[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
VENEZUELA'S CRISIS:
IMPLICATIONS FOR THE REGION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
THE WESTERN HEMISPHERE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
JUNE 22, 2016
__________
Serial No. 114-206
__________
Printed for the use of the Committee on Foreign Affairs
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas BRIAN HIGGINS, New York
MATT SALMON, Arizona KAREN BASS, California
DARRELL E. ISSA, California WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina ALAN GRAYSON, Florida
MO BROOKS, Alabama AMI BERA, California
PAUL COOK, California ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas GRACE MENG, New York
SCOTT PERRY, Pennsylvania LOIS FRANKEL, Florida
RON DeSANTIS, Florida TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina JOAQUIN CASTRO, Texas
TED S. YOHO, Florida ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
---------
Subcommittee on the Western Hemisphere
JEFF DUNCAN, South Carolina, Chairman
CHRISTOPHER H. SMITH, New Jersey ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida JOAQUIN CASTRO, Texas
MICHAEL T. McCAUL, Texas ROBIN L. KELLY, Illinois
MATT SALMON, Arizona GREGORY W. MEEKS, New York
RON DeSANTIS, Florida ALAN GRAYSON, Florida
TED S. YOHO, Florida ALAN S. LOWENTHAL, California
DANIEL DONOVAN, New York
C O N T E N T S
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Page
WITNESSES
The Honorable Michael Kozak, Deputy Assistant Secretary, Bureau
of Democracy, Human Rights, and Labor, U.S. Department of State 5
Ms. Annie Pforzheimer, Acting Deputy Assistant Secretary, Bureau
of Western Hemisphere Affairs, U.S. Department of State........ 11
Mr. John Smith, Acting Director, Office of Foreign Assets
Control, U.S. Department of the Treasury....................... 19
Mr. John Andersen, Deputy Assistant Secretary for the Western
Hemisphere, U.S. Department of Commerce........................ 23
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Michael Kozak: Prepared statement.................. 7
Ms. Annie Pforzheimer: Prepared statement........................ 13
Mr. John Smith: Prepared statement............................... 21
Mr. John Andersen: Prepared statement............................ 25
APPENDIX
Hearing notice................................................... 48
Hearing minutes.................................................. 49
The Honorable Ileana Ros-Lehtinen, a Representative in Congress
from the State of Florida: Material submitted for the record... 50
VENEZUELA'S CRISIS:
IMPLICATIONS FOR THE REGION
----------
WEDNESDAY, JUNE 22, 2016
House of Representatives,
Subcommittee on the Western Hemisphere,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 1 o'clock p.m.,
in room 2172 Rayburn House Office Building, Hon. Jeff Duncan
(chairman of the subcommittee) presiding.
Mr. Duncan. A quorum being present, the subcommittee will
come to order. I would now like to recognize myself for an
opening statement.
Venezuela--today we begin to examine the deteriorating
situation in Venezuela which has regressed into a severe
economic, political and human rights crisis.
This hearing follows the subcommittee's field hearing in
Miami last November on human rights abuses in Venezuela and
Cuba when we heard testimony from victims of abuse at the hands
of Maduro and the Castro government.
Our purpose in meeting today is to understand the situation
in Venezuela and the impact on U.S. businesses operating in the
country and the Obama administration's policies and actions on
this issue both within the OAS, or Organization of American
States, and the region at large.
Since the founding of our country the United States has
supported freedom for all people around the world and I want
the people of Venezuela to know that United States stands with
you right now.
You are the ones who are suffering the most from this
crisis and I applaud your courage to pursue freedom, justice
and democracy through the constitutional channels which you
have.
The situation in Venezuela today is truly heartbreaking.
Despite possessing rich natural resources and the largest oil
reserves in the world, Venezuela is going through an extremely
severe economic crisis.
Last year, Venezuela's economy contracted 7 percent and
today multiple economic forecasts are projecting that the
country will default on both sovereign debt and the debt of the
state-owned oil company PDVSA.
In fact, according to Venezuela's Central Bank data, its
external debt is estimated to be $185 billion. To put that in
perspective, Argentina's 2001 default was a little over $100
billion.
This year, Venezuela's economy is projecting a negative 8
percent growth, an inflation of 720 percent. Right now, 76
percent of the population is unemployed and last month
Venezuela saw its largest monthly oil production decline,
according to OPEC.
Today, there are widespread shortages of energy, food and
medicine. The Maduro government has been rationing electricity,
recently ordering a 5-day weekend for the public sector to save
electricity.
Food shortages affect 80 percent of the population, which
wait an average of 4 hours in line to obtain basic foodstuffs.
Nine out of ten homes do not eat three meals a day. This
situation has led to more than 50 food riots and deaths of at
least five people.
In response, the government launched a program to
distribute goods door to door. But this program has essentially
amounted to government control over who eats and who doesn't in
Venezuela.
When Venezuelans visit hospitals, medicine is missing 80
percent of the time. Sadly, this is affecting the most
vulnerable. Infant mortality has increased 100 times since 2012
largely because hospitals cannot operate incubators where there
is no power.
Venezuela also reported over 400,000 cases of the Zika
virus, but the government has done very little to respond. The
crisis has extended to other aspects of social and political
life in Venezuela.
The people have not been silent. Spontaneous social unrest,
multiple lootings, violence and widespread protests even in
traditional Chavista strongholds are occurring daily. The
Observatory of Social Conflict, a local NGO, found that there
were 52 lootings and 641 protests just last month, which is a
37 percent increase compared to the same time last year.
Large groups of armed criminal gangs also control vast
swaths of territory in urban areas, terrorizing populations and
leading one of the highest murder rates in the world.
Not only has the government failed to respond well, it has
also committed widespread human rights abuses and undermined
democracy in the country.
This horrific crisis in Venezuela has led to a surge in the
number of Venezuelans seeking asylum in the United States and I
am concerned about the migration implications for the region at
large.
In February 2014, anti-government protests throughout the
country sparked brutality from security forces. The Maduro
government violated and suppressed the protests, killing at
least 43 people, injuring 800 more and arresting 300 others.
Today, the government has imprisoned over 4,000 people for
political purposes and there are also at least 93 political
prisoners in Venezuela including oppositional leader Leopoldo
Lopez.
Only a few weeks ago the national police fired tear gas on
protestors who were chanting, ``We want food.'' In response to
these events and the Venezuelan government's support for
terrorism, the U.S. imposed sanctions, visa restrictions or
assets freezes on a few Venezuelan companies for supporting
Iran, two Venezuelan individuals for supporting Hezbollah,
several Venezuelans for drug trafficking, and 62 Venezuelan
individuals for corruption and human rights abuses.
Recently, the Obama administration imposed sanctions on
seven Venezuelan individuals for human rights abuses. However,
the Obama administration could do much, much more.
Today, many government officials in Venezuela who are
directly responsible for human rights abuses, the deterioration
of democratic institutions, public corruption, and drug
trafficking remain free to access U.S. financial systems.
This is not right. And in view of the especially horrendous
situation in Venezuela right now, the Obama administration
should be doing more to resolve the humanitarian crisis,
support a democratic outcome and ensure that those responsible
for committing human rights abuses and subverting democratic
institutions no longer receive access to the U.S. financial
system, at the very least.
Last week, Secretary Kerry announced that the United States
and Venezuela would launch high-level diplomatic talks and that
U.S. would lead talks between the Maduro government and the
opposition.
This week, Ambassador Thomas Shannon is in Venezuela for
these talks. In ambiguous and confusing language, the Obama
administration is supporting dialogue efforts, the OAS
secretary general's efforts to invoke democratic charter, and
the recall referendum in Venezuela.
Yet, the Obama administration has simultaneously rewarded
President Maduro with diplomatic talks and affirmed publicly
that the U.S. does not support suspending Venezuela from the
OAS.
I want to note that after Secretary Kerry's announcement
last week Venezuela's national guard brazenly arrested two
opposition activists, Francisco Marquez and Gabriel San Miguel
over the weekend. Both remain detained and have been denied
access to legal counsel.
Marquez is a U.S. citizen. These men should be released
immediately, as should all political prisoners at the very
least, before Ambassador Shannon meets with President Maduro
this week.
The United States sent conflicting messages to the world
about Venezuela that do not make sense. The Maduro government
controls the presidency, a majority of municipalities, the
supreme court, the military leadership and PDVSA leadership,
not to mention most of the media. Only the National Assembly is
controlled by an opposition and it has been undermined time and
again by Maduro's supreme court.
