    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                              VENEZUELA'S CRISIS:
                          IMPLICATIONS FOR THE REGION

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                             THE WESTERN HEMISPHERE

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 22, 2016

                                   __________

                               Serial No. 114-206

                                   __________

            Printed for the use of the Committee on Foreign Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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                          COMMITTEE ON FOREIGN AFFAIRS

                     EDWARD R. ROYCE, California, Chairman
    CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
    ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
    DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
    STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
    JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
    MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
    TED POE, Texas                       BRIAN HIGGINS, New York
    MATT SALMON, Arizona                 KAREN BASS, California
    DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
    TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
    JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
    MO BROOKS, Alabama                   AMI BERA, California
    PAUL COOK, California                ALAN S. LOWENTHAL, California
    RANDY K. WEBER SR., Texas            GRACE MENG, New York
    SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
    RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
    MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
    TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
    CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
    SCOTT DesJARLAIS, Tennessee
    REID J. RIBBLE, Wisconsin
    DAVID A. TROTT, Michigan
    LEE M. ZELDIN, New York
    DANIEL DONOVAN, New York

         Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

                   Jason Steinbaum, Democratic Staff Director

                                  ---------

                     Subcommittee on the Western Hemisphere

                     JEFF DUNCAN, South Carolina, Chairman
    CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
    ILEANA ROS-LEHTINEN, Florida         JOAQUIN CASTRO, Texas
    MICHAEL T. McCAUL, Texas             ROBIN L. KELLY, Illinois
    MATT SALMON, Arizona                 GREGORY W. MEEKS, New York
    RON DeSANTIS, Florida                ALAN GRAYSON, Florida
    TED S. YOHO, Florida                 ALAN S. LOWENTHAL, California
    DANIEL DONOVAN, New York
                                C O N T E N T S

                                  ----------
                                                                       Page

                                   WITNESSES

    The Honorable Michael Kozak, Deputy Assistant Secretary, Bureau
      of Democracy, Human Rights, and Labor, U.S. Department of State     5
    Ms. Annie Pforzheimer, Acting Deputy Assistant Secretary, Bureau
      of Western Hemisphere Affairs, U.S. Department of State........    11
    Mr. John Smith, Acting Director, Office of Foreign Assets
      Control, U.S. Department of the Treasury.......................    19
    Mr. John Andersen, Deputy Assistant Secretary for the Western
      Hemisphere, U.S. Department of Commerce........................    23

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    The Honorable Michael Kozak: Prepared statement..................     7
    Ms. Annie Pforzheimer: Prepared statement........................    13
    Mr. John Smith: Prepared statement...............................    21
    Mr. John Andersen: Prepared statement............................    25

                                    APPENDIX

    Hearing notice...................................................    48
    Hearing minutes..................................................    49
    The Honorable Ileana Ros-Lehtinen, a Representative in Congress
      from the State of Florida: Material submitted for the record...    50

                              VENEZUELA'S CRISIS:
                          IMPLICATIONS FOR THE REGION

                                  ----------

                            WEDNESDAY, JUNE 22, 2016

                           House of Representatives,

                    Subcommittee on the Western Hemisphere,

                         Committee on Foreign Affairs,

                                Washington, DC.

        The committee met, pursuant to notice, at 1 o'clock p.m.,
    in room 2172 Rayburn House Office Building, Hon. Jeff Duncan
    (chairman of the subcommittee) presiding.
        Mr. Duncan. A quorum being present, the subcommittee will
    come to order. I would now like to recognize myself for an
    opening statement.
        Venezuela--today we begin to examine the deteriorating
    situation in Venezuela which has regressed into a severe
    economic, political and human rights crisis.
        This hearing follows the subcommittee's field hearing in
    Miami last November on human rights abuses in Venezuela and
    Cuba when we heard testimony from victims of abuse at the hands
    of Maduro and the Castro government.
        Our purpose in meeting today is to understand the situation
    in Venezuela and the impact on U.S. businesses operating in the
    country and the Obama administration's policies and actions on
    this issue both within the OAS, or Organization of American
    States, and the region at large.
        Since the founding of our country the United States has
    supported freedom for all people around the world and I want
    the people of Venezuela to know that United States stands with
    you right now.
        You are the ones who are suffering the most from this
    crisis and I applaud your courage to pursue freedom, justice
    and democracy through the constitutional channels which you
    have.
        The situation in Venezuela today is truly heartbreaking.
    Despite possessing rich natural resources and the largest oil
    reserves in the world, Venezuela is going through an extremely
    severe economic crisis.
        Last year, Venezuela's economy contracted 7 percent and
    today multiple economic forecasts are projecting that the
    country will default on both sovereign debt and the debt of the
    state-owned oil company PDVSA.
        In fact, according to Venezuela's Central Bank data, its
    external debt is estimated to be $185 billion. To put that in
    perspective, Argentina's 2001 default was a little over $100
    billion.
        This year, Venezuela's economy is projecting a negative 8
    percent growth, an inflation of 720 percent. Right now, 76
    percent of the population is unemployed and last month
    Venezuela saw its largest monthly oil production decline,
    according to OPEC.
        Today, there are widespread shortages of energy, food and
    medicine. The Maduro government has been rationing electricity,
    recently ordering a 5-day weekend for the public sector to save
    electricity.
        Food shortages affect 80 percent of the population, which
    wait an average of 4 hours in line to obtain basic foodstuffs.
        Nine out of ten homes do not eat three meals a day. This
    situation has led to more than 50 food riots and deaths of at
    least five people.
        In response, the government launched a program to
    distribute goods door to door. But this program has essentially
    amounted to government control over who eats and who doesn't in
    Venezuela.
        When Venezuelans visit hospitals, medicine is missing 80
    percent of the time. Sadly, this is affecting the most
    vulnerable. Infant mortality has increased 100 times since 2012
    largely because hospitals cannot operate incubators where there
    is no power.
        Venezuela also reported over 400,000 cases of the Zika
    virus, but the government has done very little to respond. The
    crisis has extended to other aspects of social and political
    life in Venezuela.
        The people have not been silent. Spontaneous social unrest,
    multiple lootings, violence and widespread protests even in
    traditional Chavista strongholds are occurring daily. The
    Observatory of Social Conflict, a local NGO, found that there
    were 52 lootings and 641 protests just last month, which is a
    37 percent increase compared to the same time last year.
        Large groups of armed criminal gangs also control vast
    swaths of territory in urban areas, terrorizing populations and
    leading one of the highest murder rates in the world.
        Not only has the government failed to respond well, it has
    also committed widespread human rights abuses and undermined
    democracy in the country.
        This horrific crisis in Venezuela has led to a surge in the
    number of Venezuelans seeking asylum in the United States and I
    am concerned about the migration implications for the region at
    large.
        In February 2014, anti-government protests throughout the
    country sparked brutality from security forces. The Maduro
    government violated and suppressed the protests, killing at
    least 43 people, injuring 800 more and arresting 300 others.
        Today, the government has imprisoned over 4,000 people for
    political purposes and there are also at least 93 political
    prisoners in Venezuela including oppositional leader Leopoldo
    Lopez.
        Only a few weeks ago the national police fired tear gas on
    protestors who were chanting, ``We want food.'' In response to
    these events and the Venezuelan government's support for
    terrorism, the U.S. imposed sanctions, visa restrictions or
    assets freezes on a few Venezuelan companies for supporting
    Iran, two Venezuelan individuals for supporting Hezbollah,
    several Venezuelans for drug trafficking, and 62 Venezuelan
    individuals for corruption and human rights abuses.
        Recently, the Obama administration imposed sanctions on
    seven Venezuelan individuals for human rights abuses. However,
    the Obama administration could do much, much more.
        Today, many government officials in Venezuela who are
    directly responsible for human rights abuses, the deterioration
    of democratic institutions, public corruption, and drug
    trafficking remain free to access U.S. financial systems.
        This is not right. And in view of the especially horrendous
    situation in Venezuela right now, the Obama administration
    should be doing more to resolve the humanitarian crisis,
    support a democratic outcome and ensure that those responsible
    for committing human rights abuses and subverting democratic
    institutions no longer receive access to the U.S. financial
    system, at the very least.
        Last week, Secretary Kerry announced that the United States
    and Venezuela would launch high-level diplomatic talks and that
    U.S. would lead talks between the Maduro government and the
    opposition.
        This week, Ambassador Thomas Shannon is in Venezuela for
    these talks. In ambiguous and confusing language, the Obama
    administration is supporting dialogue efforts, the OAS
    secretary general's efforts to invoke democratic charter, and
    the recall referendum in Venezuela.
        Yet, the Obama administration has simultaneously rewarded
    President Maduro with diplomatic talks and affirmed publicly
    that the U.S. does not support suspending Venezuela from the
    OAS.
        I want to note that after Secretary Kerry's announcement
    last week Venezuela's national guard brazenly arrested two
    opposition activists, Francisco Marquez and Gabriel San Miguel
    over the weekend. Both remain detained and have been denied
    access to legal counsel.
        Marquez is a U.S. citizen. These men should be released
    immediately, as should all political prisoners at the very
    least, before Ambassador Shannon meets with President Maduro
    this week.
        The United States sent conflicting messages to the world
    about Venezuela that do not make sense. The Maduro government
    controls the presidency, a majority of municipalities, the
    supreme court, the military leadership and PDVSA leadership,
    not to mention most of the media. Only the National Assembly is
    controlled by an opposition and it has been undermined time and
    again by Maduro's supreme court.
        Democracy is failing in Venezuela, and Venezuela does not
    have time to waste. So far, only OAS Secretary General Almagro
    has stood firm on these points.
        The administration should have greater courage of
    conviction to send a clear U.S. message--release all the
    political prisoners, accept humanitarian aid, hold a recall
    referendum this year, and submit to the Venezuelan people's
    wishes to resolve this crisis.
        So I look forward to hearing from our witnesses today about
    these issues and I will now turn to the ranking member from New
    Jersey, Mr. Sires, for his opening remarks.
        Mr. Sires. Thank you, Mr. Chairman, for holding this
    hearing and thank you to our witnesses from the State
    Department, Treasury Department, the Department of Commerce for
    being here to discuss the Venezuela crisis and its implications
    for the Americas.
        Under the administration of President Nicolas Maduro, the
    political, social and economic situation in Venezuela has
    deteriorated to a very dangerous and destabilizing level.
        Widespread corruption, political harassment and economic
    crisis have caused a number of Venezuelans seeking asylum in
    the United States to soar. In March of this year, the number of
    Venezuelan asylum seekers was second only to China nationals in
    submitting asylum requests to the United States.
        With over 1,300 Venezuelans' applications submitted, the
    current political and economic chaos is also destroying
    Venezuela's once-improving education system. The education
    professionals are fleeing the country, leaving many of
    Venezuela's 7 million public students without qualified
    teachers and depriving these young people of the opportunity to
    better lives through education.
        Venezuela's health system has also been subject to severe
    budget cuts with hospitals lacking everything from basic
    supplies and medication to being unable to provide life-saving
    cancer treatments.
        These cuts are occurring just as Venezuela is facing one of
    the worst outbreaks of Zika in South America. Food shortages
    have led to riots, protests and looting around the country that
    have resulted in the death of several people shot by police and
    security officials.
        In response to these challenges, Maduro and his cronies
    have used intimidation and strong-arm tactics to suppress
    political opponents instead of working to provide basic
    necessities like food and medicine to the Venezuelan people.
        In 2014, the government violently suppressed political
    protests, resulting in the death of at least 43 people. In the
    aftermath of December 2015, legislative elections that brought
    the opposition, Democratic Unity Roundtable party, to power,
    Maduro has done everything he can to thwart the power of the
    National Assembly, most notably by jailing opposition leader
    Leopoldo Lopez and using Venezuela's supreme court to block any
    of the laws approved by the legislative since he took office in
    January.
        Fed up with Maduro's oppressive tactics and lack of
    response to the suffering and the starvation of the Venezuelan
    people, opposition efforts are now focused on recalling
    President Maduro in a national referendum.
        The National Electoral Council finally released forms
    needed to bring the process of seeking a recall referendum but
    only after several opposition National Assembly legislators
    chained themselves to the Electoral Council's office to protest
    the body's refusal to provide the paperwork.
        As we call can see, the challenges in Venezuela are rapidly
    increasing and, unfortunately, Maduro's actions are only
    hurting the lives of innocent Venezuelan people.
        I look forward to hearing from our witnesses, their views
    on the crisis and hear what real options the U.S. has to help
    steer Venezuela away from its path of destruction and bring
    peace to its people.
        Thank you.
        Mr. Duncan. I thank the ranking member and other members,
    and put written statements in the record. Witnesses, I am glad
    you are here today. I look forward to this hearing.
        You each will be given 5 minutes. There is a lighting
    system in front of you. When it is approaching red--it will
    turn yellow and then red. When it gets around red let us try to
    wrap it up.
        If you hear a slight tapping of the gavel that means wrap
    it up there so we can move on. We are on a tight time crunch
    here with the ranking member and I would love to get to as much
    as we can.
        So let us just jump right into Venezuela. Ambassador Kozak,
    you are recognized for 5 minutes.

