Trading Hands: Does the United States’ Transfer of Citgo to the Venezuelan Opposition Violate the Non-Intervention Principle?

Joshua Raftis
Vol. 40 Associate Editor

In January of this year, Juan Guaido, the President of Venezuela’s opposition-dominated National Assembly, unilaterally declared himself president of Venezuela in defiance of the sitting president, Nicolas Maduro.[1] Guaido based his claim to the presidency on Articles 233, 333, and 350 of the Venezuelan Constitution, which he interpreted to render the current presidency vacant and to vest the National Assembly with the power to appoint an interim president.[2] Since his declaration, Guaido’s opposition government has been recognized by at least fifty different countries, including the United States of America (which had promised to back Guaido should he declare himself President)[3] and many other members of the Organization of American States, and the European Union.[4]

As part of its support for the opposition government the Trump administration ordered the Treasury Department to freeze the assets of the Maduro government in the United States and to transfer them to accounts that are only accessible to members of the opposition.[5] Most notable amongst these U.S.-based assets is Citgo, a subsidiary of the Venezuelan State Oil Company (PDVSA) which owns three refineries and over 5,000 gas stations across the United States and makes over $23 billion in annual sales.[6] [7] The United States forbade Citgo from passing any funds or profits back to PDVSA, and recognized the opposition government as the majority shareholder of the company, allowing the opposition to replace Citgo’s board of directors, replacing many pro-Maduro directors with staunch Guaido loyalists.[8] [9] [10] This move to transfer ownership and control of Citgo from the Maduro government to the opposition government is potentially problematic from an international law perspective because the Maduro government is still recognized by the United Nations as the legitimate government of Venezuela.[11] This raises the question of whether such a transfer of national assets from the internationally recognized government of Venezuela to an internal opposition government constitutes an unacceptable interference in the internal affairs of Venezuela.

The Non-Intervention Principle

Under the 1965 Declaration on the Inadmissibility of Intervention in the Domestic Affairs of States the United Nations General Assembly declared that

all peoples have an inalienable right to complete freedom, the exercise of their sovereignty and the integrity of their national territory, and that, by virtue of that right, they freely determine their political status and freely pursue their economic, social and cultural development. . . [12]

As a result of this, the General Assembly stated that “no State has the right to intervene, directly or indirectly, for any reason whatever, in the internal or external affairs of any other State.” [13]

The Non-Intervention Principle was clarified by the International Court of Justice (ICJ) in Nicaragua v. United States, in which the Court passed judgement on a number of military and economic interventions taken by the United States during the Nicaraguan civil war.[14] The ICJ found that the Non-Intervention Principle was made legally binding through Article 2-4 of the UN Charter, as well as by Customary International Law, as reflected by the General Assembly Resolution. In its ruling, the ICJ held that mere economic pressure alone, in the form of sanctions or a trade embargo, was insufficient to constitute an unacceptable intervention, since member states are entitled to decide which countries they wish to engage in economic relations with.[15] Despite this, the ICJ found that the US had interfered in Nicaragua’s affairs by providing financial aid to the Contras and had that the US engaged in a use of force by providing weapons and training to the Contras, as well as by mining and bombing certain Nicaraguan port facilities.[16]

Application to Citgo and Venezuela

The United States has not engaged in a use of force against Venezuela.  What is less clear is whether the United States’ transfer of assets, including Citgo, from the internationally recognized Maduro government to the opposition constitutes providing financial assistance to a rebel group comparable to the United States’ funding of the Contras in the 1980s. In Nicaragua the ICJ proclaimed that “no such general right of intervention, in support of an opposition within another State, exists in contemporary international law.” [17] This proclamation, however, must be taken in the context of the type of intervention the United States was engaged in: namely, funding armed paramilitary groups to use coercive force to overthrow the Sandinista government.

The Nicaragua court fixated on the impermissibility of the United States’ use of financial support to the Contras as a means of coercion against the Nicaraguan government:

The Court considers that in international law, if one State, with a view to the coercion of another State, supports and assists armed bands in that State whose purpose is to overthrow the government of that State, that amounts to an intervention by the one State in the internal affairs of the other.[18]

This is where the current situation diverges most clearly from the facts of Nicaragua. So far, the funds transferred by the United States to the opposition government have not been used to fund an armed rebellion. It is unclear to what extent the seized assets have been used to fund the opposition government at all because it is notoriously difficult it is to access any form of financial assets inside of Venezuela.[19] Instead, the transfers have been characterized by the State Department as an attempt to “help Venezuela’s legitimate government safeguard those assets for the benefit of the Venezuelan people.”[20]

This argument is bolstered by the Guaido government, which stated that it considered the transfer of assets to be a fundamentally humanitarian act. “We are not going to permit more abuses and [accept that] that they rob the money, food and medicines of Venezuelans . . . .” Guaido stated, “[t]he [gold] does not belong to the government, it should be used to attend to the health and feeding of Venezuelans.” [21] This humanitarian aid argument should be taken seriously, considering that the Nicaragua Court specifically mentioned that “there can be no doubt that the provision of strictly humanitarian aid to persons or forces in another country, whatever their political affiliations or objectives, cannot be regarded as unlawful intervention, or as in any other way contrary to international law.” [22]

Conclusion

Despite the merits of the argument that the transfer of control over Citgo to the opposition is not coercive, and that it is primarily humanitarian in nature, the legitimacy of the United States’ intervention is not likely to be resolved in arguments before the International Court of Justice. Rather it is likely to be resolved on the floor of the General Assembly, where the United States is considering advancing a petition to revoke the credentials of the Maduro Government, or within Venezuela itself as clashes between the supporters of the opposition and the military intensify. If the Trump administration’s move is vindicated in either arena, it will likely give dictators and despots a good reason to second guess whether it is wise for them to park some of their most valuable assets inside the United States. They could end up finding, like Maduro did, that their crown jewels could be quickly turned against them if or when an American-backed challenger should arise to unseat them.


