Philippines Declares Martial Law, Duterte’s call with Trump Transcripts

Posted on May 23, 2017May 23, 2017 by Denise Simon

Philippines: Martial law declared as Islamic State jihadis storm city and battle national army

In Mindanao. This is a global war, and of the most curious type imaginable: no one in authority wants to admit that it is actually going on, and Western governments generally treat each enemy attack in this war as a separate and discrete criminal incident.

“Philippines soldiers battle Isis-linked gunmen on Marawi city streets,” by Gabriel Samuels, Independent, May 23, 2017:

A group of heavily-armed militants from a group linked to Isis have reportedly stormed a city in the Philippines and engaged in firefights with the national army.

Residents of Marawi City, in the south of the country, were urged to remain indoors as at least 15 gunmen from a Muslim rebel group called Maute stormed the streets brandishing assault rifles.

The group, which is also known as the Islamic State of Lanao, have reportedly received support from Isis.

Troops and a special police force were deployed to the city after residents in a nearby village raised the alarm and appealed for help.

President Rodrigo Duterte then declared martial law and a state of emergency in the province of Mindano [sic]. General Eduardo Ano, the military chief of staff, said at least one police officer was killed and eight soldiers were wounded in the fighting. More here.

***

It was enormously controversial that President Trump placed a friendly call to Philippine strongman Duterte on April 29. Now, we can read what they said. In short, Duterte has been on a killing rampage and frankly has called the United States all kinds of nasty names. Humm…. Then there was the part of the phone call that included North Korea’s nuclear program.

Read all about it with the transcripts here.

*** Image result for duterte meets putin

Duterte Lands in Russia for Visit Cut Short After Martial Law Declaration

Philippines President Rodrigo Duterte has landed in Russia for what was planned as an extensive visit including one-on-one talks with President Vladimir Putin, but the trip has been cut short following a jihadist attack in the Philippine’s south.

Breitbart: Duterte alluded to this trip as the month began, following a personal invitation to the White House, saying he could not confirm travel to America because he is “supposed to go to Russia.”

Duterte arrived in Moscow Monday night for a four-day visit, accompanied by a large Filipino business delegation. While Duterte will seek more Russian business investment in his country, a key objective of his visit will be signing a defense cooperation agreement expected to provide the Philippines with more weapons to use in the ongoing war against drug traffickers that has become a staple of the Duterte presidency.

Duterte had previously claimed Putin had offered him a “buy one, get one free” deal on firearms.

The Philippines is also facing jihadist attacks by Abu Sayyaf, the Islamic State affiliate in the country, which has become increasingly aggressive in the Muslim-majority south of the country, where Duterte is from.

Abu Sayyaf ultimately led to Duterte’s decision to leave Russia early to address the jihadist threat. Duterte declared a 60-day period of martial law in his native Mindanao island and will return home. According to the Philippine Star:

Foreign Affairs Secretary Alan Peter Cayetano said at the same press conference that the president will be cutting his visit to Russia short because his presence is needed in the country.

The signing of bilateral agreements with Russia will push through but the meetings with Russia President Vladimir Putin and Prime Minister Dmitry Medvedev were postponed. Cayetano said Duterte may just speak with the two leaders via phone.

“The agreement on military technical cooperation will pave the way for the Philippines to explore a possibility of military procurement from Russia,” Foreign Assistant Secretary Maria Cleofe Natividad told reporters before Duterte left to Russia. The agreements would also reportedly create an extradition agreement, which the two countries had not previously had, and allow for “information sharing, training, and technical cooperation,” according to the regional news outlet Rappler.

Officials have also expressed a hope that Duterte’s visit will help end the propagation of negative Russia stereotypes in the country. “There’s been a lot of stereotypes in the Philippines and I don’t really blame it. I mean, growing up watching James Bond movies, the villains were either an evil Russian scientist or some beautiful nubile Russian assassin,” Philippine Ambassador to Russia Carlos Sorreta said on Monday. “The reality is we have not had a deeper exchange with Russia even though we’ve had good relations, so we’re 40 years. And that’s going to change.”

Sorreta hoped the Russian visit would expand the “kind of independent foreign policy [they are] trying to achieve.”

Before his departure, Duterte emphasized the need to expand cooperation with Russia. “Russia must cease to be at the margins of Philippine diplomacy,” he said. “Overdependence on traditional partners has limited our room to maneuver in a very dynamic international arena. This is a strategic oversight that has led to many missed opportunities for our country. I am determined to correct this.”