      STATEMENT OF THE HONORABLE MICHAEL KOZAK, DEPUTY ASSISTANT
     SECRETARY, BUREAU OF DEMOCRACY, HUMAN RIGHTS, AND LABOR, U.S.
                          DEPARTMENT OF STATE

        Mr. Kozak. Thank you, Mr. Chairman.
        Mr. Chairman, Ranking Member Sires and members of the
    committee, we thank you for holding this timely hearing focused
    on the crisis in Venezuela, which you both very well described
    in your opening statements.
        We are increasingly concerned about the deteriorating human
    rights climate in Venezuela and we are encouraging Venezuelan
    civil society to continue to defend human rights and
    fundamental freedoms despite the significant challenges it
    faces.
        As you mentioned, the opposition won a two-thirds super
    majority in the National Assembly on December 6, 2015. The
    assembly legislated an amnesty and national reconciliation bill
    that would have provided mechanisms for the release of
    political prisoners including Leopoldo Lopez.
        But President Maduro's United Socialist Party used the
    executive and political judicial branches of the government to
    block all legislation and to reduce the National Assembly's
    authorities to essentially nothing.
        According to this scheme, the Venezuelan supreme court
    declared the amnesty and national reconciliation bill
    unconstitutional. Let me state here once again our view that
    the government should release immediately all those imprisoned
    for their political beliefs.
        The crisis cannot be solved with the democratic political
    leaders jailed for their political beliefs.
        The crisis in Venezuela is self-induced by the Maduro
    administration. The economic crisis results from years of bad
    economic decisions. The political crisis is the product of
    centralization of power.
        President Maduro's party has disregarded the rule of law
    and basic tenets of democracy. It has also disregarded
    international commitments to protect human rights and
    fundamental freedoms.
        President Maduro declared a full state of emergency to
    expand his powers and restrict freedom of assembly. In recent
    weeks, national guard soldiers and police in riot gear have
    blocked roads throughout the country and metro stations near
    the national electoral council offices.
        President Maduro and his party have politicized the
    judiciary. Judge Maria Lourdes Afiuni was charged with
    corruption and abuse of authority after not convicting a
    prisoner on politicized charges--in other words, for doing her
    job.
        She was arrested, jailed, and brutally treated 6 years ago.
    Thirteen hearings have been held since then. No evidence has
    ever been adduced that she committed any crime. She had never
    been convicted or sentenced.
        Nevertheless, she continues to be subjected to what they
    call conditional release. This restricts her movement and
    ability to talk to the media or use social media, even though
    the law in Venezuela states that such measures may not last
    more than 2 years.
        There is substantial evidence of the systematic scheme of
    the government to torture that involves judges, prosecutors and
    jailers. Venezuelan NGO Foro Penal counts 81 political
    prisoners behind bars. Twenty-six of them are in deteriorating
    health.
        On September 10, 2015, Judge Susanna Barreiros found
    Leopoldo Lopez, the leader of the opposition party Popular
    Will, guilty on counts of public incitement, damage to
    property, fire damage and association for conspiracy related to
    the February 2014 protest.
        This was supposedly for transmitting subliminally messages
    to the crowd. The judge issued a sentence of 13 years and 9
    months in prison, almost the maximum allowed by law. The 14-
    month trial was marked by lack of due process and shows abuse
    of the judicial system to punish government critics.
        The judge accepted more than 100 witnesses for the
    prosecution. She rejected all but two for the defense. She
    deliberated less than 1 hour before announcing her decision to
    convict.
        So we call once again for the immediate release of Leopoldo
    Lopez and all the other political prisoners.
        The ability of the press to publish freely and for
    Venezuelans to speak their minds has crumbled in the face of
    government actions.
        President Maduro's administration has used a potent
    combination of politicized libel laws, media content
    regulations, legal harassment and physical intimidation to
    silence independent media.
        The ruling party uses force and arbitrarily detains
    protestors who peacefully assemble to express their views,
    controls media outlets, deprives newspapers of newsprint needed
    to inform the public and prosecutes journalists and editors.
        I am going to skip a little bit to compress this, Mr.
    Chairman, and if I can submit the whole thing for the record,
    if that is useful.
        I thought I would shift now to talking about what we have
    been trying to do about this.
        Mr. Duncan. Okay. Your time is starting to expire, sir.
    Hurry.
        Mr. Kozak. I will then submit the rest for the record, sir.
        Thank you.
        [The prepared statement of Mr. Kozak follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        				----------

        Mr. Duncan. Ms. Pforzheimer. Is that right, Pforzheimer?
    Okay. You are recognized for 5 minutes.