[1] Joe Parkins Daniels, Mariana Zuñiga, & Juliana Borger, Trump says ‘all options on table’ as Venezuela crisis deepens, The Guardian (Jan 24, 2019), https://www.theguardian.com/world/2019/jan/23/enezuela-trump-president-juan-guaido-maduro-recognition-news-latest.

[2] Constitución de la República Bolivariana de Venezuela [CRBV] [Constitution] Dec. 20, 1999, arts. 233, 333, 350 (Ven).

[3]Jessica Donati and Vivian Salama, Pence Pledged U.S. Backing Before Venezuela Opposition Leader’s Move, Wall Street Journal (Jan 25, 2019), https://www.wsj.com/articles/a-call-from-pence-helped-set-an-uncertain-new-course-in-venezuela-11548430259.

[4] Jonathan Stearns, France, U.K. Recognize Juan Guaido as Venezuela Interim President, Bloomberg (Feb. 4, 2019), https://www.bloomberg.com/news/articles/2019-02-04/france-u-k-recognize-guaido-as-europe-firms-venezuela-stance.

[5] Nick Wadhams and Patricia Laya, U.S. Asserts Guaido’s Control Over Key Venezuela Bank Accounts, Bloomberg (Jan. 29, 2019), https://www.bloomberg.com/news/articles/2019-01-29/u-s-asserts-guaido-s-control-over-u-s-based-venezuela-accounts.

[6] Marianna Parraga, The battle for Citgo: How Venezuela’s opposition leaders seized control, Reuters (Feb. 22, 2019), https://www.reuters.com/article/us-venezuela-politics-citgo-insight/the-battle-for-citgo-how-venezuela-opposition-leaders-seized-control-idUSKCN1QB26Q

[7]  Marianna Parraga, Citgo’s new board arrives in Houston, to hold first meeting: sources, Reuters (Feb. 21, 2019) https://www.reuters.com/article/us-venezuela-politics-citgo-board/citgos-new-board-arrives-in-houston-to-hold-first-meeting-sources-idUSKCN1QA2BU.

[8] Id.

[9] Timothy Cama and Megan R. Wilson, Trump exempts Citgo from Venezuela sanctions, The Hill (Aug. 25, 2017), https://thehill.com/policy/energy-environment/348007-trump-exempts-citgo-from-venezuela-sanctions.

[10] Jef Feeley and Bob Van Voris, Why Some Judge in Delaware Could Be Asked to Decide Who Venezuela’s President Is, Bloomberg (Feb. 22, 2019) https://www.bloomberg.com/news/articles/2019-02-22/why-some-judge-in-delaware-could-play-key-role-in-citgo-battle.

[11] Retiran credenciales diplomáticas a Samuel Moncada, MiamiDiario.com (Feb. 17, 2019) https://miamidiario.com/retiran-credenciales-diplomaticas-a-samuel-moncada/.

[12] G.A. Res. 2131 (XX), Declaration on the Inadmissibility of Intervention in the Domestic Affairs of States and the Protection of Their Independence and Sovereignty, Preface, (Dec. 21, 1965).

[13] Id., art. 1.

[14] See generally, Military and Paramilitary Activities in and Against Nicaragua (Nicar. v. U.S.), Judgment, 1986 I.C.J. Rep. 14, (June 27) (hereafter “Nicaragua v. U.S.”).

[15] Id., at ¶ 276 (stating, “[t]he 90 per cent cut in the sugar import quota of 23 September 1983 does not on the other hand seem to the Court to go so far as to constitute an act calculated to defeat the object and purpose of the Treaty. The cessation of economic aid, the giving of which is more of a unilateral and voluntary nature, could be regarded as such a violation only in exceptional circumstances.”)

[16] [16] Id., at ¶ 292(Findings 3 & 4).

[17] Id., at ¶ 209.

[18] Id., at ¶ 241.

[19] Stefano Pozzebon, You can’t get $1 out of the bank in Venezuela. I tried., CNN (Jan. 17, 2018), https://money.cnn.com/2018/01/17/news/economy/venezuela-cash-crisis/index.html.

[20] Wadhams and Laya, supra note 3.

[21] Tracy Wilkinson and Mery Mogollon, U.S., Russia clash at United Nations over crisis in Venezuela and who is legitimate president, Los Angeles Times (Jan. 26, 2019), https://www.latimes.com/world/la-fg-venezuela-un-security-council-20190126-story.html.

[22] Nicaragua v. United States, supra note 12.

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