Duterte has repeatedly stated that he would like to diminish the role of the United States in Philippine foreign relations, at one point declaring, ” You know, if China and Russia would decide to create a new order, I would be the first to join.”

Prior to Duterte, the government of Benigno Aquino kept close ties to the United States and maintained a distance from Russia. The Philippine Star notes that a head of state from that country has not visited Russia since President Gloria Arroyo did in 2009, and prior to that, no visit is on the record since 1997.

Duterte has eagerly expressed his fondness for Putin. “I like Putin. … We have similarities. When it comes to girls,” Duterte said in August 2016, in anticipation of their first meeting. Following that meeting, Duterte gushed that Putin had a “wide laugh” and had reserved a gun as a present for him in Russia. Neither country has confirmed whether Putin will hand over the present during this visit.

Cyber-code, Oilrig, Iran hires Russian Hackers

Posted on May 18, 2017May 18, 2017 by Denise Simon

Update and unrelated to OilRig and reported May 18: Russia tried to take over Pentagon Twitter accounts: report

SCMedia: Attacks believed to be Iranian in origin were fended off for more than two weeks in April, but security experts examining the code detected snippets of code from an underground Russian marketplace.

Iranian hackers targeting critical infrastructure

Attacks believed to be Iranian in origin were fended off for more than two weeks in April, but security experts examining the code detected something they’d never seen before: snippets of code baring similarities to a known Russian toolkit available on the underground Russian marketplace.

The code had previously been used in a damaging cyber-attack on the Ukraine’s infrastructure in 2015.

Carl Wright, general manager and executive vice president of worldwide sales at TrapX Security, the San Mateo, California-based security firm that blocked the hackers last month, told an interviewer it was the first time his firm had detected an attack where hackers based in Iran were collaborating with Russian hackers-for-hire, according to an article in the New York Times.

Wright could not reveal the target of the attack owing to a confidentiality arrangement. But other security experts said the attackers could have purchased the Russian toolkit from an online forum and customised it for their campaign.

This hypothesis is countered by TrapX researchers, however, who noted that a number of “web domains used in the attack had been registered to a Russian alias, and that three email addresses continue to be used by a hacker in Russian hacking forums and in the underground web.”

The Iranian attackers behind the latest campaign, dubbed OilRig for their previous attacks on oil companies in Saudi Arabia and Israel, have been expanding their geographical range with hundreds of new attacks targeting a number of military, financial and energy companies in Europe as well as the United States, the Times reported.

Nearly three-quarters of the code employed in the latest campaign was previously used by OilRig in hundreds of attacks on other enterprises, including government agencies and oil companies.

But, as the defences of the newest target became more robust and the attackers evolved their tactics, the security researchers noted new weapons in their arsenal: a typical hacker’s kit, used to siphon out data, such as to steal usernames and passwords; but, more revealing, a tool never before detected in an OilRig campaign.

This was obfuscated with encryption to evade security investigators. After weeks spent decrypting the code, the researchers at TrapX determined that besides code similar to that used by OilRig in prior attacks, the bad actors were employing malware called BlackEnergy, also used previously, specifically by the Russian hackers who attacked the Ukraine power grid. Further, data was being transferred from the target to a server also used in the Ukraine attack.

TrapX lured the miscreants to inject their malware onto a server, which was then analysed by the TrapX team who were able to then shut the attackers out of their client’s system.

Forbes

*** There is more:

Iranian hackers which previously targeted organizations in Saudi Arabia are now targeting organizations in other countries, including the US, as part of a campaign identified as OilRig campaign.

In addition to expanding its reach, the group has been enhancing its malware tools.

Researchers at Palo Alto Networks have been monitoring the group for some time and have

reported observing attacks launched by a threat actor against financial institutions and technology companies in Saudi Arabia and on the Saudi defense industry. This campaign referred to as “ OilRig,” by Palo Alto Networks, entails weaponized Microsoft Excel spreadsheets tracked as

“Clayslide” and a backdoor called “Helminth.” More here.