      STATEMENT OF MS. ANNIE PFORZHEIMER, ACTING DEPUTY ASSISTANT
         SECRETARY, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S.
                          DEPARTMENT OF STATE

        Ms. Pforzheimer. Thank you very much.
        Chairman Duncan, Ranking Member Sires, members of the
    committee, thank you for inviting me to participate in today's
    hearing on Venezuela. I appreciate your interest in Venezuela
    and your support for U.S. assistance in our policies there.
        We share Congress' deep concerns about the situation in
    Venezuela including the worsening shortages in food and
    medicine.
        We are troubled by credible and independent reports of 85
    percent of the medicines on the World Health Organization's
    list of essential medicines are not available at pharmacies and
    hospitals while many others are scarce.
        The International Monetary Fund predicts the macroeconomic
    picture will continue to worsen with estimates of 700 percent
    inflation and GDP contraction of over 8 percent this year.
        These dire conditions are a direct result of the Venezuelan
    government's economic mismanagement and misguided policy
    decisions. A sustainable remedy can only come about through
    meaningful dialogue including between the executive branch and
    the legislature.
        However, since January we have witnessed instead how the
    executive and judicial branches have stripped away and
    undermined the National Assembly's constitutionally guaranteed
    responsibilities. These actions have eroded the separation of
    powers enshrined in the Venezuelan constitution.
        For example, the legislature's authority to call ministers
    to hearings similar to this one to ask their executive branch
    to explain its decisions was blocked by President Maduro on May
    2nd.
        We remain deeply concerned about these efforts. The State
    Department has taken steps to impose visa restrictions on more
    than 60 individuals believed to be responsible for, complicity
    in undermining democratic governance, engaging corruption or
    committing human rights abuses.
        Certain family members of such individuals can be affected
    by these actions. We will continue to evaluate further actions
    against those who undermine democratic governance and the rule
    of law, commit human rights abuses and line their pockets with
    public moneys.
        At the OAS General Assembly in Santo Domingo last week,
    Secretary Kerry expressed our commitment to working with all
    OAS members states to remedy the deeply troubling situation in
    Venezuela.
        He emphasized the need for dialogue and renewed calls for
    the Venezuelan government to release political prisoners,
    respect freedom of expression at assembly, alleviate shortages
    of food and medicine and to honor constitutional mechanisms
    including a fair and timely recall referendum.
        On June 15th in Santo Domingo, 15 foreign ministers signed
    a statement of strong support for the efforts of former Spanish
    Prime Minister Zapatero, former Dominican President Fernandez
    and former Panamanian President Torrijos to promote an
    inclusive political dialogue and the fair and timely
    implementation of constitutional mechanisms.
        This week, the OAS is continuing its focus on Venezuela's
    situation in the framework of the Inter-American Democratic
    Charter.
        The region must work collectively and demonstrate the
    leadership necessary to address the erosion of democratic
    institutions in Venezuela.
        As Ambassador Kozak said, we continue to call on the
    Venezuelan government to release those who have been in prison
    solely for their political beliefs. Rather than intimidating or
    imprisoning its critics, we believe the Venezuelan government
    should focus on finding real solutions through dialogue.
        The Venezuelan constitution guarantees the citizens of
    Venezuela the right to pursue a recall referendum if they so
    choose. We have seen some very slow progress by the National
    Electoral Council to allow a recall referendum to move to its
    next step.
        As we heard today, the council is scheduled to validate
    signatures of those expressing support for a recall referendum.
    This important process offers an opportunity for the Venezuelan
    people to express their political will in a constitutional,
    peaceful, and democratic manner.
        We favor Venezuelan solutions to Venezuelan problems with
    the support of the region. We are prepared to continue to use
    all appropriate tools in our toolkit and we will continue to
    call attention to all actions that undermine democratic
    principles.
        We did just that at the OAS General Assembly and we will
    continue to do so at the OAS permanent council meetings
    including the one yesterday and the one that is scheduled
    tomorrow.
        We will continue to work closely with Congress and others
    in the region to support greater political expression in
    Venezuela and encourage the Venezuelan government to comply
    with its human rights obligations and live up to its commitment
    to democracy.
        Mr. Chairman, I would like to end by saying that we
    sincerely appreciate the House Committee on Foreign Affairs'
    contribution to the promotion and protection of human rights in
    Venezuela, the strong and bipartisan cooperation among this
    committee's members and staff to support the U.S. Government
    championing of democracy and human rights in our hemisphere
    including the right to freedom of expression is a great credit
    to our country.
        Thank you, and I look forward to answering your questions.
        [The prepared statement of Ms. Pforzheimer follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Duncan. Thank you so much.
        Mr. Smith, you are recognized for 5 minutes.

    STATEMENT OF MR. JOHN SMITH, ACTING DIRECTOR, OFFICE OF FOREIGN
            ASSETS CONTROL, U.S. DEPARTMENT OF THE TREASURY

        Mr. Smith. Thank you, Mr. Chairman.
        Chairman Duncan, Ranking Member Sires, members of the
    committee, thank you for inviting me to appear before you today
    to discuss conditions in Venezuela, particularly as they
    pertain to regional stability and U.S. interests.
        As acting director of the Treasury Department's Office of
    Foreign Assets Control, I will address the administration's
    implementation of sanctions measures as mandated by the
    Venezuelan Defense of Human Rights and Civil Society Act of
    2014 and implemented by Executive Order 13692.
        As the committee may recall, the sanctions implemented by
    the Executive order stem from the government of Venezuela's
    human rights abuses, persecution of political opponents,
    curtailment of press freedoms and the exacerbating presences of
    significant public corruption in Venezuela in 2014.
        The following year, after signing the legislation passed by
    this body, President Obama issued Executive Order 13692
    sanctioning seven individuals associated with various organs of
    the Venezuelan government by blocking their property and
    interests in property that are come within the United States or
    within the possession or control of U.S. persons.
        Individuals who meet the criteria for economic sanctions
    are also subject to visa restrictions. In addition to blocking
    criteria targeting the activity mentioned above, the Executive
    order includes several status-based blocking criteria.
        Current and former Venezuelan government officials, for
    example, are subject to sanctions upon identification by the
    secretary of the treasury in consultation with the secretary of
    state.
        Similar mechanisms have complemented our conduct-based
    authorities in other programs and fit well in the fluid
    Venezuelan context. Our Venezuelan sanctions target only the
    individuals we have designated under the Executive order and
    not the people of Venezuela as a whole.
        This deliberate approach reflects a desire to make the best
    possible use of the targeting authority provided under the
    Executive order. That authority is not exclusively focused on
    the human rights abuses that took place in 2014 but encompasses
    other serious human rights abuses, significant acts of violence
    and actions that prohibit, limit or penalize the exercise of
    freedoms of expression and peaceful assembly in Venezuela.
        The resulting flexibility to respond to repression in real
    time is crucial, both as a symbolic deterrent and as a
    practical matter if circumstances require swift action.
        The targeted measures currently in place are tailored to
    specifically pressure bad actors and demonstrate two key
    points. The first is that the United States is working to see
    democracy and human rights protected and preserved in
    Venezuela.
        The second is that neighbors--as neighbors who care deeply
    about the Venezuelan people, we are concerned about the
    country's current economic situation and have no desire to
    exacerbate it.
        That is why our sanctions target neither the Venezuelan
    people nor their government as a whole. What we do not want is
    for those who would threaten and undermine democracy in their
    home country to be able to use the U.S. financial system of
    advance their nefarious purposes.
        We continue to monitor the situation in Venezuela closely
    and work with our colleagues across the interagency including
    in the Departments of State and Commerce to evaluate policy
    options in line with U.S. foreign policy objectives and
    national security interests.
        The United States remains deeply concerned about the
    situation in Venezuela. This March, President Obama reinforced
    our ability to combat political repression and public
    corruption in Venezuela when he renewed the national emergency
    and corresponding sanctions implemented under Executive Order
    13692.
        For our part, we in the Office of Foreign Assets Control
    stand ready to act with the powerful tools available to us if
    and when conditions call for it and action would be consistent
    with U.S. efforts to coordinate with regional governments to
    address the situation in Venezuela.
        Thank you, and I am happy to answer any questions.
        [The prepared statement of Mr. Smith follows:]
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                                  ----------

        Mr. Duncan. Thank you. These two names are easier than the
    first two. Mr. Andersen, you are recognized for 5 minutes.