Democracy is failing in Venezuela, and Venezuela does not
have time to waste. So far, only OAS Secretary General Almagro
has stood firm on these points.
The administration should have greater courage of
conviction to send a clear U.S. message--release all the
political prisoners, accept humanitarian aid, hold a recall
referendum this year, and submit to the Venezuelan people's
wishes to resolve this crisis.
So I look forward to hearing from our witnesses today about
these issues and I will now turn to the ranking member from New
Jersey, Mr. Sires, for his opening remarks.
Mr. Sires. Thank you, Mr. Chairman, for holding this
hearing and thank you to our witnesses from the State
Department, Treasury Department, the Department of Commerce for
being here to discuss the Venezuela crisis and its implications
for the Americas.
Under the administration of President Nicolas Maduro, the
political, social and economic situation in Venezuela has
deteriorated to a very dangerous and destabilizing level.
Widespread corruption, political harassment and economic
crisis have caused a number of Venezuelans seeking asylum in
the United States to soar. In March of this year, the number of
Venezuelan asylum seekers was second only to China nationals in
submitting asylum requests to the United States.
With over 1,300 Venezuelans' applications submitted, the
current political and economic chaos is also destroying
Venezuela's once-improving education system. The education
professionals are fleeing the country, leaving many of
Venezuela's 7 million public students without qualified
teachers and depriving these young people of the opportunity to
better lives through education.
Venezuela's health system has also been subject to severe
budget cuts with hospitals lacking everything from basic
supplies and medication to being unable to provide life-saving
cancer treatments.
These cuts are occurring just as Venezuela is facing one of
the worst outbreaks of Zika in South America. Food shortages
have led to riots, protests and looting around the country that
have resulted in the death of several people shot by police and
security officials.
In response to these challenges, Maduro and his cronies
have used intimidation and strong-arm tactics to suppress
political opponents instead of working to provide basic
necessities like food and medicine to the Venezuelan people.
In 2014, the government violently suppressed political
protests, resulting in the death of at least 43 people. In the
aftermath of December 2015, legislative elections that brought
the opposition, Democratic Unity Roundtable party, to power,
Maduro has done everything he can to thwart the power of the
National Assembly, most notably by jailing opposition leader
Leopoldo Lopez and using Venezuela's supreme court to block any
of the laws approved by the legislative since he took office in
January.
Fed up with Maduro's oppressive tactics and lack of
response to the suffering and the starvation of the Venezuelan
people, opposition efforts are now focused on recalling
President Maduro in a national referendum.
The National Electoral Council finally released forms
needed to bring the process of seeking a recall referendum but
only after several opposition National Assembly legislators
chained themselves to the Electoral Council's office to protest
the body's refusal to provide the paperwork.
As we call can see, the challenges in Venezuela are rapidly
increasing and, unfortunately, Maduro's actions are only
hurting the lives of innocent Venezuelan people.
I look forward to hearing from our witnesses, their views
on the crisis and hear what real options the U.S. has to help
steer Venezuela away from its path of destruction and bring
peace to its people.
Thank you.
Mr. Duncan. I thank the ranking member and other members,
and put written statements in the record. Witnesses, I am glad
you are here today. I look forward to this hearing.
You each will be given 5 minutes. There is a lighting
system in front of you. When it is approaching red--it will
turn yellow and then red. When it gets around red let us try to
wrap it up.
If you hear a slight tapping of the gavel that means wrap
it up there so we can move on. We are on a tight time crunch
here with the ranking member and I would love to get to as much
as we can.
So let us just jump right into Venezuela. Ambassador Kozak,
you are recognized for 5 minutes.
STATEMENT OF THE HONORABLE MICHAEL KOZAK, DEPUTY ASSISTANT
SECRETARY, BUREAU OF DEMOCRACY, HUMAN RIGHTS, AND LABOR, U.S.
DEPARTMENT OF STATE
Mr. Kozak. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member Sires and members of the
committee, we thank you for holding this timely hearing focused
on the crisis in Venezuela, which you both very well described
in your opening statements.
We are increasingly concerned about the deteriorating human
rights climate in Venezuela and we are encouraging Venezuelan
civil society to continue to defend human rights and
fundamental freedoms despite the significant challenges it
faces.
As you mentioned, the opposition won a two-thirds super
majority in the National Assembly on December 6, 2015. The
assembly legislated an amnesty and national reconciliation bill
that would have provided mechanisms for the release of
political prisoners including Leopoldo Lopez.
But President Maduro's United Socialist Party used the
executive and political judicial branches of the government to
block all legislation and to reduce the National Assembly's
authorities to essentially nothing.
According to this scheme, the Venezuelan supreme court
declared the amnesty and national reconciliation bill
unconstitutional. Let me state here once again our view that
the government should release immediately all those imprisoned
for their political beliefs.
The crisis cannot be solved with the democratic political
leaders jailed for their political beliefs.
The crisis in Venezuela is self-induced by the Maduro
administration. The economic crisis results from years of bad
economic decisions. The political crisis is the product of
centralization of power.
President Maduro's party has disregarded the rule of law
and basic tenets of democracy. It has also disregarded
international commitments to protect human rights and
fundamental freedoms.
President Maduro declared a full state of emergency to
expand his powers and restrict freedom of assembly. In recent
weeks, national guard soldiers and police in riot gear have
blocked roads throughout the country and metro stations near
the national electoral council offices.
President Maduro and his party have politicized the
judiciary. Judge Maria Lourdes Afiuni was charged with
corruption and abuse of authority after not convicting a
prisoner on politicized charges--in other words, for doing her
job.
She was arrested, jailed, and brutally treated 6 years ago.
Thirteen hearings have been held since then. No evidence has
ever been adduced that she committed any crime. She had never
been convicted or sentenced.
Nevertheless, she continues to be subjected to what they
call conditional release. This restricts her movement and
ability to talk to the media or use social media, even though
the law in Venezuela states that such measures may not last
more than 2 years.
There is substantial evidence of the systematic scheme of
the government to torture that involves judges, prosecutors and
jailers. Venezuelan NGO Foro Penal counts 81 political
prisoners behind bars. Twenty-six of them are in deteriorating
health.
On September 10, 2015, Judge Susanna Barreiros found
Leopoldo Lopez, the leader of the opposition party Popular
Will, guilty on counts of public incitement, damage to
property, fire damage and association for conspiracy related to
the February 2014 protest.
This was supposedly for transmitting subliminally messages
to the crowd. The judge issued a sentence of 13 years and 9
months in prison, almost the maximum allowed by law. The 14-
month trial was marked by lack of due process and shows abuse
of the judicial system to punish government critics.
The judge accepted more than 100 witnesses for the
prosecution. She rejected all but two for the defense. She
deliberated less than 1 hour before announcing her decision to
convict.
So we call once again for the immediate release of Leopoldo
Lopez and all the other political prisoners.
The ability of the press to publish freely and for
Venezuelans to speak their minds has crumbled in the face of
government actions.
President Maduro's administration has used a potent
combination of politicized libel laws, media content
regulations, legal harassment and physical intimidation to
silence independent media.
The ruling party uses force and arbitrarily detains
protestors who peacefully assemble to express their views,
controls media outlets, deprives newspapers of newsprint needed
to inform the public and prosecutes journalists and editors.
I am going to skip a little bit to compress this, Mr.
Chairman, and if I can submit the whole thing for the record,
if that is useful.
I thought I would shift now to talking about what we have
been trying to do about this.
Mr. Duncan. Okay. Your time is starting to expire, sir.
Hurry.
Mr. Kozak. I will then submit the rest for the record, sir.
Thank you.
[The prepared statement of Mr. Kozak follows:]
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Mr. Duncan. Ms. Pforzheimer. Is that right, Pforzheimer?
Okay. You are recognized for 5 minutes.
STATEMENT OF MS. ANNIE PFORZHEIMER, ACTING DEPUTY ASSISTANT
SECRETARY, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S.
DEPARTMENT OF STATE
Ms. Pforzheimer. Thank you very much.
Chairman Duncan, Ranking Member Sires, members of the
committee, thank you for inviting me to participate in today's
hearing on Venezuela. I appreciate your interest in Venezuela
and your support for U.S. assistance in our policies there.
We share Congress' deep concerns about the situation in
Venezuela including the worsening shortages in food and
medicine.
We are troubled by credible and independent reports of 85
percent of the medicines on the World Health Organization's
list of essential medicines are not available at pharmacies and
hospitals while many others are scarce.
