Julio Borges Urges U.S. to Reject PDVSA-Rosneft Deal
On May 24, 2017, Julio Borges, President of Venezuela’s National Assembly, wrote a letter to U.S. Treasury Secretary Steven Mnuchin, who serves as Chair of the Committee on Foreign Investment in the United States (CFIUS), urging CFIUS to reject the potential acquisition by Russian oil company Rosneft of Venezuelan state-owned oil company Petroleos de Venezuela S.A. (PDVSA)’s stake of Citgo Petroleum Corporation (Citgo).
In the letter, Mr. Borges explained that the potential transaction would result from an illegal attempt by President Nicolás Maduro to perpetuate his deeply unpopular regime, given that PDVSA unlawfully used 49.9 percent of Citgo shares as collateral for a $1.5 billion loan from Rosneft, without authorization by Venezuela’s National Assembly, as required by the Venezuelan Constitution. Mr. Borges moreover explained that the acquisition would serve against the national security interests of the United States.
Below is the full text of the letter by Julio Borges to Secretary Steven Mnuchin:
Dear Secretary Mnuchin,
I am writing to respectfully bring your attention, as Chair of the Committee on Foreign Investment in the United States (CFIUS), to the illegality of the potential acquisition by Russian oil company Rosneft of Venezuelan state-owned oil company Petroleos de Venezuela S.A. (PDVSA)’s stake of Citgo Petroleum Corporation (Citgo). The transaction would result from an illegitimate and desperate attempt by the dictatorship of Nicolas Maduro to fill the regime’s coffers to continue its repression of the millions of Venezuelans protesting for elections and democracy in the streets of our country. The potential acquisition also serves against the national security interests of the United States, as it would prop up a government tied to drug trafficking and with a documented history of supporting anti- democratic regimes in the Western Hemisphere and beyond. For these reasons, I urge CFIUS to reject the proposed transaction.
Last year, PDVSA unlawfully used 49.9 percent of Citgo shares as collateral for a $1.5 billion loan from Rosneft, without authorization by Venezuela’s National Assembly. This is a direct violation of Venezuela’s Constitution, which provides the National Assembly with the power to authorize all of the National Government’s international debt agreements. Thus, it would be illegal for Rosneft to acquire PDVSA’s stake of Citgo if the Maduro regime were to default on its illegitimate debt obligation to Rosneft. Already, the National Assembly has legislated through numerous resolutions not to recognize any of the government’s debt-incurring mechanisms without its authorization.
Beyond the constitutional illegality of the transaction, were CFIUS to permit Rosneft to acquire PDVSA’s stake of Citgo through an illicit agreement, it would be tacitly supporting the breakdown of democratic order and the separation of powers in Venezuela. The Venezuelan government has repeatedly violated human rights and the Constitution of Venezuela, with dozens of our citizens killed and hundreds more injured during protests in recent weeks against the dictatorship of President Nicolas Maduro. Since Venezuela’s opposition coalition won a majority in the National Assembly in 2015, the Maduro regime has systematically sought to erode the powers of the National Assembly and to concentrate them in the Executive branch. These anti-democratic efforts culminated recently when the government-controlled Venezuelan Supreme Court issued a ruling to assume the powers of the National Assembly. This virtual coup effectively dissolved the National Assembly, thus decimating the separation of powers doctrine enshrined in our Constitution.
As the Venezuelan people continue their struggle to recover democratic order in our country through peaceful and democratic elections, I urge CFIUS to reject this illegal transaction designed to perpetuate the power of a deeply unpopular and repressive regime.
Thank you for your consideration.
Deputy Julio Borges
PRESIDENT OF THE NATIONAL ASSEMBLY