    STATEMENT OF MR. JOHN ANDERSEN, DEPUTY ASSISTANT SECRETARY FOR
          THE WESTERN HEMISPHERE, U.S. DEPARTMENT OF COMMERCE

        Mr. Andersen. Thank you very much, Mr. Chairman.
        Chairman Duncan, Ranking Member Sires and members of the
    committee, thank you for the opportunity to speak to you today
    about the ongoing crisis in Venezuela and its impact on our
    commercial relationship.
        The Department of Commerce's International Trade
    Administration is one of the primary agencies responsible for
    strengthening the competitiveness of U.S. industry in the
    global marketplace, promoting U.S. exports, monitoring
    compliance with U.S. trade agreements and enforcing U.S. trade
    laws.
        ITA's efforts are driven by the needs of our primary
    constituency--the U.S. business community. For more than 15
    years Venezuela's anti-market orientation has complicated our
    commercial relations, making it harder for U.S. companies to do
    business in Venezuela.
        We have advised our clients to be mindful of the
    considerable challenges they will encounter when assessing the
    Venezuelan market.
        On January 1, 2012, the Commerce Department closed its
    commercial office in Caracas in recognition that an active
    export promotion program in such a difficult market was no
    longer cost effective.
        Under the last President Hugo Chavez, the government
    nationalized domestic and foreign-owned private enterprises,
    undermined private property rights and violated contractual
    agreements.
        Under his successor, Mr. Maduro, the government has
    continued to threaten the private sector by accusing companies
    of price gauging and hoarding products, warning of additional
    government seizures in the face of these baseless accusations.
        Dependence on oil exports, which provide 95 percent of
    Venezuela's foreign exchange earnings, had long masked the
    damaging effects of Venezuela's command control of the economy
    and its protectionist anti-competitive policies.
        Given the decline in oil prices, it is not surprising that
    the IMF estimates that Venezuela's economy is likely to
    contract by 8 percent this year and that inflation could reach
    a staggering 720 percent.
        Let me spend a few moments putting Venezuela into a broader
    regional perspective. Since the global financial crisis, we
    have seen a growing bifurcation in the Western Hemisphere
    between nations that adopted market-friendly economic policies
    and those that have chosen a different path.
        The nations that have chosen the former are continuing to
    enjoy economic growth despite a difficult global economic
    environment. In Latin America, this trend is best exemplified
    by the Pacific Alliance, which was established in 2012 by
    Chile, Colombia, Mexico and Peru.
        The Pacific Alliance shares our vision that being open to
    world trade is more advantageous if combined with the creation
    of a deeper regional market to take better advantage of
    economies of scale.
        All four Pacific Alliance countries are projected to
    experience economic growth in 2016 as well as year over year
    growth through 2018. Not coincidentally, those four countries
    are also U.S. FTA partners.
        Those nations that have chosen the latter path, with
    Venezuela as the extreme example, are experiencing economic
    decline. For example, Ecuador's economy is projected to
    contract by 4.5 percent this year and Argentina's, due to the
    previous government's economic policies, is projected to
    contract by 1 percent.
        In short, the countries in our hemisphere that share an
    economic vision similar to our own, our FTA partners, including
    those that are part of the Pacific Alliance, or the Trans-
    Pacific Partnership--TPP--are faring much better and are poised
    to enjoy greater economic success than those that chose a
    different path.
        When you compare the results of our vision of open
    economies that engage with the world by establishing common
    rules, standards and values, it is looking bright. We continue
    to work with countries in the hemisphere to create a shared
    agenda for growth.
        This is why the Obama administration is working with
    Congress, the business community and other stakeholders to
    raise awareness about the benefits of the TPP. Despite its
    name, five of the 12 TPP partners are in his hemisphere.
        TPP will help solidify our vision for mutually inclusive
    hemispheric growth by raising standards across the region in a
    manner that reflects our core values, strong labor protections,
    a cleaner environment, enhanced intellectual property rights
    and many more.
        TPP's commitments to facilitating trade will in particular
    help SME's interglobal markets, which brings me back to
    Venezuela. None of us can predict how this current crisis will
    end.
        Despite the severity of the economic and political turmoil
    and the very real human suffering that accompanies it, there is
    potential that positive change can come for the people of
    Venezuela.
        We at Commerce will be prepared to help U.S. companies be a
    part of this change.
        Thank you.
        [The prepared statement of Mr. Andersen follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Duncan. Thank you.
        Let the record show this is a very well attended hearing.
    How many people in the audience are with staff or are staff
    members from one of the panelists? Just raise your hand.
        The reason I ask that I had a homeland security hearing one
    time and the room was packed. Well, I had two panels. When
    panel one got up to leave, everybody in the room left. They
    were all staffers.
        The reason I say that is I am pleased that the room is full
    with folks that are interested in the issue of Venezuela and
    that you are not just here as a congressional staffer or a
    staffer of the panelists--that you truly are interested in the
    plight of the Venezuelan people, the possible changes in the
    Venezuelan government and what it may--the kind of impact I may
    have on the region. So I appreciate you participating with
    that.
        Let us jump right in. Ms. Pforzheimer, why is the
    administration pursuing high-level diplomatic talks with the
    Maduro government when the Maduro government has such a blatant
    record of controlling all facets of the government with the
    exception of the legislature now?
        They commit gross human rights abuses. They stifle the rule
    of law and freedom of the press. I thought Mr. Andersen's
    comments were great there. Why would we reward such a
    government with high-level diplomatic talks--the highest level
    with the exception to executive?
        This is Secretary Kerry and now the Ambassador. So why are
    we rewarding the Maduro government when they continue the
    abuses on the Venezuelan people?
        Ms. Pforzheimer. Sir, thank you for your question.
        As you noted, Under Secretary Tom Shannon is in Caracas
    today. His meetings are with an extremely broad range of
    Venezuelans. He is having a human rights roundtable. He is
    talking to members of the legislature, members of the
    opposition and he is speaking with the government.
        We would not perhaps characterize it as a reward in that he
    will be raising very strong concerns with the government and
    Secretary Kerry raised such concerns with Foreign Minister
    Rodriguez.
        We said to them directly that political prisoners need to
    be released, that the legislative assembly needs----
        Mr. Duncan. Secretary Kerry has said that to the Maduro
    government?
        Ms. Pforzheimer. Yes, sir.
        Mr. Duncan. Let us contrast this real quick. Wouldn't you
    say America is known as a champion against human rights abuses
    in general?
        Ms. Pforzheimer. Yes, sir.
        Mr. Duncan. So Secretary Kerry tells the Maduro government
    you need to release the political prisoners. We negotiated with
    Iran for almost 2 years without ever making that precondition.
        We just normalized relations with Cuba without making that
    precondition. I am glad he is doing it but we need to juxtapose
    those policies with Iran and with Cuba. There is a little bit
    of difference between the administration's actions here.
        So I am glad he did that and I will let you continue.
        Ms. Pforzheimer. Thank you, sir.
        He also raised that, of course, during the public session
    at the Organization of American States and Under Secretary
    Shannon is raising our concerns directly with President Maduro
    and his government.
        Mr. Duncan. I am glad he is doing that. I think it is
    important. Before we go in and negotiate the Iranian nuclear
    deal, before we normalize relations with Cuba, before we have
    high-level talks with a government like the Maduro government
    that we say, you know what, you have political prisoners or you
    have Americans in prison for various reasons. These ought to be
    preconditions that the administration puts on the government if
    they want engagement with the United States on these important
    issues.
        The Venezuelan people are hungry. The Venezuelan people
    don't have access to peaceably assemble and petition the
    government for redress of grievances and hopefully they will in
    a recall election. Hopefully, that will happen. Time will tell.
        Mr. Smith, U.S. sanctioned Iran. We have had U.S. sanctions
    on Iran and Venezuela institutions. Now, you testified before
    the House Committee on Foreign Affairs back in February that
    your office uses sanctions to counter Iranian security threats
    by preventing them access to U.S. financial systems.
        Among the Iranian entities that your office imposed
    sanctions on is the Joint Iran-Venezuela Bank. Has your office
    investigated other banned Iranian financial institutions that
    may be accessing U.S. financial markets via Venezuela?
        Mr. Smith. Sir, yes. OFAC acts as an instrument of U.S.
    national security and foreign policy and we do investigate what
    we see as the evidence. We follow the evidence across the world
    where our sanctions programs occur.
        Mr. Duncan. Okay. Thank you.
        So a simpler question to all of you--what is it going to
    take? What is it going to take to change--to have changes
    happen in Venezuela?
        Is it going to take a new government? And that is going to
    take a recall but it may take the imposition of democratic
    standards by the OAS may start the ball rolling. Is it going to
    take oil prices coming back up? I honestly believe that one net
    benefit 10 years from now, looking back on what OPEC is doing
    to put the Bakken and U.S. energy renaissance out of business
    is the positive impact it is having on the Maduro government
    and we may see regime change in Venezuela that ultimately
    benefits the Venezuelan people.
        That may be a positive impact of the OPEC policies. But
    what is it going to take? Is it going to take change of the
    Maduro government through a recall?
        Is it going to take oil revenues going back up for whatever
