The Trump administration on Monday froze assets, banned travel and prohibited Americans from dealing with Venezuelan President Nicolas Maduro, calling him a dictator and accusing him of undermining democracy after he carried out an election Sunday for an all-powerful new legislative assembly in defiance of warnings from the international community.
As part of what are expected to be a series of escalating sanctions, the Treasury Department added Maduro to its growing list of sanctioned current and former members of the Venezuelan government and military.
"Maduro is not just a bad leader: He is now a dictator," National Security Adviser H.R. McMaster said from the White House briefing room Monday.
The U.S. has yet to settle on "strong and swift" economic actions that Trump threatened ahead of Sunday's election for a new constituent assembly with the power to dissolve the opposition-held parliament, effectively wiping out the remnants of Venezuela's democracy. McMaster called the vote a "sham election."
Treasury Secretary Steven Mnuchin said the U.S. would continue to monitor Venezuela but declined to detail potential future economic sanctions.
"Yesterday's illegitimate elections confirm that Maduro is a dictator who disregards the will of the Venezuelan people," Mnuchin said. "By sanctioning Maduro, the United States makes clear our opposition to the policies of his regime and our support for the people of Venezuela who seek to return their country to a full and prosperous democracy."
Mnuchin reiterated the threat to sanction all 545 constituent assembly members once they are seated. The new assembly is supposed to take over in the next two days.
Mnuchin wouldn't say what assets, if any, Maduro might hold. The U.S. has estimated Venezuelan Vice President Tareck El Aissami, who was sanctioned as a drug kingpin in February, has foreign assets of roughly $500 million.
Maduro is the fourth head of state sanctioned by the U.S. The others: Robert Mugabe of Zimbabwe, Bashar Assad of Syria and Kim Jong Un of North Korea.
"He joins a very exclusive club," McMaster quipped.
The U.S. plans to refrain from deploying its harshest sanction — a ban on Venezuelan oil imports — though it had raised that possibility ahead of Sunday's election. Instead, the Trump administration is considering Russian-type financial sanctions to limit U.S. companies from trading in sovereign debt on primary or secondary markets. The sanctions could even be retroactive, affecting Goldman Sachs' widely criticized May purchase of $2.8 billion worth of bonds issued by Venezuela's state-owned oil company, PDVSA, according to a former U.S. official who is familiar with the discussions.
The Trump administration wants to allow the U.S. to continue importing crude oil for refining, though it may prohibit U.S. companies from providing debt equity or any kind of investment to PDVSA. Nevertheless, a main objective of the National Security Council, State and Treasury leaders behind the sanctions is limiting the damage to U.S. companies.
"They could shield U.S. companies to a certain extent, but what you're essentially doing is turning off the Venezuela economy," the former U.S. official said.
The Venezuelan government said 8 million people, or nearly 42 percent of the electorate, voted Sunday, a figure forcefully disputed by Maduro's opposition and independent observers, who estimated fewer than half as many ballots were cast.