The International Monetary Fund predicts the macroeconomic
picture will continue to worsen with estimates of 700 percent
inflation and GDP contraction of over 8 percent this year.
These dire conditions are a direct result of the Venezuelan
government's economic mismanagement and misguided policy
decisions. A sustainable remedy can only come about through
meaningful dialogue including between the executive branch and
the legislature.
However, since January we have witnessed instead how the
executive and judicial branches have stripped away and
undermined the National Assembly's constitutionally guaranteed
responsibilities. These actions have eroded the separation of
powers enshrined in the Venezuelan constitution.
For example, the legislature's authority to call ministers
to hearings similar to this one to ask their executive branch
to explain its decisions was blocked by President Maduro on May
2nd.
We remain deeply concerned about these efforts. The State
Department has taken steps to impose visa restrictions on more
than 60 individuals believed to be responsible for, complicity
in undermining democratic governance, engaging corruption or
committing human rights abuses.
Certain family members of such individuals can be affected
by these actions. We will continue to evaluate further actions
against those who undermine democratic governance and the rule
of law, commit human rights abuses and line their pockets with
public moneys.
At the OAS General Assembly in Santo Domingo last week,
Secretary Kerry expressed our commitment to working with all
OAS members states to remedy the deeply troubling situation in
Venezuela.
He emphasized the need for dialogue and renewed calls for
the Venezuelan government to release political prisoners,
respect freedom of expression at assembly, alleviate shortages
of food and medicine and to honor constitutional mechanisms
including a fair and timely recall referendum.
On June 15th in Santo Domingo, 15 foreign ministers signed
a statement of strong support for the efforts of former Spanish
Prime Minister Zapatero, former Dominican President Fernandez
and former Panamanian President Torrijos to promote an
inclusive political dialogue and the fair and timely
implementation of constitutional mechanisms.
This week, the OAS is continuing its focus on Venezuela's
situation in the framework of the Inter-American Democratic
Charter.
The region must work collectively and demonstrate the
leadership necessary to address the erosion of democratic
institutions in Venezuela.
As Ambassador Kozak said, we continue to call on the
Venezuelan government to release those who have been in prison
solely for their political beliefs. Rather than intimidating or
imprisoning its critics, we believe the Venezuelan government
should focus on finding real solutions through dialogue.
The Venezuelan constitution guarantees the citizens of
Venezuela the right to pursue a recall referendum if they so
choose. We have seen some very slow progress by the National
Electoral Council to allow a recall referendum to move to its
next step.
As we heard today, the council is scheduled to validate
signatures of those expressing support for a recall referendum.
This important process offers an opportunity for the Venezuelan
people to express their political will in a constitutional,
peaceful, and democratic manner.
We favor Venezuelan solutions to Venezuelan problems with
the support of the region. We are prepared to continue to use
all appropriate tools in our toolkit and we will continue to
call attention to all actions that undermine democratic
principles.
We did just that at the OAS General Assembly and we will
continue to do so at the OAS permanent council meetings
including the one yesterday and the one that is scheduled
tomorrow.
We will continue to work closely with Congress and others
in the region to support greater political expression in
Venezuela and encourage the Venezuelan government to comply
with its human rights obligations and live up to its commitment
to democracy.
Mr. Chairman, I would like to end by saying that we
sincerely appreciate the House Committee on Foreign Affairs'
contribution to the promotion and protection of human rights in
Venezuela, the strong and bipartisan cooperation among this
committee's members and staff to support the U.S. Government
championing of democracy and human rights in our hemisphere
including the right to freedom of expression is a great credit
to our country.
Thank you, and I look forward to answering your questions.
[The prepared statement of Ms. Pforzheimer follows:]
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----------
Mr. Duncan. Thank you so much.
Mr. Smith, you are recognized for 5 minutes.
STATEMENT OF MR. JOHN SMITH, ACTING DIRECTOR, OFFICE OF FOREIGN
ASSETS CONTROL, U.S. DEPARTMENT OF THE TREASURY
Mr. Smith. Thank you, Mr. Chairman.
Chairman Duncan, Ranking Member Sires, members of the
committee, thank you for inviting me to appear before you today
to discuss conditions in Venezuela, particularly as they
pertain to regional stability and U.S. interests.
As acting director of the Treasury Department's Office of
Foreign Assets Control, I will address the administration's
implementation of sanctions measures as mandated by the
Venezuelan Defense of Human Rights and Civil Society Act of
2014 and implemented by Executive Order 13692.
As the committee may recall, the sanctions implemented by
the Executive order stem from the government of Venezuela's
human rights abuses, persecution of political opponents,
curtailment of press freedoms and the exacerbating presences of
significant public corruption in Venezuela in 2014.
The following year, after signing the legislation passed by
this body, President Obama issued Executive Order 13692
sanctioning seven individuals associated with various organs of
the Venezuelan government by blocking their property and
interests in property that are come within the United States or
within the possession or control of U.S. persons.
Individuals who meet the criteria for economic sanctions
are also subject to visa restrictions. In addition to blocking
criteria targeting the activity mentioned above, the Executive
order includes several status-based blocking criteria.
Current and former Venezuelan government officials, for
example, are subject to sanctions upon identification by the
secretary of the treasury in consultation with the secretary of
state.
Similar mechanisms have complemented our conduct-based
authorities in other programs and fit well in the fluid
Venezuelan context. Our Venezuelan sanctions target only the
individuals we have designated under the Executive order and
not the people of Venezuela as a whole.
This deliberate approach reflects a desire to make the best
possible use of the targeting authority provided under the
Executive order. That authority is not exclusively focused on
the human rights abuses that took place in 2014 but encompasses
other serious human rights abuses, significant acts of violence
and actions that prohibit, limit or penalize the exercise of
freedoms of expression and peaceful assembly in Venezuela.
The resulting flexibility to respond to repression in real
time is crucial, both as a symbolic deterrent and as a
practical matter if circumstances require swift action.
The targeted measures currently in place are tailored to
specifically pressure bad actors and demonstrate two key
points. The first is that the United States is working to see
democracy and human rights protected and preserved in
Venezuela.
The second is that neighbors--as neighbors who care deeply
about the Venezuelan people, we are concerned about the
country's current economic situation and have no desire to
exacerbate it.
That is why our sanctions target neither the Venezuelan
people nor their government as a whole. What we do not want is
for those who would threaten and undermine democracy in their
home country to be able to use the U.S. financial system of
advance their nefarious purposes.
We continue to monitor the situation in Venezuela closely
and work with our colleagues across the interagency including
in the Departments of State and Commerce to evaluate policy
options in line with U.S. foreign policy objectives and
national security interests.
The United States remains deeply concerned about the
situation in Venezuela. This March, President Obama reinforced
our ability to combat political repression and public
corruption in Venezuela when he renewed the national emergency
and corresponding sanctions implemented under Executive Order
13692.
For our part, we in the Office of Foreign Assets Control
stand ready to act with the powerful tools available to us if
and when conditions call for it and action would be consistent
with U.S. efforts to coordinate with regional governments to
address the situation in Venezuela.
Thank you, and I am happy to answer any questions.
[The prepared statement of Mr. Smith follows:]
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----------
Mr. Duncan. Thank you. These two names are easier than the
first two. Mr. Andersen, you are recognized for 5 minutes.
STATEMENT OF MR. JOHN ANDERSEN, DEPUTY ASSISTANT SECRETARY FOR
THE WESTERN HEMISPHERE, U.S. DEPARTMENT OF COMMERCE
Mr. Andersen. Thank you very much, Mr. Chairman.
Chairman Duncan, Ranking Member Sires and members of the
committee, thank you for the opportunity to speak to you today
about the ongoing crisis in Venezuela and its impact on our
commercial relationship.
The Department of Commerce's International Trade
Administration is one of the primary agencies responsible for
strengthening the competitiveness of U.S. industry in the
global marketplace, promoting U.S. exports, monitoring
compliance with U.S. trade agreements and enforcing U.S. trade
laws.
ITA's efforts are driven by the needs of our primary
constituency--the U.S. business community. For more than 15
years Venezuela's anti-market orientation has complicated our
commercial relations, making it harder for U.S. companies to do
business in Venezuela.
We have advised our clients to be mindful of the
considerable challenges they will encounter when assessing the
Venezuelan market.
On January 1, 2012, the Commerce Department closed its
commercial office in Caracas in recognition that an active
export promotion program in such a difficult market was no
longer cost effective.
