China and Russia Condemn New US Sanctions on Venezuela

China and Russia strongly criticized U.S. sanctions placed on Venezuela, with the former pledging to support the beleaguered President Nicolas Maduro. On Tuesday Foreign Minister of Russia Sergei Lavrov said that the sanctions completely undermined confidence in a international financial system that is dominated by the U.S., news agency of Russia Interfax reported.

“Russia is doing everything to support the lawful government of Maduro,” Lavrov added, calling U.S. sanctions against Venezuelan state energy firm PDVSA “cycnical.” Kremlin spokesperson Dmitry Peskov added that the restrictions continue an “undisguised interference in its (Venezuela’s) internal affairs,” calling them “illegal.”

The U.S. administration announced sanctions against the state’s dominant energy firm PDVSA on Monday in a bid to damage the socialist dictator, President Nicolas Maduro, who is clinging to power amid a leadership battle.

Last week, the opposition leader of Venezuela’s National Assembly, Juan Guaido, named himself interim president after street protests against Maduro. The U.S. recognized that claim and has been encouraging support for regime change in Venezuela, a country hit by the economic policies of Maduro.

Earlier on Tuesday, China also voiced its opposition to sanctions, saying the U.S. should bear responsibility for their consequences. Foreign Ministry spokesman Geng Shuang said historical experience showed foreign interference “only makes situations more complicated,” Reuters reported.

“The relevant country’s sanctions on Venezuela will lead to the deterioration of conditions of people’s lives,” Geng told a regular news briefing in Beijing, referring to the United States.

Vested interests
Both China and Russia have vested interests in the stability and the status quo in Venezuela. China has lent more than $50 billion to Venezuela through oil-for-loan agreements over the past decade, securing energy supplies for its fast-growing economy, Reuters noted. The news agency calculates that Russia too has lent Venezuela at least $17 billion in loans and credit lines since 2006.

In November 2017, Russia agreed to restructure Venezuelan sovereign debt of $3.15 billion, with repayments lasting 10 years. Although PDVSA’s debts were not thought to be part of this deal. On Tuesday, Russia’s finance ministry said Venezuela is due to pay Russia $100 million in March and that debt servicing problems were possible, Interfax said.

Russia is also heavily involved in Venezuela’s energy industry with Russian energy firm Rosneft holding a large stake in a subsidiary of PDVSA. PDVSA used 49.9 percent of its shares in its U.S. subsidiary Citgo as collateral for loan financing from Russia’s majority state-owned Rosneft in 2016.

Russia thus stands to suffer from U.S. measures to freeze PDVSA’s oil transactions and those of its U.S. asset Citgo (to which most of the Venezuela’s exports destined for the U.S. go). Citgo has already become a focus for Maduro’s rival Guaido. Just ahead of U.S. sanctions Monday, the self-proclaimed interim president ordered Congress to appoint new boards of directors to PDVSA and Citgo.