Rubio details how Trump administration will control Venezuela's oil money

The Trump administration soon will allow Venezuela to sell oil now subject to US sanctions, with the revenue initially dedicated to basic government services such as policing and health care and subject to Washington's oversight, Secretary of State Marco Rubio said Wednesday.

The United States will retain control in the short term to ensure the oil revenue is used to stabilise Venezuela, Rubio said at a Senate Foreign Relations Committee hearing. “The funds from that will be deposited into an account that we will have oversight over,” Rubio said, adding that the US Treasury would control the process. Venezuela, he said, “will spend that money for the benefit of the Venezuelan people.”

Rubio offered new insight into how the US is planning to handle the sale of tens of millions of barrels of oil from Venezuela, which has the largest proven reserves of crude in the world, and oversee where the money flows. After the US raid that captured then-President Nicolas Maduro this month, the US is working to influence the next steps in the South American country through its vast oil resources.

The US will not subsidise oil industry investments in Venezuela, Rubio said, and is only overseeing the sale of sanctioned petroleum as an “interim step.” “This is simply a way to divide revenue so that there isn't systemic collapse while we work through this recovery and transition,” Rubio said.

Democrats and some Republicans on the committee pressed Rubio for more details about Trump's plans for Venezuela's oil. Sen. Chris Murphy, D-Conn., asked for assurances from Rubio that the sale of Venezuelan oil will be fair and open, not rigged to benefit oil companies allied with Trump. “You are taking their oil at gunpoint, you are holding and selling that oil … you're deciding how and for what purposes that money is going to be used in a country of 30 million people,” Murphy said. “I think a lot of us believe that that is destined for failure.”

Under Maduro, Rubio said Venezuela's oil industry benefited the country's corrupt leaders and countries such as China, which purchased Venezuelan oil at a discount. Now, Venezuela's interim leaders are assisting the US in seizing illegal oil shipments, he said.

The US will give Venezuela's current leaders instructions on how the money can and cannot be spent and conduct audits to ensure it is used as intended, Rubio said. He said Venezuela could use the money to pay for policing or to buy medicine. The fund was initially set up in Qatar to avoid having the proceeds seized by American creditors and because of other legal complications that stem from the US not considering Maduro's government legitimate, Rubio said.

Hundreds of millions of dollars have already been set aside and as much as USD 3 billion more is anticipated, he said. “It's an account that belongs to Venezuela, but it has US sanctions as a blocking mechanism,” Rubio said. “We only control the dispersal of the money, we don't control the actual money.”

Earlier this month, acting Venezuelan President Delcy Rodriguez said cash from oil sales would flow into two sovereign wealth funds: one to support crisis-stricken health services and a second to bolster public infrastructure, including the electric grid. The country's hospitals are so poorly equipped that patients are asked to provide supplies needed for their care, from syringes to surgical screws. They also must pay for lab and imaging tests at private hospitals.

On Tuesday, during a televised event to announce the revamping of various health care facilities, Rodriguez said her government and the US administration “have established respectful and courteous channels of communication” since Maduro was captured. Neither Rodriguez nor her government's press office immediately comment on Rubio's remarks Wednesday.

At Rodriguez's request, Venezuelan lawmakers last week began debating an overhaul of the country's energy law. The proposed changes are meant to create conditions to attract much-needed private foreign investment.