Under the last President Hugo Chavez, the government
nationalized domestic and foreign-owned private enterprises,
undermined private property rights and violated contractual
agreements.
Under his successor, Mr. Maduro, the government has
continued to threaten the private sector by accusing companies
of price gauging and hoarding products, warning of additional
government seizures in the face of these baseless accusations.
Dependence on oil exports, which provide 95 percent of
Venezuela's foreign exchange earnings, had long masked the
damaging effects of Venezuela's command control of the economy
and its protectionist anti-competitive policies.
Given the decline in oil prices, it is not surprising that
the IMF estimates that Venezuela's economy is likely to
contract by 8 percent this year and that inflation could reach
a staggering 720 percent.
Let me spend a few moments putting Venezuela into a broader
regional perspective. Since the global financial crisis, we
have seen a growing bifurcation in the Western Hemisphere
between nations that adopted market-friendly economic policies
and those that have chosen a different path.
The nations that have chosen the former are continuing to
enjoy economic growth despite a difficult global economic
environment. In Latin America, this trend is best exemplified
by the Pacific Alliance, which was established in 2012 by
Chile, Colombia, Mexico and Peru.
The Pacific Alliance shares our vision that being open to
world trade is more advantageous if combined with the creation
of a deeper regional market to take better advantage of
economies of scale.
All four Pacific Alliance countries are projected to
experience economic growth in 2016 as well as year over year
growth through 2018. Not coincidentally, those four countries
are also U.S. FTA partners.
Those nations that have chosen the latter path, with
Venezuela as the extreme example, are experiencing economic
decline. For example, Ecuador's economy is projected to
contract by 4.5 percent this year and Argentina's, due to the
previous government's economic policies, is projected to
contract by 1 percent.
In short, the countries in our hemisphere that share an
economic vision similar to our own, our FTA partners, including
those that are part of the Pacific Alliance, or the Trans-
Pacific Partnership--TPP--are faring much better and are poised
to enjoy greater economic success than those that chose a
different path.
When you compare the results of our vision of open
economies that engage with the world by establishing common
rules, standards and values, it is looking bright. We continue
to work with countries in the hemisphere to create a shared
agenda for growth.
This is why the Obama administration is working with
Congress, the business community and other stakeholders to
raise awareness about the benefits of the TPP. Despite its
name, five of the 12 TPP partners are in his hemisphere.
TPP will help solidify our vision for mutually inclusive
hemispheric growth by raising standards across the region in a
manner that reflects our core values, strong labor protections,
a cleaner environment, enhanced intellectual property rights
and many more.
TPP's commitments to facilitating trade will in particular
help SME's interglobal markets, which brings me back to
Venezuela. None of us can predict how this current crisis will
end.
Despite the severity of the economic and political turmoil
and the very real human suffering that accompanies it, there is
potential that positive change can come for the people of
Venezuela.
We at Commerce will be prepared to help U.S. companies be a
part of this change.
Thank you.
[The prepared statement of Mr. Andersen follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
----------
Mr. Duncan. Thank you.
Let the record show this is a very well attended hearing.
How many people in the audience are with staff or are staff
members from one of the panelists? Just raise your hand.
The reason I ask that I had a homeland security hearing one
time and the room was packed. Well, I had two panels. When
panel one got up to leave, everybody in the room left. They
were all staffers.
The reason I say that is I am pleased that the room is full
with folks that are interested in the issue of Venezuela and
that you are not just here as a congressional staffer or a
staffer of the panelists--that you truly are interested in the
plight of the Venezuelan people, the possible changes in the
Venezuelan government and what it may--the kind of impact I may
have on the region. So I appreciate you participating with
that.
Let us jump right in. Ms. Pforzheimer, why is the
administration pursuing high-level diplomatic talks with the
Maduro government when the Maduro government has such a blatant
record of controlling all facets of the government with the
exception of the legislature now?
They commit gross human rights abuses. They stifle the rule
of law and freedom of the press. I thought Mr. Andersen's
comments were great there. Why would we reward such a
government with high-level diplomatic talks--the highest level
with the exception to executive?
This is Secretary Kerry and now the Ambassador. So why are
we rewarding the Maduro government when they continue the
abuses on the Venezuelan people?
Ms. Pforzheimer. Sir, thank you for your question.
As you noted, Under Secretary Tom Shannon is in Caracas
today. His meetings are with an extremely broad range of
Venezuelans. He is having a human rights roundtable. He is
talking to members of the legislature, members of the
opposition and he is speaking with the government.
We would not perhaps characterize it as a reward in that he
will be raising very strong concerns with the government and
Secretary Kerry raised such concerns with Foreign Minister
Rodriguez.
We said to them directly that political prisoners need to
be released, that the legislative assembly needs----
Mr. Duncan. Secretary Kerry has said that to the Maduro
government?
Ms. Pforzheimer. Yes, sir.
Mr. Duncan. Let us contrast this real quick. Wouldn't you
say America is known as a champion against human rights abuses
in general?
Ms. Pforzheimer. Yes, sir.
Mr. Duncan. So Secretary Kerry tells the Maduro government
you need to release the political prisoners. We negotiated with
Iran for almost 2 years without ever making that precondition.
We just normalized relations with Cuba without making that
precondition. I am glad he is doing it but we need to juxtapose
those policies with Iran and with Cuba. There is a little bit
of difference between the administration's actions here.
So I am glad he did that and I will let you continue.
Ms. Pforzheimer. Thank you, sir.
He also raised that, of course, during the public session
at the Organization of American States and Under Secretary
Shannon is raising our concerns directly with President Maduro
and his government.
Mr. Duncan. I am glad he is doing that. I think it is
important. Before we go in and negotiate the Iranian nuclear
deal, before we normalize relations with Cuba, before we have
high-level talks with a government like the Maduro government
that we say, you know what, you have political prisoners or you
have Americans in prison for various reasons. These ought to be
preconditions that the administration puts on the government if
they want engagement with the United States on these important
issues.
The Venezuelan people are hungry. The Venezuelan people
don't have access to peaceably assemble and petition the
government for redress of grievances and hopefully they will in
a recall election. Hopefully, that will happen. Time will tell.
Mr. Smith, U.S. sanctioned Iran. We have had U.S. sanctions
on Iran and Venezuela institutions. Now, you testified before
the House Committee on Foreign Affairs back in February that
your office uses sanctions to counter Iranian security threats
by preventing them access to U.S. financial systems.
Among the Iranian entities that your office imposed
sanctions on is the Joint Iran-Venezuela Bank. Has your office
investigated other banned Iranian financial institutions that
may be accessing U.S. financial markets via Venezuela?
Mr. Smith. Sir, yes. OFAC acts as an instrument of U.S.
national security and foreign policy and we do investigate what
we see as the evidence. We follow the evidence across the world
where our sanctions programs occur.
Mr. Duncan. Okay. Thank you.
So a simpler question to all of you--what is it going to
take? What is it going to take to change--to have changes
happen in Venezuela?
Is it going to take a new government? And that is going to
take a recall but it may take the imposition of democratic
standards by the OAS may start the ball rolling. Is it going to
take oil prices coming back up? I honestly believe that one net
benefit 10 years from now, looking back on what OPEC is doing
to put the Bakken and U.S. energy renaissance out of business
is the positive impact it is having on the Maduro government
and we may see regime change in Venezuela that ultimately
benefits the Venezuelan people.
That may be a positive impact of the OPEC policies. But
what is it going to take? Is it going to take change of the
Maduro government through a recall?
Is it going to take oil revenues going back up for whatever
reason to provide the economic resources the Maduro government
can continue using to prop up a stable economy?
Is it going to take an end of the El Nino drought and
replenish water in a lake so they can provide electricity? What
is it going to take?
I would love to hear your thoughts on that, and Ambassador,
I will start with you. I am going to come all the way across.
Mr. Kozak. Okay. Thank you, Mr. Chairman.
My own view is it is going to take--you have got to get
changes in the policies that the Venezuelan government is
following. Now, whether this government changes its policies
radically or the government gets changed out to a government
that has different policies, that remains to be seen.
But what they have so far refused to do is pretty much
change anything. There is pressure internally building up on
them, which you well described. All the consequences of their
own action has generated a lot of internal political pressure.
There is a growing international pressure on them, as you
saw with the OAS resolution or joint statement that was passed
in Santo Domingo where a number of countries in the region that
weren't so concerned before now are expressing concern in
joining us and doing it.
The other element of what it takes, though, is how do you
have--what is the mechanism for translating that pressure into
a result and that is--we really have been pushing two possible
ones.
