The United States is increasingly finding itself on a trade collision course with yet another major global — Russia. While President Trump has embarked on a full-on trade war with China, the US could be set for a trade fall-out with Russia and President Putin over its refusal to stop trading with Venezuela as uncertainty surrounding the Venezuelan presidency continues.
US-supported opposition leader Juan Guaido has declared himself the nation’s interim president, despite the fact that current leader Nicolas Maduro remains in office. The Maduro regime has been on its last legs for some time now, with tens of thousands of Venezuelans seeking to flee the country in search of a better life outside of Maduro’s communist rule. It has been reported that 98% of the troops within the Venezuelan army – who have long been loyal to Maduro – now believe a change of government is necessary, but fear what will happen to their families if they were to defect.
Alongside America’s fresh trade wars with China, documented by DailyFX, the US has also hit the Venezuelan oil industry with severe sanctions that have been imposed since the turn of the New Year. The US already rolled out a plan to diminish the supply of the oil and gasoline-based products that are used to dilute heavy Venezuelan crude oil and make it eligible for export. In February, shipments of crude from Venezuela fell by 40% as a result. The US wants other refiners and oil trading houses across the globe to cut their current engagements with Venezuela beyond the existing sanctions already imposed.
The US has also warned against Russia – who still support the Maduro regime – sending military aid and equipment to the crisis-stricken nation. John Bolton, national security adviser, has warned that such a move would be a “direct threat to security in the region”. Reports suggest Moscow sent “specialists” from its military over to Venezuela last month with a view to assisting the nation.
Bolton confirmed that the US would “defend and protect the interests of the United States, and those of [its] partners in the Western Hemisphere”. Technical price charts indicate the Dow Jones has rallied impressively since the eve of 2019, with America’s no-nonsense approach towards China and Venezuela seemingly strengthening the hand of big business in the States. It has also bolstered the EUR to USD trading pair, with EUR/USD looking particularly strong in the face of uncertainty in the eurozone. Given the unprecedented turbulence surrounding Brexit, most EUR/USD forecasts anticipate the dollar strengthening even further against the euro.
As part of its clampdown on Venezuela, Washington has also frozen assets worth $7 billion belonging to PDVSA and its American subsidiary, Citgo. In retaliation, Venezuelan oil minister and president of PDVSA Manuel Quevedo indicated that Caracas’ state-backed oil firm would look to send oil originally bound for the United States over to Russia and China instead. Mr Quevedo has stated his intention to meet with Russia’s energy minister, Alexander Novak, to discuss options for Venezuela to ramp up its exports to Russia.
More than 50 other nations have officially recognized Juan Guaido as Venezuela’s newfound leader, amid the ever-growing electricity blackouts and food shortages caused as Maduro battles to maintain power. The US appears to be planning to persist in preventing Venezuela from bolstering its relationships with Russia and China, resulting in the status quo being upheld and continued political unrest for Venezuela and its citizens.