World

Trump inauguration received $500,000 from Venezuelan state-owned company

20 Apr 2017 | By Abheet Sethi

Venezuela, a country reeling under a severe economic crisis, has donated $500,000 to Donald Trump's inauguration.

The donation wasn't personally signed off by Venezuelan President Nicholas Maduro but by CITGO Petroleum, an American subsidiary of Venezuela's state oil company, Petróleos de Venezuela (PdVSA).

PdVSA, for all intents and purposes, is considered an arm of Venezuela's government. PdVSA is heavily indebted to Russian oil-giant Rosneft.

In context: Russia-backed Venezuela donates $500,000 to Trump inauguration

Venezuela in crisisVenezuela facing an economic and political crisis

Venezuela, home to world's largest oil reserves, ran into economic crisis because of fall in the price of crude oil.

The country is facing a recession, food shortages, widespread power cuts and, subsequent lootings and deadly riots.

There is political uncertainty in Venezuela as the opposition attempts to constitutionally remove President Maduro.

Maduro has increasingly turned authoritarian and cracked down on the opposition.

20 Apr 2017Trump inauguration received $500,000 from Venezuelan state-owned company

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Why?Why would Venezuela bankroll Trump's inauguration?

Maduro has often accused the US of trying to overthrow him by supporting the Venezuelan opposition.

However, he has been careful not to antagonize Trump. The donation could be an attempt at making an ally out of Trump.

Yet, the Trump administration has in recent times stepped up its criticism against Maduro, especially of his crackdown on the opposition.

Venezuela's donation tops that of Pepsi, Walmart and Verizon

PdVSA/CITGO's donation was much higher than some US corporate bigwigs such as Pepsi ($250,000), Walmart ($150,000) and Verizon ($100,000), according to a Federal Election Commission report. The donation was at par with JP Morgan Chase and Exxon which contributed $500,000 each.

Russian connectionRussian oil giant Rosneft's funding keeping PdVSA/Venezuelan govt. afloat

Last year, Russian state-owned oil giant Rosneft was offered a near 50% stake in PdVSA as collateral for a $1.5 billion loan.

Rosfnet's funding is keeping PdVSA and the Venezuelan government afloat.

If they default, Rosfnet could gain a controlling stake in PdVSA and its US-based subsidiary CITGO.

This prospect has raised concerns among American policymakers of Russia's entry into the American energy sector.

US concernedRosneft's control of CITGO could threaten America's energy security

CITGO, an American company, was bought by PdVSA in the 1980s. CITGO owns several oil refineries and pipelines across America.

Rosneft has close ties to Russian President Vladimir Putin.

"We are extremely concerned that Rosneft's control of a major US energy supplier [CITGO] could pose a grave threat to American energy security," US lawmakers wrote in a recent letter to the US Treasury secretary.

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Rosneft has been sanctioned by the US

The US has sanctioned Rosneft and its boss Igor Sechin over supposed links to Russia's military intervention in Ukraine and its annexation of Crimea. These sanctions could prevent Rosneft from taking over CITGO, if its parent company PdVSA defaults on its loans.