CARACAS (Reuters) – With its access to the global financial system restricted by U.S. sanctions, Venezuela managed to make some payments for the country’s coronavirus vaccines by asking a handful of private local banks to pay on the government’s behalf, two sources familiar with the matter said.
The banks have used foreign currency obtained through transactions with international credit and debit cards within Venezuela to pay COVAX, an initiative that provides vaccines to poor countries, said the people, who spoke on the conditions of anonymity and that the participating banks not be named.
It was not clear how or if the banks were compensated, nor what portion of the payments to COVAX have been made by the banks. So far, Venezuela has paid about $109 million to COVAX, about $10 million shy of what it owes, Venezuelan officials said earlier this month.
The tactic is the latest sign of how President Nicolas Maduro often finds ways around the obstacles created by the U.S. sanctions, aimed at ousting him over accusations of vote-rigging and rights violations.
That does not mean it has been easy. Government officials have said for months that the sanctions were impeding its ability to make the international bank transfers necessary to pay for the COVAX doses.
Venezuelan officials have said they expect to receive some 5 million vaccine doses through COVAX. But so far the country has received none, although most regional neighbors from Nicaragua to Colombia having already received hundreds of thousands of doses under the program.
Venezuela, with a population of some 30 million, has received vaccines only from allies Russia and China and its rollout of those 3.5 million doses has been slow and plagued by confusion here.
Years of economic crisis and a collapse in oil production – by far the OPEC nation’s biggest export – has left the country perilously short of foreign currency reserves. But in April, officials said they had made here the payments for the COVAX vaccines, without explaining how the transactions took place.
Some of the payments were made by local banks at the central bank’s request, the people said. Transactions with international cards have ballooned in inflation-stricken Venezuela since the government loosened exchange controls in 2019, leaving the banks that process the payments with a store of foreign currency.
Neither Venezuela’s central bank nor the information ministry, which handles media inquiries on the government’s behalf, responded to requests for comment.
The strategy has not been seamless. While the U.S. sanctions apply only to government institutions, including the central bank, some companies are wary of dealing with even non-sanctioned private Venezuelan institutions for fear of punishment by Washington – a trend known as “overcompliance.”
Venezuelan Foreign Minister Jorge Arreaza earlier this month posted on Twitter a letter from COVAX indicating that four of the 16 transactions made in Venezuela’s name, totaling some $4.6 million, had been “blocked.”
“Since there are various transfers from different banks, the operations are reviewed more closely,” one of the people familiar with the operations said.
Washington on Thursday issued an exemption to its sanctions on Venezuela, as well as on Syria and Iran, clarifying that financial transactions related to COVID-19 treatment and testing were permitted. U.S. officials have long argued that the sanctions do not prohibit humanitarian relief efforts.
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