One is the recall referendum which, unfortunately, has been
repeatedly delayed by manipulations of the government. And the
other is trying to get some kind of serious negotiation going
between the elected members of the assembly and the elected
government to see if they can come up with a package of policy
changes.
Again, the government so far has not done that. The concern
is that if you don't do one of those things to bring about a
change in policy that it goes on and on and on until something
breaks and then you don't have a peaceful course correction on
the part of the Venezuelan government but you just have a
chaotic mess at the end.
And so that is why we are putting our efforts into trying
to create those vehicles for translating that pressure into a
result. But it remains to be seen how that is going to work
out.
Mr. Duncan. Let us go to Ms. Pforzheimer.
Ms. Pforzheimer. Thank you, sir.
I agree with Mike about the vehicles. We are looking at the
vehicle of dialogue, the vehicle of the recall referendum and,
of course, the regional pressure.
But I just want to state that we look at two big goals--a
sustainable solution in Venezuela, sustainable economic
recovery, and we look at Venezuelans having their
constitutional rights restored.
And we want political prisoners released, we want the
legislative assembly to have the rights and the separation of
powers that is legitimate and under the constitution.
Mr. Duncan. So saying that, don't you think that the U.S.
position of the OAS should be standing up for those democratic
ideals?
Ms. Pforzheimer. Sir, I do agree with that and I believe
that we are----
Mr. Duncan. Is that the official U.S. policy at the OAS?
Ms. Pforzheimer. We support at this point all of those
policies to support the constitutional measure of a recall
referendum and we support a dialogue as it is effective and
useful.
Mr. Duncan. Is Mr. Fitzpatrick's position of the OAS going
to be that the United States supports democratic institutions
and principles within Venezuela and that a recall election
should happen? Is that going to be the U.S.' position at the
OAS?
Ms. Pforzheimer. Sir, we believe that the recall process
should proceed as the Venezuelan people want it to.
Mr. Duncan. Okay. I think the Venezuelan people want that.
I think the Maduro government is actually putting it off. But I
just want to make sure that we were clear about the U.S.
position at the OAS.
I will go to Mr. Smith. What is it going to take?
Mr. Smith. Sir, I would say that is a question of foreign
policy and I defer to my State Department colleagues. We are
here to offer to be an instrument of U.S. national security and
foreign policy objectives.
But, again, when it comes to the foreign policy I defer to
the State Department.
Mr. Andersen. Yes, Mr. Chairman. Thank you for that
question.
I agree with the comments made by my State Department
colleagues. We all want to see a prosperous and stable
Venezuela, a Venezuela that maintains our strong and lasting
ties with the Venezuelan people.
When a resolution is achieved, and we do hope one will be,
we at Commerce Department, working with the U.S. business
community, can and will play an important role in ensuring a
longer-term solution.
Mr. Duncan. Thank you.
We will probably have time for another round of questions.
Mr. Sires is on a tight schedule. I will yield to him for
as much time as he needs.
Mr. Sires. Thank you, Mr. Chairman. You know, I keep
hearing about the OAS. They have yet to be successful on
anything since they got first created.
I mean, what initiative are they going to do? You know, it
is just amazing to me we keep referring to OAS, OAS, and the
track record of success is very little.
Then you have the people in the region. As long as these
people are dependent on PetroCaribe, how much more pressure are
they going to put on Venezuela?
And so far, the only country that I heard that--maybe I am
wrong--has been Argentina that has spoken up about what is
going on in Venezuela.
And these negotiations I think are just stalling. The
Venezuela government is stalling--stalling and waiting and
waiting to see what happens, and the fact that you have 30,000
Cubans in Venezuela running the security apparatus, dependent
on PetroCaribe oil, I mean, I just think that they are trying
to prolong this and prolong it and prolong it--that somehow
people are going to get tired and when people get tired they
are going to start moving in and taking all these corporations
over and become the state's, similar to Cuba, because that is
how it started.
I was there. I saw how it began, little by little. And this
business of having a supreme court that he created is nothing
more to stop any efforts from continued democracy in Venezuela.
So I do hope that maybe there is, and I am wrong and these
negotiations are going to lead into something. But I find that
very difficult, and I was wondering is the Venezuela and
Colombia border still open or closed? Because I know it is
impacting Colombia also.
Ms. Pforzheimer. Sir, the border is closed. However, there
is some movement, especially for humanitarian purposes.
Mr. Sires. One more question. Can you assess to me--do you
think Maduro is going to last the rest of the year?
Ms. Pforzheimer. Sir, I have no way of assessing that. I
know that he has some incredibly difficult economic choices
ahead about making payments on loans and having enough money to
import foodstuffs for his people and that many analysts have
said that this year is incredibly difficult for the Venezuelan
economy as we see it is already difficult for the people.
Mr. Sires. Mr. Andersen, what do you think?
Mr. Andersen. I would have the same response. I mean, I
don't think--as I said in my testimony, none of us I think know
at this point how this may end.
Mr. Sires. The reason I ask that is are we prepared in case
something happens in Venezuela to respond to a situation in
Venezuela so it doesn't get out of hand? Are we making any
plans? Are we considering the possibility that he may have to
step down and maybe there is chaos?
Ms. Pforzheimer. Sir, we would be very ready to work with
the international community if that were the case. There are
many humanitarian agencies international--the World Food
Program, Food and Agriculture Association and the Pan-American
Health Organization--that are ready to help in Venezuela if
they are asked and we are ready to consider support.
Mr. Sires. Are we receiving any intel or are we working
with the Venezuelan community in Florida, which is probably the
largest, on getting information on what is actually going on in
the country or we just go by what we read and what people say?
Do we have meetings with different leaders of the Venezuelan
community?
Ms. Pforzheimer. Speaking for myself, I meet with a very
wide range of people both U.S. and Venezuelan citizens.
Mr. Sires. Ambassador?
Mr. Kozak. Yes, the same here. We have meetings with human
rights groups that are very active in Venezuela. I would also
note we have a functioning U.S. Embassy there that does a lot
of reporting on these very issues.
So they are giving us ground truth and they are in contact
with a lot of the--not only the opposition political parties
but with the NGOs in Venezuela so and the business community.
So it is more than just talking to the government. We have got
that whole range.
Mr. Sires. These are the people that are basically
promoting democracy and human rights within Venezuela--the
people that you are working with?
Mr. Kozak. Yes, sir.
Mr. Sires. Can you tell me what country are the most
dependent on PetroCaribe in the region? Because one of the
reasons I voted for the export of oil is because I felt that
this country could play the same type of role that Venezuela is
playing.
I want to be an exporter of energy so we don't have to have
a country like Venezuela have these people under their thumb
with the energy.
A lot of my colleagues don't agree with that. But the
problem here is which countries are so dependent on Venezuela
for their oil?
Ms. Pforzheimer. Sir, overall most of the countries that
are the most dependent are in the Caribbean and the U.S. is
very interested in working with Caribbean nations on
diversifying their energy source.
That dependence is a little bit less in this era of lower
oil prices and this is the moment for them to consider other
sources of energy, and Vice President Biden has met with
Caribbean leaders to encourage them to consider and act now
where we have a little breathing room.
Mr. Sires. And the last thing I want to say is are we
tracking Iran's--are still flights into Venezuela? Are there
many flights still there or are there no flights anymore or if
they venture into Venezuela where is it at?
Ms. Pforzheimer. This is an issue that we follow closely
and I don't have details about their specific flights into
Venezuela. But we remain very vigilant about any of the
implications of Iran in the whole hemisphere.
Mr. Sires. Mr. Smith, you talk about security. Is that what
you were talking about before?
Mr. Smith. We continue to follow Iran's activities and
follow the intelligence, the law enforcement information,
classified to unclassified, all sources.
Mr. Sires. And what does your intel tell you?
Mr. Smith. I couldn't speak--honestly, I don't have today
the answer to that question. But I couldn't even speak about
intel in this open setting. But it is something that we--if
there were specific questions we can take those back and
provide in a different setting.
Mr. Sires. Classified hearing--a classified briefing,
right?
Mr. Smith. If there were specific questions in that regard.
Mr. Sires. Mr. Chairman, thank you very much.
Mr. Duncan. I thank you, Ranking Member.
And now we will go to Mr. Donovan for 5 minutes.
Mr. Donovan. Thank you, Mr. Chairman.
