Gunster Attorney Marina Olman Quoted in MoneyLaundering.com

Lawmakers Say Venezuela Should Be Designated a State Sponsor of Terrorism

June 24, 2011

By Colby Adams

 Congressional leaders called for the U.S. State Department to deem Venezuela a State Sponsor of Terrorism Friday for allegedly supporting Iran’s nuclear weapons efforts and a blacklisted South American separatist group.

 The current U.S. sanctions regime against specific Venezuela-owned companies, banks and individuals are “merely cosmetic,” said Rep. Jason Chaffetz (R-UT), chairman of the House Oversight Subcommittee on National Security, during a joint hearing of three House subcommittees.

 “Isn’t the only reason we haven’t included Venezuela on the State Sponsor of Terrorism list because of the oil?” said Chaffetz, questioning State Department officials and Adam Szubin, director of the Office of Foreign Assets Control (OFAC). “It seems that we’re okay with Venezuelan terrorism as long as we keep the price of gas down at 7-11.”

 Designating Venezuela over its ties to Iran and Fuerzas Armadas Revolucionarias de Colombia (FARC) would add a fifth nation to the U.S. list, which includes Cuba, Iran, Sudan and Syria. The designation potentially imposes restrictions on U.S. foreign assistance, a ban on defense exports and sales and miscellaneous financial restrictions.

 Although banking sanctions aren’t mandated by the list, they are often applied in conjunction through other sanctions vehicles, including the International Emergency Economic Powers Act (IEEPA), said Victor Comras, a former sanctions director with the U.S. State Department. To date, all countries included on the list have been subject to banking restrictions under IEEPA.

 “We do buy and sell a lot from Venezuela, and those things are handled through the regular financial institutions,” said Comras. “There can be no doubt that if we were to add Venezuela [to the State Sponsors of Terrorism list], banks would be much more cautious in their dealings for fear” that the country will be otherwise sanctioned, he said.

 Perhaps the strongest use of the designation with other sanctions has been against Cuba, said Marina Olman, a banking attorney with Gunster, Yoakley & Stewart, P.A. in Miami.

 “If they went that route, transactions making references to ‘Venezuela’ or Venezuelan companies, for example, could be blocked by U.S. financial institutions,” she said, adding that such a move “is probably not realistic” considering U.S. trade with the country.

 The pending 2012 Venezuelan presidential election, which could see the emergence of leadership more favorable to U.S. interests, could weigh against adding the South American country to the State Department list, she said.

 Venezuela warrants tougher restrictions for its financial, military and trade relationship with Iran, as well as its support of Hezbollah and FARC, who use the country “as the front door to operate and move freely within our hemisphere,” said Rep. Connie Mack (R-FL), chairman of the House Foreign Subcommittee on the Western Hemisphere, during the hearing.

 A total embargo of Venezuelan imports would dramatically curtail the U.S. energy supply, however, said Thomas Delare, the State Department’s director of terrorism finance and economic sanctions policy, during questioning.

 “If 10 percent of U.S. oil imports are coming from Venezuela, with three U.S. refineries dependent on CITGO, 6,000 gas stations and 3,000 other employees, we have to weigh those factors as well, especially with the spike in oil prices,” said Delare.

 The hearing follows the May 24 designation of Venezuelan state-owned oil company PDVSA under the Comprehensive Iran Sanctions, Accountability and Divestment Act. U.S. officials blacklisted the company for selling fuel to Iran worth $50 million but exempted PDVSA’s U.S. subsidiary, Citgo.

 Separately, the U.S. Treasury Department added two current and one former Venezuelan official purportedly linked to FARC to its list of Specially Designated Nationals in September 2008. The next month, the department blacklisted a Venezuelan subsidiary of the Tehran-based Export Import Bank of Iran shortly afterits opening in Caracas.

 The United States last applied the designation in 1993, against Sudan. Since 1979, U.S. officials have removed Libya, Iraq, North Korea and South Yemen from the list.

Tags: Marina Olman