, and Syria. Venezuela’s current vice president, Tareck el-Aissami, is Hezbollah’s bagman and a drug trafficker, like most of the Venezuelan government elite (PDF). In February, Trump sanctioned el-Aissami under the Kingpin Act, which gave Venezuelans hope that Trump would be more proactive in countering their growing dictatorship. As Venezuelan protesters get tear gassed from helicopters, beaten by police or assassinated by government proxy gangs, they tweet their desperate pleas for U.S. government help to Secretary of State Rex Tillerson, the president, Sen. Marco Rubio, and even Ivanka Trump, but to no avail.
Oil was the “national patrimony,” that would always save Venezuela: When I was a child in elementary school in Caracas, we had little pots of petroleum and posters of oil rigs at sunset over Lake Maracaibo. Now oil is the weapon the regime uses against its people.
Shady Russian oil money may have even been behind the current mass demonstrations in Venezuela. On March 30, the Venezuelan Supreme Court decreed it would assume all National Assembly legislative functions, effectively dissolving it: a self-coup, called autogolpe in Spanish because it has happened before in Latin America. The Maduro regime wanted to sign oil deals the opposition-controlled National Assembly would not approve. What Venezuelan President Nicolás Maduro was after was more money from Rosneft. International condemnation of the coup was swift and broad, so the next day, the Supreme Court issued a statement that it had reversed its decision—but it quietly kept its power to sign oil deals.
The dragon of Venezuelan citizen anger has been unleashed: cancelled elections, hunger, death from disease and lack of medicines, hyperinflation that means a bag full of money can’t buy you bread… which you can’t find anyway. All are instigated by a kleptocracy estimated to have funneled hundreds of billions into personal foreign bank accounts and made Venezuela into the world’s biggest transit point for cocaine and a major funder of Hezbollah. The Maduro regime is a security threat no matter how you count it, with the worst yet to come.
Once a staunch U.S. ally with deep, century-old ties to the Rockefeller family, Venezuela is now the biggest failed state in the Western Hemisphere. The U.S. military’s Southern Command chief, Adm. Kurt Tidd, testified before Congress on April 6 that Venezuela could destabilize the entire region. If not resolved soon, the crisis may well result in an outflow of 30 million people: bigger than the Syrian refugee crisis and in our own hemisphere. Likely to be most affected is neighboring Colombia, which the U.S. has spent more than $10 billion stabilizing under Plan Colombia, to keep it from being a failed state under the pincer pressures of drug trafficking and drug-funded terrorist insurgencies, of which the Revolutionary Armed Forces of Colombia (FARC) is the biggest. Just when Colombia is stable and the Colombian government is on the verge of reaching peace with the FARC, which it has fought since 1964, it faces destabilization from its neighbor.
Two years ago Colombian President Juan Manuel Santos was asked: “What keeps you up at night? The FARC?”
“No,” Santos answered. “Venezuela.”
April 19 was the “Mother of All Protests”: 6 million Venezuelans turned out to demonstrate that they want the elections that were supposed to be held last December. The next day Maduro announced he would give out 500,000 weapons to civilian militias to defend his Bolivarian Revolution: a revolution that has people dying and eating trash in a country with the world’s largest oil reserves. Never mind that some he was arming to fight for him were old, hungry, and didn’t even have shoes. Santos promptly dispatched his Foreign Minister to ask the UN “to investigate the militarization of Venezuelan society.” Hungry millions rushing his borders brandishing weapons is the Colombian president’s worst nightmare. Venezuela’s other neighbors are less tempting: Guyana is poor and the Brazilian border is buffered by thick jungle on both sides. The other options are “the ABCs:” life rafts to Aruba, Bonaire, and Curaçao, which belong to the Netherlands. That is already happening.
At every meeting I attend in Washington, D.C., on Venezuela, the Dutch are there; so are Shell and ExxonMobil. They are waiting for the Maduro regime to tip over and swoop in for the privatization of the world’s largest oil reserves for “the price of a skinny chicken,” as we say in Spanish. Halliburton maintains legal representation in Caracas and is poised to strike deals at just the right time, and Shell reckons the problem with Venezuelan oil is its management: It has calculated that it could turn a profit in 6.8 years, where it would take the current regime 200 years.
Venezuelans would now welcome nearly anything that removes resources from this kleptocracy and brings economic development with rule of law and protection of private property. The opposition leaders (including my distant cousin Maria Corina Machado) are mostly U.S.-educated and from industrialist families. But when the time comes, political history may color local sentiment toward American business.
Obama did nothing, and former Rep. Joe Kennedy famously appeared in ads praising Hugo Chávez for Citgo giving Boston cheap heating oil. Now that Chávez’s successor’s brutality is on full display, the whole Kennedy clan I’m sure would rather we forget. But Venezuelans don’t. And now the Rosneft-Citgo-Trump story is widespread and will soon give another target for opposition rage: financial complicity as a reason for U.S. inaction. If American companies don’t want to be viewed as part of the same kleptocratic swamp that has engulfed Venezuela and drowned its people, they should encourage the administration to politely return the money it has been given by the abuser of 30 million hungry and tortured Venezuelans it once called friends.
Dr. Vanessa Neumann is a Venezuelan-American and president of the trade integrity and political risk consultancy Asymmetrica. Her book Blood Profits: How American Consumers Unwittingly Fund Terrorists will be published by St. Martin’s Press this autumn.