WASHINGTON _ The Trump administration announced tough new financial sanctions Friday against the Venezuelan regime in retaliation for the detention of Juan Guaido's chief of staff.
The new sanctions that target the entire Venezuelan banking sector are the strongest action taken by the administration since the crippling oil sanctions against the state run oil company, PDVSA.
A senior administration official called the action a signal to Nicolas Maduro of the ongoing pain that could be inflicted, while noting Trump's declaration this week that the U.S. had not done the "tough sanctions yet."
The official said the banking sanctions would potentially shut Venezuela out of international financial markets.
"He should be very afraid," the senior administration official said. "We are now going to be significantly expanding our economic activity. We've done a lot already to prevent the Maduro regime to engage in significant international transactions. By going after the banking sector itself, we'll be able to do that more efficiently."
In response to the Maduro regime's increasingly undemocratic actions, the administration took action in the summer of 2017 to restrict Venezuela's access to U.S. financial markets, increasing fiscal pressure on the government. The new sanctions go even farther, sanctioning Venezuela's state-owned development bank and its foreign subsidiaries in Uruguay and Bolivia. The bank provided credit services and commodity contracts to promote Venezuela's economic development.
On Thursday, the State Department accused a Venezuelan judge, two prosecutors and two intelligence officials of being responsible for the pre-dawn detention of Juan Guaido's chief of staff, Roberto Marrero.
The detention of someone so close to Guaido, who the United States recognizes as Venezuela's legitimate leader, is largely seen as a test of Trump administration's mettle. U.S. leaders have warned that Maduro would be a crossing a red line if his government harmed or intimidated Guaido or his family.
The senior administration officials told a group of reporters that Maduro's actions did cross a line, hence the new sanctions that will have a "profound impact on the regime's ability to survive."
"We'll also designate specific banking institutions and that means those banks will not be able to deal with any significant international financial institution that wants to do anything in the United States. We consider these very significant steps."
During a Rose Garden news conference this week with his Brazilian counterpart, Trump declared the United States has yet to take its toughest measures on Venezuela. But that assessment is much different than that of others familiar with U.S. strategy in Venezuela, who say the United States has already inflicted its strongest damage through crippling oil sanctions.
Benjamin Gedan, who was National Security Council director for South America during the Obama administration, said the reality is the Trump administration has limited options.
"Unfortunately, the U.S. is low on ammunition," Gedan said. "The latest provocation might be hard to swallow, but it is important to give existing sanctions time to bite."
That doesn't mean the administration if out of options. Here are the most likely:
_ Individual sanctions. The United States has already slapped sanction against 80 people close to Maduro, including members of his inner circle and family. It can continue to expand the list of individuals and entities that can be sanctioned.
_ Secondary sanctions. The administration is threatening to impose so called "secondary sanctions" on non-US companies and entities that trade with Venezuela, such as in oil or gold. These sanctions are similar to those imposed against the government in Iran.
_ Visa revocation. The U.S. continues to threaten revoking visas of Venezuelans. The administration has already revoked hundreds of visas from Venezuelans, many of which belonged to former diplomats from Venezuela and their families.
_ Oil sanctions. The administration has not issued a complete ban on oil purchases, but many oil experts say that was essentially the outcome when it required any payment be placed into an escrow account that would ultimately be redirected to the Guaido team.
_ Sectorial sanctions. The U.S. has already targeted the Venezuelan oil and gold sector. They could presumably extend to other sectors, such as other forms of mining and perhaps agriculture, but experts say those would more likely be symbolic because of the limited production of those industries.
_ Law enforcement action. The administration could also take action against so-called "bag men" of Maduro officials who are believed to be laundering 10s of millions of dollars through the United States. While those actions would be powerful, experts say those criminal investigations are not typically used as foreign policy tool.
_ Banking sanctions. The U.S. could expand sanctions on foreign financial institutions that continue to provide Maduro with lines of credit. On March 11, the U.S. sanctioned a Moscow-based bank that was jointly owned by Russian and Venezuelan state-owned oil companies after its assets grew in 2018. The U.S. could impose similar restrictions on foreign banks that increase their Venezuelan assets during the country's ongoing humanitarian crisis, and Chinese banks are a potential target.
_ List of state sponsors of terrorism. The administration was preparing to add Venezuela to the U.S. list of state sponsors of terrorism in what was seen as dramatic escalation against Maduro's regime. The list is reserved for governments accused of repeatedly providing "support for acts of international terrorism" and includes only Iran and North Korea. But the administration has held back as it considers the potential impacts on the Guaido government if it takes over.
"The theme is there is not much more _ that I see _ we can do," said Fernando Cutz, a former acting senior director for Western Hemisphere Affairs at the National Security Council in the Trump administration. "The secondary sanctions are probably most we could do. We can so no one in the world is allowed to buy oil from Venezuela like we do with Iran, but again I think that is going to be mainly symbolic if its true that the Indians are going to actually follow through on what they're saying, which is they're going to stop. If the Indians stop purchasing, than no one is purchasing."
Eric Farnsworth, vice president of the Council of the Americas who recently testified before the U.S. Senate on Venezuela, said sanctions which limit the ability for individual Venezuelans to access credit will "complicate the lives of everyday Venezuelans" but also put further pressure on Maduro to dole out benefits that keep him in power.
"It does threaten to complicate the lives of everyday Venezuelans but I think the answer here is to find a way to get Maduro to be eased out of office," Farnsworth said. "I'm not being callous here, but their lives are going to get worse under the current regime anyway with no end in sight."
Farnsworth also said the administration's response to Guaido's chief of staff being detained suggests that the White House is going to consider every sanction possible before seriously considering a military response.
"China is bankrolling Venezuela and until you can change that relationship, U.S. sanctions are only going to get you part of the way," Farnsworth said. "At the end of the day, if Maduro can't get financing from somewhere, his regime goes kaput."
Regardless of what actions the administration takes, it's going to take more than sanctions to produce regime change, said Cynthia Arnson, director of the Latin America program at the Wilson Center. Not that the Maduro government doesn't deserve sanction, but Arnson said there is no evidence that inflicting pain through sanctions produced positive results.
"The Trump administration is looking to absolutely cripple the Venezuelan economy in the hopes that the level of pain will lead to cracks in the armed forces or otherwise result in regime change," Arnson said. "But there is no example of economic sanctions that I know of that has been successful in producing regime change."
Gedan agreed.
"Unfortunately, there are finite tools available to pressure a foreign government, he said. "Ultimately, Venezuela's government will fall when the Venezuelan people rise up."