    reason to provide the economic resources the Maduro government
    can continue using to prop up a stable economy?
        Is it going to take an end of the El Nino drought and
    replenish water in a lake so they can provide electricity? What
    is it going to take?
        I would love to hear your thoughts on that, and Ambassador,
    I will start with you. I am going to come all the way across.
        Mr. Kozak. Okay. Thank you, Mr. Chairman.
        My own view is it is going to take--you have got to get
    changes in the policies that the Venezuelan government is
    following. Now, whether this government changes its policies
    radically or the government gets changed out to a government
    that has different policies, that remains to be seen.
        But what they have so far refused to do is pretty much
    change anything. There is pressure internally building up on
    them, which you well described. All the consequences of their
    own action has generated a lot of internal political pressure.
        There is a growing international pressure on them, as you
    saw with the OAS resolution or joint statement that was passed
    in Santo Domingo where a number of countries in the region that
    weren't so concerned before now are expressing concern in
    joining us and doing it.
        The other element of what it takes, though, is how do you
    have--what is the mechanism for translating that pressure into
    a result and that is--we really have been pushing two possible
    ones.
        One is the recall referendum which, unfortunately, has been
    repeatedly delayed by manipulations of the government. And the
    other is trying to get some kind of serious negotiation going
    between the elected members of the assembly and the elected
    government to see if they can come up with a package of policy
    changes.
        Again, the government so far has not done that. The concern
    is that if you don't do one of those things to bring about a
    change in policy that it goes on and on and on until something
    breaks and then you don't have a peaceful course correction on
    the part of the Venezuelan government but you just have a
    chaotic mess at the end.
        And so that is why we are putting our efforts into trying
    to create those vehicles for translating that pressure into a
    result. But it remains to be seen how that is going to work
    out.
        Mr. Duncan. Let us go to Ms. Pforzheimer.
        Ms. Pforzheimer. Thank you, sir.
        I agree with Mike about the vehicles. We are looking at the
    vehicle of dialogue, the vehicle of the recall referendum and,
    of course, the regional pressure.
        But I just want to state that we look at two big goals--a
    sustainable solution in Venezuela, sustainable economic
    recovery, and we look at Venezuelans having their
    constitutional rights restored.
        And we want political prisoners released, we want the
    legislative assembly to have the rights and the separation of
    powers that is legitimate and under the constitution.
        Mr. Duncan. So saying that, don't you think that the U.S.
    position of the OAS should be standing up for those democratic
    ideals?
        Ms. Pforzheimer. Sir, I do agree with that and I believe
    that we are----
        Mr. Duncan. Is that the official U.S. policy at the OAS?
        Ms. Pforzheimer. We support at this point all of those
    policies to support the constitutional measure of a recall
    referendum and we support a dialogue as it is effective and
    useful.
        Mr. Duncan. Is Mr. Fitzpatrick's position of the OAS going
    to be that the United States supports democratic institutions
    and principles within Venezuela and that a recall election
    should happen? Is that going to be the U.S.' position at the
    OAS?
        Ms. Pforzheimer. Sir, we believe that the recall process
    should proceed as the Venezuelan people want it to.
        Mr. Duncan. Okay. I think the Venezuelan people want that.
    I think the Maduro government is actually putting it off. But I
    just want to make sure that we were clear about the U.S.
    position at the OAS.
        I will go to Mr. Smith. What is it going to take?
        Mr. Smith. Sir, I would say that is a question of foreign
    policy and I defer to my State Department colleagues. We are
    here to offer to be an instrument of U.S. national security and
    foreign policy objectives.
        But, again, when it comes to the foreign policy I defer to
    the State Department.
        Mr. Andersen. Yes, Mr. Chairman. Thank you for that
    question.
        I agree with the comments made by my State Department
    colleagues. We all want to see a prosperous and stable
    Venezuela, a Venezuela that maintains our strong and lasting
    ties with the Venezuelan people.
        When a resolution is achieved, and we do hope one will be,
    we at Commerce Department, working with the U.S. business
    community, can and will play an important role in ensuring a
    longer-term solution.
        Mr. Duncan. Thank you.
        We will probably have time for another round of questions.
        Mr. Sires is on a tight schedule. I will yield to him for
    as much time as he needs.
        Mr. Sires. Thank you, Mr. Chairman. You know, I keep
    hearing about the OAS. They have yet to be successful on
    anything since they got first created.
        I mean, what initiative are they going to do? You know, it
    is just amazing to me we keep referring to OAS, OAS, and the
    track record of success is very little.
        Then you have the people in the region. As long as these
    people are dependent on PetroCaribe, how much more pressure are
    they going to put on Venezuela?
        And so far, the only country that I heard that--maybe I am
    wrong--has been Argentina that has spoken up about what is
    going on in Venezuela.
        And these negotiations I think are just stalling. The
    Venezuela government is stalling--stalling and waiting and
    waiting to see what happens, and the fact that you have 30,000
    Cubans in Venezuela running the security apparatus, dependent
    on PetroCaribe oil, I mean, I just think that they are trying
    to prolong this and prolong it and prolong it--that somehow
    people are going to get tired and when people get tired they
    are going to start moving in and taking all these corporations
    over and become the state's, similar to Cuba, because that is
    how it started.
        I was there. I saw how it began, little by little. And this
    business of having a supreme court that he created is nothing
    more to stop any efforts from continued democracy in Venezuela.
        So I do hope that maybe there is, and I am wrong and these
    negotiations are going to lead into something. But I find that
    very difficult, and I was wondering is the Venezuela and
    Colombia border still open or closed? Because I know it is
    impacting Colombia also.
        Ms. Pforzheimer. Sir, the border is closed. However, there
    is some movement, especially for humanitarian purposes.
        Mr. Sires. One more question. Can you assess to me--do you
    think Maduro is going to last the rest of the year?
        Ms. Pforzheimer. Sir, I have no way of assessing that. I
    know that he has some incredibly difficult economic choices
    ahead about making payments on loans and having enough money to
    import foodstuffs for his people and that many analysts have
    said that this year is incredibly difficult for the Venezuelan
    economy as we see it is already difficult for the people.
        Mr. Sires. Mr. Andersen, what do you think?
        Mr. Andersen. I would have the same response. I mean, I
    don't think--as I said in my testimony, none of us I think know
    at this point how this may end.
        Mr. Sires. The reason I ask that is are we prepared in case
    something happens in Venezuela to respond to a situation in
    Venezuela so it doesn't get out of hand? Are we making any
    plans? Are we considering the possibility that he may have to
    step down and maybe there is chaos?
        Ms. Pforzheimer. Sir, we would be very ready to work with
    the international community if that were the case. There are
    many humanitarian agencies international--the World Food
    Program, Food and Agriculture Association and the Pan-American
    Health Organization--that are ready to help in Venezuela if
    they are asked and we are ready to consider support.
        Mr. Sires. Are we receiving any intel or are we working
    with the Venezuelan community in Florida, which is probably the
    largest, on getting information on what is actually going on in
    the country or we just go by what we read and what people say?
    Do we have meetings with different leaders of the Venezuelan
    community?
        Ms. Pforzheimer. Speaking for myself, I meet with a very
    wide range of people both U.S. and Venezuelan citizens.
        Mr. Sires. Ambassador?
        Mr. Kozak. Yes, the same here. We have meetings with human
    rights groups that are very active in Venezuela. I would also
    note we have a functioning U.S. Embassy there that does a lot
    of reporting on these very issues.
        So they are giving us ground truth and they are in contact
    with a lot of the--not only the opposition political parties
    but with the NGOs in Venezuela so and the business community.
    So it is more than just talking to the government. We have got
    that whole range.
        Mr. Sires. These are the people that are basically
    promoting democracy and human rights within Venezuela--the
    people that you are working with?
        Mr. Kozak. Yes, sir.
        Mr. Sires. Can you tell me what country are the most
    dependent on PetroCaribe in the region? Because one of the
    reasons I voted for the export of oil is because I felt that
    this country could play the same type of role that Venezuela is
    playing.
        I want to be an exporter of energy so we don't have to have
    a country like Venezuela have these people under their thumb
    with the energy.
        A lot of my colleagues don't agree with that. But the
    problem here is which countries are so dependent on Venezuela
    for their oil?
        Ms. Pforzheimer. Sir, overall most of the countries that
    are the most dependent are in the Caribbean and the U.S. is
    very interested in working with Caribbean nations on
    diversifying their energy source.
        That dependence is a little bit less in this era of lower
    oil prices and this is the moment for them to consider other
    sources of energy, and Vice President Biden has met with
    Caribbean leaders to encourage them to consider and act now
    where we have a little breathing room.
        Mr. Sires. And the last thing I want to say is are we
    tracking Iran's--are still flights into Venezuela? Are there
    many flights still there or are there no flights anymore or if
    they venture into Venezuela where is it at?
        Ms. Pforzheimer. This is an issue that we follow closely
    and I don't have details about their specific flights into
    Venezuela. But we remain very vigilant about any of the
    implications of Iran in the whole hemisphere.
        Mr. Sires. Mr. Smith, you talk about security. Is that what
    you were talking about before?
        Mr. Smith. We continue to follow Iran's activities and