Mr. Smith, I wanted to ask you, are the sanctions that we
have imposed on Venezuela actually working and if there is an
assessment how do we assess whether our sanctions that we
impose on countries are actually successful or not?
Mr. Smith. I think I would say that the sanctions were
working across the board on the variety of objectives that we
have.
We have imposed sanctions involving Venezuelan actors,
individuals, and entities across a wide variety of programs in
the past year.
It includes the Kingpin Act for narcotics trafficking
activities, WMD for weapons of mass destruction activities,
counter terrorism as well as under the Venezuelan sanctions
program itself.
And so I think all of those serve the message of calling
out bad activity, alerting the U.S. financial system and the
international financial system of the bad individuals and
entities--the bad actors--that we think should be cut off.
So in that respect, I think very much sanctions are having
the effect that they intended. Of course, sanctions--the
ultimate goal of a sanctions program is to change the behavior,
change the behavior not only of the individuals and entities
but also of Venezuela as a whole and that still has not
occurred.
Obviously, there are still concerns with the country but I
think we have succeeded in calling out the bad activity that we
needed to call out.
Mr. Donovan. When we impose sanctions, are they for a
length of time? Is there an expiration date of those sanctions
or is it until we see that change of behavior you just spoke
of?
Mr. Smith. It is a combination. We don't have a certain
specified length of time that sanctions last. We do want to
make sure that the information is still current, that
individuals and entities are still engaging in bad behavior,
and if we see a change of behavior then we can remove them from
the list as we do regularly.
Mr. Donovan. One of the things I wanted to ask you about is
the periodic reports that you submit to Congress and how
difficult it is for Congress to have oversight because of the
reports.
I think in a 6-month period I have seen 20 different
reports. They have different time frames in which they measure
the success of the sanctions.
There is no single, like, comprehensive report from OFAC
that would allow congressional oversight to the effect of what
the sanctions are doing to those countries and those entities
that we impose them on.
Is there any plan to make the--this easier for Congress to
recognize either the successes or the failures of the policies
that we have imposing sanctions?
Mr. Smith. We haven't considered a single report largely
because we are dealing with dozens of reports to Congress that
we do on an annual basis. I think there are over 100 reports a
year that we do to Congress across a range of sanctions
programs.
And so they take away--every time we do an additional
report they take away some of the resources that we would spend
investigating an actor.
But we believe that the reports are very important so that
Congress can continue to be informed of our activities. We have
not considered a single report largely because we are doing so
many of the reports that Congress has mandated across the
various programs.
I think we could consider working with Congress if there
would be a way to do a single report as opposed to all the
separate ones. That would certainly be a resource savings from
our perspective.
Mr. Donovan. Thank you, sir.
Mr. Chairman, I yield back the remainder of my time.
Mr. Duncan. Thank you.
Let us see, no Democrats on this side so we will now go to
Mr. Yoho for 5 minutes.
Mr. Yoho. Mr. Chairman, I appreciate and I appreciate you
guys being here discussing this in the Western Hemisphere. This
is so dear to us and so--I mean, just to see that country fall
apart like it has.
And I, you know, live in Florida and being a veterinarian
we had a lot of Venezuelan clients and we have watched the
progression of it going from a great country, and I have been
there in its heydays, to see where it is today and just seeing
it fall apart and properties being confiscated. People can't
get stuff on their shelves in the grocery store, ensuing chaos
that we see coming.
With that said, the U.S. should leverage the U.S.
Department of State and U.S. Department of Defense connections
with militaries around the region to stress the Venezuelan
security forces.
Their obligation to uphold the constitution and democracy
in respect to human rights--what is the U.S. doing to
communicate this message to the Venezuelan military and people
in the other countries in that area? Whoever wants to take that
on.
Ms. Pforzheimer. Thank you, sir.
I think I would find that difficult to discuss instead of--
--
Mr. Yoho. Okay.
Ms. Pforzheimer [continuing]. Deferring to my colleagues
from the Department of Defense.
Mr. Yoho. That is fair enough. Let me ask you this. What
influence does Cuba have on the situation in Venezuela and what
effect does the Obama administration's so-called normalization
of relationships with Cuba have on the Maduro government as far
as the path that they see forward, if they see one? And I hope
it is a short one.
Ms. Pforzheimer. Sir, thank you. The U.S. raises, as I
noted, human rights issues with Venezuela. We have asked the
region to speak out with us to call for dialogue, to call for
the release of political prisoners and we also would hope that
Cuba would use whatever influence it does have to do the same.
However, our conversation with Cuba is conducted on a
bilateral basis and it is separate from the work that we are
doing with the region through the OAS.
Mr. Yoho. Okay. Let me ask you this.
Do you see Maduro hanging on to last threads of power?
Because he saw the U.S. soften relationships with Cuba has he
felt empowered from that?
Mr. Kozak. I might take a shot at that, Mr. Chairman.
I used to head our interests section in Cuba 15 years ago
so I know them a bit. The Cubans have managed to hang on to
power because they had other people outside subsidizing them--
the Soviets and, more recently, the Venezuelans.
And so I think probably the effect has been a little bit
the opposite, that the Venezuelans are seeing that the Cubans
are able to help them in sort of having tens of thousands, as
Mr. Sires mentioned, of people there--medical and security type
people.
Mr. Yoho. Right.
Mr. Kozak. But they are not able to help them economically.
Instead, they are a drain on them and their ideological bent
has gotten a little confused with their discussions with us.
So Cuba has a big role to play precisely because they have
all those people on the ground.
But I don't think that the parallel--certainly the two
leaders have tried to drive things in the same direction but
they don't have that outside----
Mr. Yoho. Well, what I was hoping to get out of that was in
South America there are several countries that are anti-
American or leaning to the pink type of governments away from
Western forms of government.
And when they see people like Castro, you know, getting
these releases or release from our State Department, I didn't
know if that emboldened Maduro to do what he does and hang on
instead of fighting internally to fix it internally, thinking
there--or versus thinking, you know, if we just stay strong
America is going to come in and soften these sanctions and I
think that would send the whole--a wrong signal to that area.
We were with Chairman Duncan and we went to South America
and we talked a lot of the--four of the five Presidents in the
countries we went to and we brought this up as a concern--is
this going to empower Cuba and if so is that going to influence
Maduro to keep doing what he is doing.
And I think what I want to end with, Mr. Chairman, is let
this be entered into the record that a socialism type of
government with a dictatorial leader like Maduro is not a
viable form of government in the 21st century and people
prosper where liberties and freedoms are protected, not where
human dreams and initiatives are silenced by repressive
government.
Thank you.
Mr. Duncan. Thank you. Without objection, so ordered.
So we have time for another round of questions if you all
have anything else you would like to ask. I am going to jump
right back in.
On to Mr. Andersen--first off, you mentioned I thought was
interesting--the Argentine government, the economic predictions
which I think will be proven to be low based on the Macri's
imposition of more free market and I think you are going to see
an improvement in Argentina.
But you were talking about Argentina and sort of--I don't
know if you were juxtaposing those or whether you were
comparing them on a similar----
Mr. Andersen. Thank you, Mr. Chairman. Sorry for the
confusion.
The point I was trying to make is that economies in our
hemisphere who have followed a similar approach to Venezuela
and I was making specific reference to the previous Argentine
government, not the current one.
We share your view completely with the trajectory with the
friendship, with the relationship with the current Argentine
government. But those who have followed a policy that is not
market friendly, that it has caused economic hardship to
companies, have not been open to the world economy are the ones
who are doing much more poorly in this hemisphere.
Mr. Duncan. Absolutely. I think the Kirchner government and
more socialist policies of big government top-down approach,
Keynesian economics, just don't work. I think what you are
going to see more free market--with the Macri government in
Argentina you are going to see prosperous days ahead.
So I think what a lot of the problems we are experiencing
in Venezuela right now are because of that same Marxist
philosophy.
So let us talk about energy. Energy is a passion of mine. I
think energy is a segue to hemispheric stability, economic
opportunity and what we heard--you heard Mr. Yoho talk about
travelling to Latin America, to a number of countries.
Energy was on their minds as well, whether their own access
with their own development of their energy resources, and
Argentina is a good example of what Macri wants to do with his
energy there, how the Argentine people felt about the pipeline
that now imports natural gas from Chile was originally built to
export natural gas to Chile.
They would love to see Argentina be an exporting country
once again from Paraguay, wanting to develop the gas fields in
up along the Bolivian border. So energy is on the minds of the
folks there.