More: Last month

The Israeli Cyber Defense Authority yesterday announced that it believes Iran was behind the a series of targeted attacks against some 250 individuals between April 19 and 24 in government agencies, high-tech companies, medical organizations, and educational institutions including the renowned Ben-Gurion University. The attackers – whom security experts say are members of the so-called OilRig aka Helix Kitten aka NewsBeef nation-state hacking group in Iran — used stolen email accounts from Ben-Gurion to send their payload to victims.

“This is the largest and most sophisticated attack they’ve [OilRig] ever performed,” says Michael Gorelik, vice president of R&D for Morphisec, who studied the attacks and confirms that the final stage was thwarted for the most part. “It was a major information-gathering [operation],” he says.

OilRig has been rapidly maturing since it kicked off operations around 2015. The attack campaign against Israeli targets employed the just-patched Microsoft CVE-2017-0199 remote code execution vulnerability in the Windows Object Linking and Embedding (OLE) application programming interface. This flaw had been weaponized in attacks prior to the patch, including Dridex banking Trojan and botnet attacks, and in at least one other cyber espionage campaign.

Forbes has more on corporate and individual hack operations in the United States by OilRig including other countries.

Will Mueller’s Russian Probe Include Viktor Medvedchuk?

Posted on May 18, 2017May 18, 2017 by Denise Simon

Primer: Remember the media told us and the polls told us Hillary would win. When Trump prevailed, the left went into action in earnest and that is being aided by television and print media. All things Russia will be in our daily lives for a long while and there is good cause for that. There are truths that are being omitted, frankly we need complete truth, wherever it leads. For the sake of the country and gaining any kind of confidence in political leaders, the double edged sword will draw blood.

So, here we go and will Robert Mueller and his team perform and provide a final report that is honest, complete and true? America needs President Trump to succeed, of this there is no question. There is a legislative agenda that must advance.

Read on.

Image result for viktor medvedchuk

When it comes to Moscow’s long term operation to bring Ukraine under Russian influence, Medbedchuk is Putin’s man. Viktor Medvedchuk continues to work diligently to keep Ukraine from any membership into the European Union or NATO. As an aside, Viktor is also the god-father to Putin’s daughter Darina.

With historical targets by the Kremlin to hold power over Ukraine, Medvedchuk was trusted by the KGB/FSB using all the normal KGB tactics.

Viktor is a Russian oligarch with extravagant taste and is said to be worth $800 million.

yacht Royal Romance

Superyacht Royal Romance, owned by Ukrainian oligarch Viktor Medvedchuk

P4-GEM Viktor Medvedchuk

Medvedchuk’s private jet with registration P4-GEM

So, why is Medvedchuk important? He has some nasty history inside Ukraine. Further, those members of the Trump campaign and transition team had communications with Medvedchuk. Would one of those on the Trump team be Paul Manafort? Yes, glad you asked. Manafort was tapped to aid Yanukovych’s victory as Prime Minister of Ukraine until matters fell apart and he fled Ukraine for Russia. Manafort was in country when this occurred and stayed in Ukraine to rally old supporters and create a new party that would oppose pro-Westerner Poroshenko and alter the parliament. That black ledger discovered by a Ukraine government investigations shows that Manafort was paid $12.7 million for his work.

A side note, the law firm Wilmer Hale, is where Reginald Brown is representing Paul Manafort, happens to be the same law firm that now independent counsel for the Russian probe, Robert Mueller worked. So, is this new independent investigation a ploy due to history and conflicts of cases and legal representation? Humm, let’s continue.

***

Exclusive: Trump campaign had at least 18 undisclosed contacts with Russians: Sources

Michael Flynn and other advisers to Donald Trump’s campaign were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the 2016 presidential race, current and former U.S. officials familiar with the exchanges told Reuters.

The previously undisclosed interactions form part of the record now being reviewed by FBI and congressional investigators probing Russian interference in the U.S. presidential election and contacts between Trump’s campaign and Russia.

Six of the previously undisclosed contacts described to Reuters were phone calls between Sergei Kislyak, Russia’s ambassador to the United States, and Trump advisers, including Flynn, Trump’s first national security adviser, three current and former officials said.

Conversations between Flynn and Kislyak accelerated after the Nov. 8 vote as the two discussed establishing a back channel for communication between Trump and Russian President Vladimir Putin that could bypass the U.S. national security

bureaucracy, which both sides considered hostile to improved relations, four current U.S. officials said.