    follow the intelligence, the law enforcement information,
    classified to unclassified, all sources.
        Mr. Sires. And what does your intel tell you?
        Mr. Smith. I couldn't speak--honestly, I don't have today
    the answer to that question. But I couldn't even speak about
    intel in this open setting. But it is something that we--if
    there were specific questions we can take those back and
    provide in a different setting.
        Mr. Sires. Classified hearing--a classified briefing,
    right?
        Mr. Smith. If there were specific questions in that regard.
        Mr. Sires. Mr. Chairman, thank you very much.
        Mr. Duncan. I thank you, Ranking Member.
        And now we will go to Mr. Donovan for 5 minutes.
        Mr. Donovan. Thank you, Mr. Chairman.
        Mr. Smith, I wanted to ask you, are the sanctions that we
    have imposed on Venezuela actually working and if there is an
    assessment how do we assess whether our sanctions that we
    impose on countries are actually successful or not?
        Mr. Smith. I think I would say that the sanctions were
    working across the board on the variety of objectives that we
    have.
        We have imposed sanctions involving Venezuelan actors,
    individuals, and entities across a wide variety of programs in
    the past year.
        It includes the Kingpin Act for narcotics trafficking
    activities, WMD for weapons of mass destruction activities,
    counter terrorism as well as under the Venezuelan sanctions
    program itself.
        And so I think all of those serve the message of calling
    out bad activity, alerting the U.S. financial system and the
    international financial system of the bad individuals and
    entities--the bad actors--that we think should be cut off.
        So in that respect, I think very much sanctions are having
    the effect that they intended. Of course, sanctions--the
    ultimate goal of a sanctions program is to change the behavior,
    change the behavior not only of the individuals and entities
    but also of Venezuela as a whole and that still has not
    occurred.
        Obviously, there are still concerns with the country but I
    think we have succeeded in calling out the bad activity that we
    needed to call out.
        Mr. Donovan. When we impose sanctions, are they for a
    length of time? Is there an expiration date of those sanctions
    or is it until we see that change of behavior you just spoke
    of?
        Mr. Smith. It is a combination. We don't have a certain
    specified length of time that sanctions last. We do want to
    make sure that the information is still current, that
    individuals and entities are still engaging in bad behavior,
    and if we see a change of behavior then we can remove them from
    the list as we do regularly.
        Mr. Donovan. One of the things I wanted to ask you about is
    the periodic reports that you submit to Congress and how
    difficult it is for Congress to have oversight because of the
    reports.
        I think in a 6-month period I have seen 20 different
    reports. They have different time frames in which they measure
    the success of the sanctions.
        There is no single, like, comprehensive report from OFAC
    that would allow congressional oversight to the effect of what
    the sanctions are doing to those countries and those entities
    that we impose them on.
        Is there any plan to make the--this easier for Congress to
    recognize either the successes or the failures of the policies
    that we have imposing sanctions?
        Mr. Smith. We haven't considered a single report largely
    because we are dealing with dozens of reports to Congress that
    we do on an annual basis. I think there are over 100 reports a
    year that we do to Congress across a range of sanctions
    programs.
        And so they take away--every time we do an additional
    report they take away some of the resources that we would spend
    investigating an actor.
        But we believe that the reports are very important so that
    Congress can continue to be informed of our activities. We have
    not considered a single report largely because we are doing so
    many of the reports that Congress has mandated across the
    various programs.
        I think we could consider working with Congress if there
    would be a way to do a single report as opposed to all the
    separate ones. That would certainly be a resource savings from
    our perspective.
        Mr. Donovan. Thank you, sir.
        Mr. Chairman, I yield back the remainder of my time.
        Mr. Duncan. Thank you.
        Let us see, no Democrats on this side so we will now go to
    Mr. Yoho for 5 minutes.
        Mr. Yoho. Mr. Chairman, I appreciate and I appreciate you
    guys being here discussing this in the Western Hemisphere. This
    is so dear to us and so--I mean, just to see that country fall
    apart like it has.
        And I, you know, live in Florida and being a veterinarian
    we had a lot of Venezuelan clients and we have watched the
    progression of it going from a great country, and I have been
    there in its heydays, to see where it is today and just seeing
    it fall apart and properties being confiscated. People can't
    get stuff on their shelves in the grocery store, ensuing chaos
    that we see coming.
        With that said, the U.S. should leverage the U.S.
    Department of State and U.S. Department of Defense connections
    with militaries around the region to stress the Venezuelan
    security forces.
        Their obligation to uphold the constitution and democracy
    in respect to human rights--what is the U.S. doing to
    communicate this message to the Venezuelan military and people
    in the other countries in that area? Whoever wants to take that
    on.
        Ms. Pforzheimer. Thank you, sir.
        I think I would find that difficult to discuss instead of--
    --
        Mr. Yoho. Okay.
        Ms. Pforzheimer [continuing]. Deferring to my colleagues
    from the Department of Defense.
        Mr. Yoho. That is fair enough. Let me ask you this. What
    influence does Cuba have on the situation in Venezuela and what
    effect does the Obama administration's so-called normalization
    of relationships with Cuba have on the Maduro government as far
    as the path that they see forward, if they see one? And I hope
    it is a short one.
        Ms. Pforzheimer. Sir, thank you. The U.S. raises, as I
    noted, human rights issues with Venezuela. We have asked the
    region to speak out with us to call for dialogue, to call for
    the release of political prisoners and we also would hope that
    Cuba would use whatever influence it does have to do the same.
        However, our conversation with Cuba is conducted on a
    bilateral basis and it is separate from the work that we are
    doing with the region through the OAS.
        Mr. Yoho. Okay. Let me ask you this.
        Do you see Maduro hanging on to last threads of power?
    Because he saw the U.S. soften relationships with Cuba has he
    felt empowered from that?
        Mr. Kozak. I might take a shot at that, Mr. Chairman.
        I used to head our interests section in Cuba 15 years ago
    so I know them a bit. The Cubans have managed to hang on to
    power because they had other people outside subsidizing them--
    the Soviets and, more recently, the Venezuelans.
        And so I think probably the effect has been a little bit
    the opposite, that the Venezuelans are seeing that the Cubans
    are able to help them in sort of having tens of thousands, as
    Mr. Sires mentioned, of people there--medical and security type
    people.
        Mr. Yoho. Right.
        Mr. Kozak. But they are not able to help them economically.
    Instead, they are a drain on them and their ideological bent
    has gotten a little confused with their discussions with us.
        So Cuba has a big role to play precisely because they have
    all those people on the ground.
        But I don't think that the parallel--certainly the two
    leaders have tried to drive things in the same direction but
    they don't have that outside----
        Mr. Yoho. Well, what I was hoping to get out of that was in
    South America there are several countries that are anti-
    American or leaning to the pink type of governments away from
    Western forms of government.
        And when they see people like Castro, you know, getting
    these releases or release from our State Department, I didn't
    know if that emboldened Maduro to do what he does and hang on
    instead of fighting internally to fix it internally, thinking
    there--or versus thinking, you know, if we just stay strong
    America is going to come in and soften these sanctions and I
    think that would send the whole--a wrong signal to that area.
        We were with Chairman Duncan and we went to South America
    and we talked a lot of the--four of the five Presidents in the
    countries we went to and we brought this up as a concern--is
    this going to empower Cuba and if so is that going to influence
    Maduro to keep doing what he is doing.
        And I think what I want to end with, Mr. Chairman, is let
    this be entered into the record that a socialism type of
    government with a dictatorial leader like Maduro is not a
    viable form of government in the 21st century and people
    prosper where liberties and freedoms are protected, not where
    human dreams and initiatives are silenced by repressive
    government.
        Thank you.
        Mr. Duncan. Thank you. Without objection, so ordered.
        So we have time for another round of questions if you all
    have anything else you would like to ask. I am going to jump
    right back in.
        On to Mr. Andersen--first off, you mentioned I thought was
    interesting--the Argentine government, the economic predictions
    which I think will be proven to be low based on the Macri's
    imposition of more free market and I think you are going to see
    an improvement in Argentina.
        But you were talking about Argentina and sort of--I don't
    know if you were juxtaposing those or whether you were
    comparing them on a similar----
        Mr. Andersen. Thank you, Mr. Chairman. Sorry for the
    confusion.
        The point I was trying to make is that economies in our
    hemisphere who have followed a similar approach to Venezuela
    and I was making specific reference to the previous Argentine
    government, not the current one.
        We share your view completely with the trajectory with the
    friendship, with the relationship with the current Argentine
    government. But those who have followed a policy that is not
    market friendly, that it has caused economic hardship to
    companies, have not been open to the world economy are the ones
    who are doing much more poorly in this hemisphere.
        Mr. Duncan. Absolutely. I think the Kirchner government and
    more socialist policies of big government top-down approach,
    Keynesian economics, just don't work. I think what you are
    going to see more free market--with the Macri government in
    Argentina you are going to see prosperous days ahead.
        So I think what a lot of the problems we are experiencing
    in Venezuela right now are because of that same Marxist
    philosophy.