I spoke last week to the Caribbean nations. Energy is on
their minds, what PetroCaribe may or may not be able to deliver
in the future--an opportunity for American industry to step
into any void left by PetroCaribe.
So energy is definitely an economic driver. But as oil
prices remain low, is it possible for the Venezuelan economy to
recover without oil prices going back up, as I mentioned
earlier? And Mr. Andersen, that is to you and then I will open
it back up to anyone.
Mr. Andersen. Well, thank you again for that question.
I am not in a position to speculate on what the price may
mean in terms of oil or energy for--whether the Maduro
government--what will happen to it.
I would point out that the--clearly, the position that they
find themselves in has been exacerbated by the price currently
in energy. But this was a long time coming from very anti-
market policies for nationalizing companies, for the whole
range of bad economic choices they have made over the
succeeding years.
Mr. Duncan. I think you hit on something. We see Pemex in
Mexico denationalization are at least loosening there. We see
corruption with Petrobras. We see a state-owned oil company
like in Venezuela have troubles.
I don't know what the price point is for the Maduro
government to actually start--the economy start benefiting from
oil revenues. I don't know what the price point is there.
But I do know it is hurting them right now, as you say. Ms.
Pforzheimer, you wanted to jump in on that?
Ms. Pforzheimer. Thank you very much.
I don't know the exact price point either but I do know
that the Maduro government spent a great deal of time over the
last year trying to work with OPEC nations to get the price
raised and at some points we heard that they thought $100 a
barrel would work best.
We also note, as Mr. Andersen does, that mismanagement and
corruption are just as much part of the problem with respect to
the energy sector as the actual world price of oil.
Mr. Duncan. Yes. Anyone else like to talk about energy
prices--energy issues? There are about 500 U.S. companies that
are represented in Venezuela and largely in the oil and gas
industry but not all.
How easy or difficult is it to conduct day to day business
in Venezuela? Mr. Andersen.
Mr. Andersen. Thank you, Mr. Chairman. I think you----
Mr. Duncan. In June 2016, okay?
Mr. Andersen. And I think you referenced some of those
concerns in your oral statement, that it is extremely difficult
for U.S. companies who are in Venezuela to do business in
Venezuela from a range of issues--from currency issues, from
issues on the price of imports across the board.
So it is an extremely difficult environment that they work
in, and as I also referenced in my testimony a number of them
that do stay stay also because they have spent decades
developing this market.
They stay out of a sense of loyalty to their Venezuelan
employees and to their local communities and they are, quite
honestly--many of them have targets on their back, quite
literally, because of their being accused, as I indicated, of
hoarding and price gauging in some cases by the current
administration.
Mr. Duncan. Ms. Pforzheimer, what are the regional
implications of--from the administration's standpoint do you
see with the bad economic situation and the bad government
situation in Venezuela?
We heard from Caribbean nations that are concerned about
PetroCaribe and commitments made and, of course, Maduro went to
Jamaica and said they were going to reinvest in refineries
there and bring them up to speed and I wonder where he is going
to get the money without borrowing it from China.
But so when we think about Caribbean nations, can you
broaden that? What are some of the other implications that we
may not be thinking about when Surinam or Guyana or Colombia
and the FARC and Panama and trade and--so enlighten me from the
administration's standpoint, what are some of the implications
that you all see from this deteriorating situation there?
Ms. Pforzheimer. Thank you for the question.
We are concerned overall about the deterioration, as you
point out, and I would really just name two areas. One is what
you have noted--the dependence of the Caribbean in different
degrees on PetroCaribe and PetroCaribe funding and I think our
response and their response, more importantly, is that they
know they have to get out from that dependence. They must
diversify their sources of energy.
The other area of concern that, you know, we have heard,
although not at any concerted pitch is that of possible
migration. The Caribbean islands that are closest to Venezuela,
the Dutch Islands or the border with Colombia are points that
those countries are watching very, very carefully and they are
raising their concerns directly with the Venezuelan government.
Mr. Duncan. Right. So what else can the U.S. be doing at
the OAS to promote democracy in Venezuela?
Ms. Pforzheimer. So tomorrow's meeting is, in our view, a
very important inflection point. Secretary General Almagro
published an incredibly long and detailed and thorough
examination of the Inter-American Democratic Charter as applied
to the situation in Venezuela.
He is seeking the opportunity to speak with member states
about that report and we hope he gets that opportunity
tomorrow. We could see the formation of something like a group
of friends from the OAS member states who would also try to
work with the parties in Venezuela and urge them to seek a
sustainable solution there.
Mr. Duncan. But within the OAS itself, you have got an
Argentine plan or model. You got Almagro. So it would be
interesting to see what happens tomorrow. I agree with you on
that.
I am going to recognize a former chairman of the committee
and now chairwoman of the Middle East and North Africa
Subcommittee, Ms. Ros-Lehtinen.
Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman, and I
deeply apologize for coming so late today. I had the
opportunity to speak on the House floor this morning about
Venezuela and I hope that you get a chance to view my remarks.
But I had a few questions. Thank you so much for your
leadership on this issue of freedom and fairness for the people
of Venezuela.
And as you know, Mr. Chairman, in September of last year I
was joined by 19 of my colleagues in sending a bipartisan
letter to Secretary Kerry and Secretary Lu urging the
administration to enforce a bill that I passed along with all
of our colleagues and Senator Marco Rubio, the Venezuela
Defense of Human Rights and Civil Society Act, and we asked the
secretaries to enforce this bill and apply sanctions on regime
officials in the Venezuelan court system in response to the
unjust sentencing of Venezuela activist and political prisoner
Leopoldo Lopez.
If I could ask the witnesses, Mr. Chairman, what
justification do they have for not carrying out and
implementing these sanctions for this miscarriage of justice
and what is the dollar amount of the assets seized of the seven
individuals that you have sanctioned.
And I am going to continue on the subject of sanctions. I
am aware that State has pulled some visas due to human rights
violations and if they could tell us how many visas the State
Department has pulled and who are these individuals.
So much of this is done in secret. We just don't know what
is happening. And last week at the OAS meeting in the Dominican
Republic, Secretary Kerry stated that Venezuela should follow
its own constitution and hold a fair and timely recall
referendum.
And I wanted to ask our witnesses if Secretary Kerry
believes or expects that it will happen this year.
And lastly, Maduro has stated that he is ready to exchange
Ambassadors and I think that this is a big mistake by our State
Department because it will look as if we are legitimizing an
illegitimate regime and I wanted to ask the witnesses will the
State Department nominate someone this year to be Ambassador to
Venezuela.
And I was--lastly, Mr. Chairman, I had the opportunity to
meet with some wonderful young people who are here in the
audience today representing the youth of Venezuela and they
gave me a summary of the facts of Valencia, a state in
Venezuela, and gave me a list of individuals they believe
should be on the sanctioned individual list and I wanted to ask
our witnesses if they will be adding some names to this list.
And Mr. Chairman, with your indulgence, if I could put this
letter as part of the record and if I could put--if I could
hand this document to our officials to see if--we have given
them so many good suggestions of really bad actors in Venezuela
who deserve to be sanctioned.
They want to come to the United States. We should just not
let them come. We have got a bill that became a law that,
sadly, has not been implemented.
So thank you, Mr. Chairman.
Mr. Duncan. Without objection.
Ms. Ros-Lehtinen. And I would love to get their responses,
whoever would like to respond. Thank you. Thank you, ma'am.
Ms. Pforzheimer. Thank you very much for your questions. I
will address some of them and ask my colleague from OFAC to
address others.
Ms. Ros-Lehtinen. Good. Thank you.
Ms. Pforzheimer. Thank you very much. Thank you about your
question regarding future sanctions. This is an important tool
that we can use, we have used.
At this point, we are still assessing the utility and we
would consider any public or diplomatic or legally available
method to address the injustices in Venezuela.
Ms. Ros-Lehtinen. If I could just follow up with that. So
this bill became a law. So not that we needed to even pass it
because the administration had this authority already.
We just wanted to nudge them along, and you have heard of
individuals who are violating the human rights of Venezuelan
nationals. And what would it take to add people to the list?
I hope that it doesn't take more deaths. The Maduro regime
is already responsible for so many deaths in Venezuela.
What more do we need to do so that we can add names to the
people who will not be allowed into the United States whose
assets will be frozen, whose bank accounts will be frozen? What
more needs to be done?
Ms. Pforzheimer. Thank you, ma'am. We are assessing--we
will continually assess the utility of the sanctions, tools at
our disposal. And also, as you noted and has been noted by the
chairman, there have been visa revocations that have occurred
and are still occurring.