In January, the Trump White House initially denied any contacts with Russian officials during the 2016 campaign. The White House and advisers to the campaign have since confirmed four meetings between Kislyak and Trump advisers during that time.

The people who described the contacts to Reuters said they had seen no evidence of wrongdoing or collusion between the campaign and Russia in the communications reviewed so far. But the disclosure could increase the pressure on Trump and his aides to provide the FBI and Congress with a full account of interactions with Russian officials and others with links to the Kremlin during and immediately after the 2016 election.

The White House did not respond to requests for comment. Flynn’s lawyer declined to comment. In Moscow, a Russian foreign ministry official declined to comment on the contacts and referred Reuters to the Trump administration.

Separately, a spokesman for the Russian embassy in Washington said: “We do not comment on our daily contacts with the local interlocutors.”

The 18 calls and electronic messages took place between April and November 2016 as hackers engaged in what U.S. intelligence concluded in January was part of a Kremlin campaign to discredit the vote and influence the outcome of the election in favor of Trump over his Democratic challenger, former secretary of state Hillary Clinton.

Those discussions focused on mending U.S.-Russian economic relations strained by sanctions imposed on Moscow, cooperating in fighting Islamic State in Syria and containing a more assertive China, the sources said.

Members of the Senate and House intelligence committees have gone to the CIA and the National Security Agency to review transcripts and other documents related to contacts between Trump campaign advisers and associates and Russian officials and others with links to Putin, people with knowledge of those investigations told Reuters.

The U.S. Justice Department said on Wednesday it had appointed former FBI Director Robert Mueller as special counsel to investigate alleged Russian meddling in the U.S. presidential campaign and possible collusion between Trump’s campaign and Russia. Mueller will now take charge of the FBI investigation that began last July. Trump and his aides have repeatedly denied any collusion with Russia.

‘IT’S RARE’

In addition to the six phone calls involving Kislyak, the communications described to Reuters involved another 12 calls, emails or text messages between Russian officials or people considered to be close to Putin and Trump campaign advisers.

One of those contacts was by Viktor Medvedchuk, a Ukrainian oligarch and politician, according to one person with detailed knowledge of the exchange and two others familiar with the issue.

It was not clear with whom Medvedchuk was in contact within the Trump campaign but the themes included U.S.-Russia cooperation, the sources said. Putin is godfather to Medvedchuk’s daughter.

Medvedchuk denied having any contact with anyone in the Trump campaign.

“I am not acquainted with any of Donald Trump’s close associates, therefore no such conversation could have taken place,” he said in an email to Reuters.

In the conversations during the campaign, Russian officials emphasized a pragmatic, business-style approach and stressed to Trump associates that they could make deals by focusing on common economic and other interests and leaving contentious issues aside, the sources said.

Veterans of previous election campaigns said some contact with foreign officials during a campaign was not unusual, but the number of interactions between Trump aides and Russian officials and others with links to Putin was exceptional.

“It’s rare to have that many phone calls to foreign officials, especially to a country we consider an adversary or a hostile power,” Richard Armitage, a Republican and former deputy secretary of state, told Reuters.

FLYNN FIRED

Beyond Medvedchuk and Kislyak, the identities of the other Putin-linked participants in the contacts remain classified and the names of Trump advisers other than Flynn have been “masked” in intelligence reports on the contacts because of legal protections on their privacy as American citizens. However, officials can request that they be revealed for intelligence purposes.

U.S. and allied intelligence and law enforcement agencies routinely monitor communications and movements of Russian officials.

After Vice President Mike Pence and others had denied in January that Trump campaign representatives had any contact with Russian officials, the White House later confirmed that Kislyak had met twice with then-Senator Jeff Sessions, who later became attorney general.

Kislyak also attended an event in April where Trump said he would seek better relations with Russia. Senior White House adviser Jared Kushner, Trump’s son-in-law, also attended that event in Washington. In addition, Kislyak met with two other Trump campaign advisers in July on the sidelines of the Republican convention.

Trump fired Flynn in February after it became clear that he had falsely characterized the nature of phone conversations with Kislyak in late December – after the Nov. 8 election and just after the Obama administration announced new sanctions on Russia. Flynn offered to testify to Congress in return for immunity from prosecution but his offer was turned down by the House intelligence committee.