        So let us talk about energy. Energy is a passion of mine. I
    think energy is a segue to hemispheric stability, economic
    opportunity and what we heard--you heard Mr. Yoho talk about
    travelling to Latin America, to a number of countries.
        Energy was on their minds as well, whether their own access
    with their own development of their energy resources, and
    Argentina is a good example of what Macri wants to do with his
    energy there, how the Argentine people felt about the pipeline
    that now imports natural gas from Chile was originally built to
    export natural gas to Chile.
        They would love to see Argentina be an exporting country
    once again from Paraguay, wanting to develop the gas fields in
    up along the Bolivian border. So energy is on the minds of the
    folks there.
        I spoke last week to the Caribbean nations. Energy is on
    their minds, what PetroCaribe may or may not be able to deliver
    in the future--an opportunity for American industry to step
    into any void left by PetroCaribe.
        So energy is definitely an economic driver. But as oil
    prices remain low, is it possible for the Venezuelan economy to
    recover without oil prices going back up, as I mentioned
    earlier? And Mr. Andersen, that is to you and then I will open
    it back up to anyone.
        Mr. Andersen. Well, thank you again for that question.
        I am not in a position to speculate on what the price may
    mean in terms of oil or energy for--whether the Maduro
    government--what will happen to it.
        I would point out that the--clearly, the position that they
    find themselves in has been exacerbated by the price currently
    in energy. But this was a long time coming from very anti-
    market policies for nationalizing companies, for the whole
    range of bad economic choices they have made over the
    succeeding years.
        Mr. Duncan. I think you hit on something. We see Pemex in
    Mexico denationalization are at least loosening there. We see
    corruption with Petrobras. We see a state-owned oil company
    like in Venezuela have troubles.
        I don't know what the price point is for the Maduro
    government to actually start--the economy start benefiting from
    oil revenues. I don't know what the price point is there.
        But I do know it is hurting them right now, as you say. Ms.
    Pforzheimer, you wanted to jump in on that?
        Ms. Pforzheimer. Thank you very much.
        I don't know the exact price point either but I do know
    that the Maduro government spent a great deal of time over the
    last year trying to work with OPEC nations to get the price
    raised and at some points we heard that they thought $100 a
    barrel would work best.
        We also note, as Mr. Andersen does, that mismanagement and
    corruption are just as much part of the problem with respect to
    the energy sector as the actual world price of oil.
        Mr. Duncan. Yes. Anyone else like to talk about energy
    prices--energy issues? There are about 500 U.S. companies that
    are represented in Venezuela and largely in the oil and gas
    industry but not all.
        How easy or difficult is it to conduct day to day business
    in Venezuela? Mr. Andersen.
        Mr. Andersen. Thank you, Mr. Chairman. I think you----
        Mr. Duncan. In June 2016, okay?
        Mr. Andersen. And I think you referenced some of those
    concerns in your oral statement, that it is extremely difficult
    for U.S. companies who are in Venezuela to do business in
    Venezuela from a range of issues--from currency issues, from
    issues on the price of imports across the board.
        So it is an extremely difficult environment that they work
    in, and as I also referenced in my testimony a number of them
    that do stay stay also because they have spent decades
    developing this market.
        They stay out of a sense of loyalty to their Venezuelan
    employees and to their local communities and they are, quite
    honestly--many of them have targets on their back, quite
    literally, because of their being accused, as I indicated, of
    hoarding and price gauging in some cases by the current
    administration.
        Mr. Duncan. Ms. Pforzheimer, what are the regional
    implications of--from the administration's standpoint do you
    see with the bad economic situation and the bad government
    situation in Venezuela?
        We heard from Caribbean nations that are concerned about
    PetroCaribe and commitments made and, of course, Maduro went to
    Jamaica and said they were going to reinvest in refineries
    there and bring them up to speed and I wonder where he is going
    to get the money without borrowing it from China.
        But so when we think about Caribbean nations, can you
    broaden that? What are some of the other implications that we
    may not be thinking about when Surinam or Guyana or Colombia
    and the FARC and Panama and trade and--so enlighten me from the
    administration's standpoint, what are some of the implications
    that you all see from this deteriorating situation there?
        Ms. Pforzheimer. Thank you for the question.
        We are concerned overall about the deterioration, as you
    point out, and I would really just name two areas. One is what
    you have noted--the dependence of the Caribbean in different
    degrees on PetroCaribe and PetroCaribe funding and I think our
    response and their response, more importantly, is that they
    know they have to get out from that dependence. They must
    diversify their sources of energy.
        The other area of concern that, you know, we have heard,
    although not at any concerted pitch is that of possible
    migration. The Caribbean islands that are closest to Venezuela,
    the Dutch Islands or the border with Colombia are points that
    those countries are watching very, very carefully and they are
    raising their concerns directly with the Venezuelan government.
        Mr. Duncan. Right. So what else can the U.S. be doing at
    the OAS to promote democracy in Venezuela?
        Ms. Pforzheimer. So tomorrow's meeting is, in our view, a
    very important inflection point. Secretary General Almagro
    published an incredibly long and detailed and thorough
    examination of the Inter-American Democratic Charter as applied
    to the situation in Venezuela.
        He is seeking the opportunity to speak with member states
    about that report and we hope he gets that opportunity
    tomorrow. We could see the formation of something like a group
    of friends from the OAS member states who would also try to
    work with the parties in Venezuela and urge them to seek a
    sustainable solution there.
        Mr. Duncan. But within the OAS itself, you have got an
    Argentine plan or model. You got Almagro. So it would be
    interesting to see what happens tomorrow. I agree with you on
    that.
        I am going to recognize a former chairman of the committee
    and now chairwoman of the Middle East and North Africa
    Subcommittee, Ms. Ros-Lehtinen.
        Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman, and I
    deeply apologize for coming so late today. I had the
    opportunity to speak on the House floor this morning about
    Venezuela and I hope that you get a chance to view my remarks.
        But I had a few questions. Thank you so much for your
    leadership on this issue of freedom and fairness for the people
    of Venezuela.
        And as you know, Mr. Chairman, in September of last year I
    was joined by 19 of my colleagues in sending a bipartisan
    letter to Secretary Kerry and Secretary Lu urging the
    administration to enforce a bill that I passed along with all
    of our colleagues and Senator Marco Rubio, the Venezuela
    Defense of Human Rights and Civil Society Act, and we asked the
    secretaries to enforce this bill and apply sanctions on regime
    officials in the Venezuelan court system in response to the
    unjust sentencing of Venezuela activist and political prisoner
    Leopoldo Lopez.
        If I could ask the witnesses, Mr. Chairman, what
    justification do they have for not carrying out and
    implementing these sanctions for this miscarriage of justice
    and what is the dollar amount of the assets seized of the seven
    individuals that you have sanctioned.
        And I am going to continue on the subject of sanctions. I
    am aware that State has pulled some visas due to human rights
    violations and if they could tell us how many visas the State
    Department has pulled and who are these individuals.
        So much of this is done in secret. We just don't know what
    is happening. And last week at the OAS meeting in the Dominican
    Republic, Secretary Kerry stated that Venezuela should follow
    its own constitution and hold a fair and timely recall
    referendum.
        And I wanted to ask our witnesses if Secretary Kerry
    believes or expects that it will happen this year.
        And lastly, Maduro has stated that he is ready to exchange
    Ambassadors and I think that this is a big mistake by our State
    Department because it will look as if we are legitimizing an
    illegitimate regime and I wanted to ask the witnesses will the
    State Department nominate someone this year to be Ambassador to
    Venezuela.
        And I was--lastly, Mr. Chairman, I had the opportunity to
    meet with some wonderful young people who are here in the
    audience today representing the youth of Venezuela and they
    gave me a summary of the facts of Valencia, a state in
    Venezuela, and gave me a list of individuals they believe
    should be on the sanctioned individual list and I wanted to ask
    our witnesses if they will be adding some names to this list.
        And Mr. Chairman, with your indulgence, if I could put this
    letter as part of the record and if I could put--if I could
    hand this document to our officials to see if--we have given
    them so many good suggestions of really bad actors in Venezuela
    who deserve to be sanctioned.
        They want to come to the United States. We should just not
    let them come. We have got a bill that became a law that,
    sadly, has not been implemented.
        So thank you, Mr. Chairman.
        Mr. Duncan. Without objection.
        Ms. Ros-Lehtinen. And I would love to get their responses,
    whoever would like to respond. Thank you. Thank you, ma'am.
        Ms. Pforzheimer. Thank you very much for your questions. I
    will address some of them and ask my colleague from OFAC to
    address others.
        Ms. Ros-Lehtinen. Good. Thank you.
        Ms. Pforzheimer. Thank you very much. Thank you about your
    question regarding future sanctions. This is an important tool
    that we can use, we have used.
        At this point, we are still assessing the utility and we
    would consider any public or diplomatic or legally available
    method to address the injustices in Venezuela.
        Ms. Ros-Lehtinen. If I could just follow up with that. So
    this bill became a law. So not that we needed to even pass it
    because the administration had this authority already.
        We just wanted to nudge them along, and you have heard of
    individuals who are violating the human rights of Venezuelan
    nationals. And what would it take to add people to the list?
