MercoPress. South Atlantic News Agency

Russia and China criticize US sanctions on Venezuela: “they undermine confidence in the international financial system”

“Russia is doing everything to support the lawful government of Maduro,” Lavrov said. U.S. sanctions against Venezuelan state energy firm PDVSA are “cynical.”

Russia and China strongly criticized U.S. sanctions placed on Venezuela, with the former pledging to support the beleaguered President Nicolas Maduro. Russian Foreign Minister Sergei Lavrov said on Tuesday the sanctions completely undermined confidence in an international financial system that is dominated by the U.S., Russian news agency 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 “cynical.” 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 president Nicolas Maduro regime, that is clinging to power amid a leadership battle. Last week the opposition leader of Venezuela's National Assembly, Juan Guaidó named himself interim, caretaker, president following massive protests against Maduro. The US, Canada and Lima Group countries recognized the claim and has been encouraging support for regime change.

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“.

”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.
Both China and Russia have vested interests in the stability and the status quo in Venezuela.

China has lent more than US$ 50 billion to Venezuela through oil-for-loan agreements over the past decade, securing energy supplies for its fast-growing economy. Russia too has lent Venezuela at least US$ 17 billion in loans and credit lines since 2006.

In November 2017, Russia agreed to restructure Venezuelan sovereign debt of US$ 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 US$ 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% 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.

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.

As well as Russia and China's support, Maduro still has the support of the Venezuelan military which could prove vital to him holding on to power, although a high-profile Venezuelan diplomat to the U.S. defected at the weekend, encouraging others to do the same.