Ms. Ros-Lehtinen. Can you tell me how many visas were
pulled?
Ms. Pforzheimer. There have been over 60 visas.
Ms. Ros-Lehtinen. And are you making those public?
Ms. Pforzheimer. Due to visa confidentiality rules, we
would not be making public the names of the people whose visas
were revoked.
Ms. Ros-Lehtinen. And how about the sanctioned individuals?
Ms. Pforzheimer. Those are----
Ms. Ros-Lehtinen. When was the last time that someone had
been sanctioned from Venezuela?
Mr. Smith. Ma'am, thank you for the questions and I know
there are a number of them and I think came to the OFAC one so
I will go down the list, if I may.
I will first start off by thanking Congress for its
leadership in this area because I think the statute was
particularly important and helpful in helping us craft and work
with the rest of the administration to craft an Executive order
to build off the statute and to actually implement the--some of
the sanctions that came from that.
I will also thank you all because I think we have continued
to receive information from various Members of Congress and
staff through NGOs or other groups and we continue to look at
that information as we build packages.
When you ask about when was the last time when the
President issued the Executive order in March 2015 those were
the seven individuals that received economic sanctions----
Ms. Ros-Lehtinen. And since March 2015?
Mr. Smith. We have not frozen any additional assets. We
have not issued additional sanctions freezing assets----
Ms. Ros-Lehtinen. But you do agree that there have been
egregious human rights violations that have occurred in
Venezuela since March 2015 or do you not think that that is
true?
Good to see you.
Mr. Kozak. Nice to see you.
Ms. Ros-Lehtinen. Old friend for many years.
Mr. Kozak. Yes, indeed. A pleasure.
I might jump back because we are talking both with the
sanctions under the--that involve assets which have a much
higher standard of proof and so on and then the visas that my
colleague mentioned.
The visa ban has continued on. Every so often we will do
another trench. We have got more in the works right now, and
while we can't--as Annie mentioned, we can't give names under
the visa laws, we have said that these have included ministers
in the government, senior presidential advisors, judicial and
law enforcement personnel at high levels.
So, you know, and they know who they are and I think, more
importantly, a lot of their colleagues know who they are and we
have seen--I mean, one of the reasons you did is, one, is to
punish people for their bad behavior but the other is to deter
other people from the same kinds of behavior and we have seen
evidence of that working.
Ms. Ros-Lehtinen. And when bad behavior--if I could
interrupt and I will leave with this--bad behavior means that
they have given orders to violate the human rights----
Mr. Kozak. Absolutely.
Ms. Ros-Lehtinen [continuing]. Of Venezuelan natives. I
mean, it is not coming late to class.
Mr. Kozak. No, exactly. The visa----
Ms. Ros-Lehtinen. Ordering the killing of students,
unarmed.
Mr. Kozak [continuing]. Is within two categories,
basically. One is just that--really serious violations of human
rights such as putting people away for nothing other than their
opinion and the other is public corruption.
Ms. Ros-Lehtinen. Violations that can be proven and we have
given--with all due respect and I will end with this, so much
evidence, Mr. Chairman, and I just feel like we are letting the
people of Venezuela down when we don't use the laws to the
fullest extent.
Mr. Duncan. It is following a pattern, though.
Ms. Ros-Lehtinen. It is, sir.
Mr. Duncan. We are letting people of Cuba down.
Ms. Ros-Lehtinen. Amen.
Mr. Duncan. Now we are letting the people of Venezuela
down.
Ms. Ros-Lehtinen. Thank you, Mr. Chairman.
Mr. Duncan. Yes. Thank you.
Ms. Ros-Lehtinen. Thank you, sir. Thank you.
Mr. Duncan. Thank you. You always do a great job. You are
welcome, too. I will go down to Mr. Yoho for a follow-up.
Mr. Yoho. Thank you, Mr. Chairman. I appreciate the
extended time and I thank you guys for sitting here.
With Venezuela collapsing like they are--their economy,
their infrastructure and there is that social explosion of
people wanting the changes in there--what are the potential
ramifications for that region?
Do you see it destabilizing any of the surrounding
countries? And if you answered that earlier I apologize.
Ms. Pforzheimer. Thank you for the question.
It is something that we watch and we are working with our
Embassies in region--in countries that are in the region with
Venezuela.
We noted--I noted two areas of concern. One is the economic
implications that could occur to the Caribbean, which has been
very dependent on the Venezuelan energy and our efforts to work
with them to diversify their sources of energy.
And the other is the possibility of any kind of migration
of people leaving Venezuela and that could be--that could
affect the islands that are close by, the Dutch Islands, or
Colombia.
Mr. Yoho. And that is one of my follow-up questions. What
are the humanitarian refugee migration flow risks to the
surrounding countries? Are they prepared for that?
And then, you know, with the Maduro regime or government
not liking us too much or the disdain they have for us, at what
point can we intervene humanitarian wise and do we have that
set up and do we have metrics I assume we had already set up,
right?
Ms. Pforzheimer. I think in--to answer your second question
first that it is important if there were any kind of
humanitarian intervention that it be multilateral. I think that
is the most important function of the agencies that are set up
to assess food needs, to give emergency help to children like
UNICEF, and we are active participants in those organizations.
So we would look to them to assess the needs and the
conditions for any kind of humanitarian assistance.
Mr. Yoho. Let me ask you a pointed question. Is there any
plans on relocating any of the Venezuelan refugees to
Guantanamo in there where we had the tent city back in--back
when we had it?
And I ask that question because I was down there and there
was talk of that, of an infrastructure going in. Is that
something you can comment on?
Ms. Pforzheimer. I don't think, first of all, that I should
comment on something that would be under Department of Defense
authorities. But I have absolutely no information about
anything like that.
Mr. Yoho. All right. Let me ask you this.
With the void that is happening in that government in
Venezuela, who do you see fulfilling that void? You know, do we
have to worry about a Libya in the Western Hemisphere with ISIS
coming in?
We know the connections between Iran, Hezbollah, Russia and
China, and the reports I have read that are public knowledge is
that ISIS has been through there, that Venezuela has been
complicit in faking passports of people of Middle Eastern
status--ISIS status--faking passports so that they can cross
through from here to Canada, from there through Mexico, through
Canada. Do you have any activity down there now that we need to
know about?
Ms. Pforzheimer. Thank you. First and foremost, I think
that our law enforcement colleagues who are not here today are
best placed to talk about any kind of controls that would be
appropriate to what you are describing.
But we, as the U.S. Government, would watch any kind of
indications of that nature very carefully. As far as the idea
of vacuum, you know, the opposition is looking for a
constitutional peaceful mechanism to express their concerns.
Mr. Yoho. That is only if they are allowed to go through
the process that they are set up to do and with 1.4 million
people's signature verified on the recall, you know, things can
fall apart real quickly and then chaos breaks out and I--all we
have to do is look back at Syria and see the way that started
and where it is today and we don't need that in the Western
Hemisphere.
So with that, Mr. Chairman, I am going to yield back and I
appreciate the opportunity and thank you all for being here.
Mr. Duncan. I want to thank you and I will thank all the
members that participated. Great questions, great dialogue. I
want to thank the witnesses for being here today as well. I
think we have--we have opened a number of lines of thought and
I hope we will continue the dialogue because the Venezuelan
people need us to continue the dialogue.
If you think about--it has only been, what, 20 years or
less since Chavez took over and the changes--I think about pre-
Chavez Venezuela and Chavez and Venezuela in June 2016.
As I said earlier, it is heartbreaking for the Venezuelan
people when you think about the resources that are available
there, the country that Venezuela can be and that we yearn for
it to be once again and can be with democratic principles and
ideals in place and followed.
It is not that they don't have a constitution, not that
they don't have a legislature or not, not that they don't have
different branches of government, not that they don't have
democratic principles in existence but you have to follow
those.
So thank you and I look forward to tomorrow and the OAS
hearing--meeting, rather--and what may develop on these
different lines of thought and tracks that it looks like others
are going down.
So we will conclude, and pursuant to Rule 7 the members of
the subcommittee will be permitted to submit written statements
to be included in the official record.
Without objection, the hearing record will remain open for
5 business days to allow statements, questions, extraneous
materials for the record subject to the length limitation in
the rules.
We had some items that were submitted for the record
earlier, and there being no further business we will stand
adjourned.
[Whereupon, at 2:19 p.m., the subcommittee was adjourned.]
A P P E N D I X
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