        I hope that it doesn't take more deaths. The Maduro regime
    is already responsible for so many deaths in Venezuela.
        What more do we need to do so that we can add names to the
    people who will not be allowed into the United States whose
    assets will be frozen, whose bank accounts will be frozen? What
    more needs to be done?
        Ms. Pforzheimer. Thank you, ma'am. We are assessing--we
    will continually assess the utility of the sanctions, tools at
    our disposal. And also, as you noted and has been noted by the
    chairman, there have been visa revocations that have occurred
    and are still occurring.
        Ms. Ros-Lehtinen. Can you tell me how many visas were
    pulled?
        Ms. Pforzheimer. There have been over 60 visas.
        Ms. Ros-Lehtinen. And are you making those public?
        Ms. Pforzheimer. Due to visa confidentiality rules, we
    would not be making public the names of the people whose visas
    were revoked.
        Ms. Ros-Lehtinen. And how about the sanctioned individuals?
        Ms. Pforzheimer. Those are----
        Ms. Ros-Lehtinen. When was the last time that someone had
    been sanctioned from Venezuela?
        Mr. Smith. Ma'am, thank you for the questions and I know
    there are a number of them and I think came to the OFAC one so
    I will go down the list, if I may.
        I will first start off by thanking Congress for its
    leadership in this area because I think the statute was
    particularly important and helpful in helping us craft and work
    with the rest of the administration to craft an Executive order
    to build off the statute and to actually implement the--some of
    the sanctions that came from that.
        I will also thank you all because I think we have continued
    to receive information from various Members of Congress and
    staff through NGOs or other groups and we continue to look at
    that information as we build packages.
        When you ask about when was the last time when the
    President issued the Executive order in March 2015 those were
    the seven individuals that received economic sanctions----
        Ms. Ros-Lehtinen. And since March 2015?
        Mr. Smith. We have not frozen any additional assets. We
    have not issued additional sanctions freezing assets----
        Ms. Ros-Lehtinen. But you do agree that there have been
    egregious human rights violations that have occurred in
    Venezuela since March 2015 or do you not think that that is
    true?
        Good to see you.
        Mr. Kozak. Nice to see you.
        Ms. Ros-Lehtinen. Old friend for many years.
        Mr. Kozak. Yes, indeed. A pleasure.
        I might jump back because we are talking both with the
    sanctions under the--that involve assets which have a much
    higher standard of proof and so on and then the visas that my
    colleague mentioned.
        The visa ban has continued on. Every so often we will do
    another trench. We have got more in the works right now, and
    while we can't--as Annie mentioned, we can't give names under
    the visa laws, we have said that these have included ministers
    in the government, senior presidential advisors, judicial and
    law enforcement personnel at high levels.
        So, you know, and they know who they are and I think, more
    importantly, a lot of their colleagues know who they are and we
    have seen--I mean, one of the reasons you did is, one, is to
    punish people for their bad behavior but the other is to deter
    other people from the same kinds of behavior and we have seen
    evidence of that working.
        Ms. Ros-Lehtinen. And when bad behavior--if I could
    interrupt and I will leave with this--bad behavior means that
    they have given orders to violate the human rights----
        Mr. Kozak. Absolutely.
        Ms. Ros-Lehtinen [continuing]. Of Venezuelan natives. I
    mean, it is not coming late to class.
        Mr. Kozak. No, exactly. The visa----
        Ms. Ros-Lehtinen. Ordering the killing of students,
    unarmed.
        Mr. Kozak [continuing]. Is within two categories,
    basically. One is just that--really serious violations of human
    rights such as putting people away for nothing other than their
    opinion and the other is public corruption.
        Ms. Ros-Lehtinen. Violations that can be proven and we have
    given--with all due respect and I will end with this, so much
    evidence, Mr. Chairman, and I just feel like we are letting the
    people of Venezuela down when we don't use the laws to the
    fullest extent.
        Mr. Duncan. It is following a pattern, though.
        Ms. Ros-Lehtinen. It is, sir.
        Mr. Duncan. We are letting people of Cuba down.
        Ms. Ros-Lehtinen. Amen.
        Mr. Duncan. Now we are letting the people of Venezuela
    down.
        Ms. Ros-Lehtinen. Thank you, Mr. Chairman.
        Mr. Duncan. Yes. Thank you.
        Ms. Ros-Lehtinen. Thank you, sir. Thank you.
        Mr. Duncan. Thank you. You always do a great job. You are
    welcome, too. I will go down to Mr. Yoho for a follow-up.
        Mr. Yoho. Thank you, Mr. Chairman. I appreciate the
    extended time and I thank you guys for sitting here.
        With Venezuela collapsing like they are--their economy,
    their infrastructure and there is that social explosion of
    people wanting the changes in there--what are the potential
    ramifications for that region?
        Do you see it destabilizing any of the surrounding
    countries? And if you answered that earlier I apologize.
        Ms. Pforzheimer. Thank you for the question.
        It is something that we watch and we are working with our
    Embassies in region--in countries that are in the region with
    Venezuela.
        We noted--I noted two areas of concern. One is the economic
    implications that could occur to the Caribbean, which has been
    very dependent on the Venezuelan energy and our efforts to work
    with them to diversify their sources of energy.
        And the other is the possibility of any kind of migration
    of people leaving Venezuela and that could be--that could
    affect the islands that are close by, the Dutch Islands, or
    Colombia.
        Mr. Yoho. And that is one of my follow-up questions. What
    are the humanitarian refugee migration flow risks to the
    surrounding countries? Are they prepared for that?
        And then, you know, with the Maduro regime or government
    not liking us too much or the disdain they have for us, at what
    point can we intervene humanitarian wise and do we have that
    set up and do we have metrics I assume we had already set up,
    right?
        Ms. Pforzheimer. I think in--to answer your second question
    first that it is important if there were any kind of
    humanitarian intervention that it be multilateral. I think that
    is the most important function of the agencies that are set up
    to assess food needs, to give emergency help to children like
    UNICEF, and we are active participants in those organizations.
        So we would look to them to assess the needs and the
    conditions for any kind of humanitarian assistance.
        Mr. Yoho. Let me ask you a pointed question. Is there any
    plans on relocating any of the Venezuelan refugees to
    Guantanamo in there where we had the tent city back in--back
    when we had it?
        And I ask that question because I was down there and there
    was talk of that, of an infrastructure going in. Is that
    something you can comment on?
        Ms. Pforzheimer. I don't think, first of all, that I should
    comment on something that would be under Department of Defense
    authorities. But I have absolutely no information about
    anything like that.
        Mr. Yoho. All right. Let me ask you this.
        With the void that is happening in that government in
    Venezuela, who do you see fulfilling that void? You know, do we
    have to worry about a Libya in the Western Hemisphere with ISIS
    coming in?
        We know the connections between Iran, Hezbollah, Russia and
    China, and the reports I have read that are public knowledge is
    that ISIS has been through there, that Venezuela has been
    complicit in faking passports of people of Middle Eastern
    status--ISIS status--faking passports so that they can cross
    through from here to Canada, from there through Mexico, through
    Canada. Do you have any activity down there now that we need to
    know about?
        Ms. Pforzheimer. Thank you. First and foremost, I think
    that our law enforcement colleagues who are not here today are
    best placed to talk about any kind of controls that would be
    appropriate to what you are describing.
        But we, as the U.S. Government, would watch any kind of
    indications of that nature very carefully. As far as the idea
    of vacuum, you know, the opposition is looking for a
    constitutional peaceful mechanism to express their concerns.
        Mr. Yoho. That is only if they are allowed to go through
    the process that they are set up to do and with 1.4 million
    people's signature verified on the recall, you know, things can
    fall apart real quickly and then chaos breaks out and I--all we
    have to do is look back at Syria and see the way that started
    and where it is today and we don't need that in the Western
    Hemisphere.
        So with that, Mr. Chairman, I am going to yield back and I
    appreciate the opportunity and thank you all for being here.
        Mr. Duncan. I want to thank you and I will thank all the
    members that participated. Great questions, great dialogue. I
    want to thank the witnesses for being here today as well. I
    think we have--we have opened a number of lines of thought and
    I hope we will continue the dialogue because the Venezuelan
    people need us to continue the dialogue.
        If you think about--it has only been, what, 20 years or
    less since Chavez took over and the changes--I think about pre-
    Chavez Venezuela and Chavez and Venezuela in June 2016.
        As I said earlier, it is heartbreaking for the Venezuelan
    people when you think about the resources that are available
    there, the country that Venezuela can be and that we yearn for
    it to be once again and can be with democratic principles and
    ideals in place and followed.
        It is not that they don't have a constitution, not that
    they don't have a legislature or not, not that they don't have
    different branches of government, not that they don't have
    democratic principles in existence but you have to follow
    those.
        So thank you and I look forward to tomorrow and the OAS
    hearing--meeting, rather--and what may develop on these
    different lines of thought and tracks that it looks like others
    are going down.
        So we will conclude, and pursuant to Rule 7 the members of
    the subcommittee will be permitted to submit written statements
    to be included in the official record.
        Without objection, the hearing record will remain open for
    5 business days to allow statements, questions, extraneous
    materials for the record subject to the length limitation in
    the rules.
        We had some items that were submitted for the record
    earlier, and there being no further business we will stand
    adjourned.
        [Whereupon, at 2:19 p.m., the subcommittee was adjourned.]

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