By Matt Spetalnick
WASHINGTON (Reuters) - The Trump administration’s envoy on Venezuela said China appears to be scaling back economic support for President Nicolas Maduro, and Beijing acknowledged a diminishing role largely due to U.S. sanctions against the OPEC nation.
As China's economic activities have declined, Maduro and his socialist government are becoming more reliant on Russia and its oil giant Rosneft as his financial lifeline for staying in power, Elliott Abrams, President Donald Trump administration’s special representative on Venezuela, told Reuters on Tuesday.
Abrams said China's involvement in Venezuela “is diminishing, not growing” because of Beijing’s increased concern about economic mismanagement and corruption under Maduro. Washington and dozens of other countries have recognised opposition leader Juan Guaido, not Maduro, as the country’s legitimate president
“It is primarily their view that it's a mess,” Abrams said of Beijing's misgivings, adding that Chinese officials have expressed these privately.
He declined to provide specifics on how China had scaled back in Venezuela, except to say “we're not aware of any new Chinese loans or investments in 2019.”
But when asked about Abrams' comments, China's foreign ministry said that after decades of growing economic ties, "presently, China and Venezuela are stopping or slowing down some of our cooperation, namely due to sanctions and other factors."
"Sanctions are the root cause behind the deterioration of the Venezuelan people’s daily lives. China urges the relevant countries to immediately stop the unilateral sanctions against Venezuela," the ministry said.
The two countries had built an economic partnership in the early 2000s based on late Venezuelan socialist leader Hugo Chavez’s need for financing and China’s desperate search for crude oil as its economic growth exploded.
But as Chinese growth levelled off and crude became plentiful after the 2014 oil price collapse, China had less to gain from the relationship. Caracas, caught in an economic meltdown, is estimated to owe Beijing nearly $20 billion in outstanding loans.
There has been a steady drop-off in Chinese financing, with Beijing reluctant to approve new loans, since the opposition took over the country’s legislature in 2016.
Beijing's comments signal that China is likely to continue to provide diplomatic support for Maduro along with Russia, including at the United Nations.
GROWING ROLE OF RUSSIA
Abrams sought to highlight the roles of China and Russia nearly a year after the Trump administration threw its support behind Guaido, who last January invoked the constitution to assume a rival interim presidency, arguing that Maduro's 2018 re-election was a sham.
Despite a U.S.-led pressure campaign, Maduro – who accuses Guaido of being Washington’s puppet - remains in office, backed by the military as well as longtime ally Cuba. His staying power has been a source of frustration for Trump, U.S. officials have said privately.
Abrams insisted, however, that the growing roles of Russia and Rosneft appeared to be the result of the impact of the sanctions programme, which he said had forced other countries and companies to turn away from Venezuela.
“That reduces the ability of the regime to earn money,” he said.
Asked whether Washington is preparing Venezuela-related sanctions against Russia and Rosneft, Abrams said their roles “continue to attract a lot of attention here.” But he declined to discuss any specific measures.
U.S. officials are mindful of the need for caution in targeting a company as large and far-reaching as Rosneft because of the risk of cause unintended damage to U.S. and allies’ interests.
Rosneft has helped Venezuela market its crude since Washington imposed sanctions on state oil company PDVSA [PDVSA.UL] last January.
Moscow has acted as a lender of last resort for Venezuela, with the government and Rosneft providing at least $17 billion in loans and credit lines since 2006, and has also provided diplomatic support.
Venezuela's oil exports plummeted 32% last year, according to Refinitiv Eikon data and PDVSA's reports, with Rosneft the largest receiver and intermediary with 33.5% of total exports, followed by state-run China National Petroleum Corp (CNPC) [CNPC.UL] and its units with 11%, and Cuba's state-run Cubametales with 7%.
(Additional reporting by Liangping Gao and Huizhong Wu in Beijing and Brian Ellsworth in Caracas; Editing by Mary Milliken and Marguerita Choy)