1000+ Officers Raid, 44 Arrests

Posted on May 17, 2017May 17, 2017 by Denise Simon

Image result for ms-13 raid los angeles NY Daily News

Primer: The LATimes reports:

Shortly after 4 a.m. Wednesday, heavily-armed ATF agents — wearing helmets and bulletproof gear and carrying rifles — forced their way into a storefront and a back building near Exposition Boulevard and Western Avenue in Exposition Park. Agents approached in an armored vehicle down a narrow alleyway behind the small business.

Once inside, federal agents and police detectives found what they described as gang members involved in human trafficking, as well as possible victims. The storefront, which appeared to be locked from the outside, was full of garbage.

A few of the people detained were handcuffed and lined up facing a metal fence in the alleyway next to the armored vehicle.

The indictment names the former leader of the gang and a dozen people who acted as a joint council of leaders, Brown said.

The lead defendant in the indictment is 43-year-old Jose Balmore Romero, known as “Porky.” Romero called the shots for the gang in Los Angeles in 2013 and 2014 and oversaw the gang’s drug-trafficking activities and coordinated the collection of extortion money, some of which was distributed to the Mexican Mafia, according to the U.S. attorney’s office in Los Angeles. Romero has been in custody since 2015, charged with ordering a gang-related slaying.

Three men were charged with murder in connection with the gang’s activities, authorities said. Carlos Alfredo Cardoza Lopez, 23, known as “Little Boy,” faces a violent crime in aid of racketeering murder charge in the fatal shooting of a innocent bystander inside the gang-controlled Little San Salvador Nightclub and Restaurant on Western Avenue, federal prosecutors said in a statement. A friend of the victim also was stabbed. More here.

Associated Press

Indictment document is here.

Dozens of MS-13 gang members nabbed in 50 Los Angeles raids

Los Angeles (CNN)Hundreds of federal and local authorities stormed homes and storefronts across Los Angeles early Wednesday, targeting dozens of high-ranking members of the notorious MS-13 street gang.

The 50 pre-dawn raids, aimed at catching suspects asleep or off guard, also focused on nabbing members of MS-13’s core leadership, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) said.

“Today we disrupted this gang’s command and control,” said Eric Harden, special agent in charge of the ATF’s Los Angeles field division.

Los Angeles is the US base for MS-13, which has tens of thousands of members worldwide. Authorities count the gang among the largest criminal organizations in the US.

More than half of the 44 people arrested Wednesday are undocumented immigrants, acting US Attorney Sandra Brown said.

But the raids aimed to curb violent crime — not immigration violations, Los Angeles Police Chief Charlie Beck said. He said MS-13 often “preys on” undocumented immigrants.

The suspects face a wide range of charges, including federal racketeering and narcotics conspiracy. If convicted, Brown said, most of those arrested Wednesday could face decades in federal prison — and three could face the death penalty.

About 1,000 officers from the ATF, the FBI, the Drug Enforcement Administration, US Immigration and Customs Enforcement, the Los Angeles Police Department and the Los Angeles County Sheriff’s Department took part worked on the massive effort.

And they had to execute their plan in the dark of night.

An inside look into a raid

Authorities conduct one of 50 simultaneous raids targeting MS-13 gang members.

CNN’s was the only TV crew that accompanied authorities during the raids.

At 4 a.m., a dozen ATF agents poured out of an armored vehicle, preparing to break open the front and back doors of an inconspicuous store just outside downtown. The storefront they hit was a suspected hub for MS-13.

Rifle-wielding officers suited in body armor and helmets appeared ready for combat. With the element of surprise on their side, agents peacefully took half a dozen people into custody.

One by one, they came out in handcuffs. Some were suspected gang members; some may be victims of human trafficking, authorities said.

A storefront might seem like an odd place to find notorious gang suspects. But MS-13 members have been known to live in storefronts and have been suspected of using them as a cover for drug activity, prostitution and human trafficking.

Investigation goes deep

Federal agents say the probe, which began in June 2014, targeted the leadership and the most violent members of MS-13 in Los Angeles and the gang’s links to the Mexican mafia.

“We believe the most impact is made by targeting the mid- to upper-level hierarchy of the gang and removing them,” Harden said.

“Once removed, it causes a disorganization of the gang, where it suppresses their activity for an extensive amount of time until another leader is developed or steps up.”

MS-13 makes money from extortions, kidnappings, drug and weapons trafficking and human trafficking, the ATF said. Killings for the protection of the gang are common, federal authorities say, and sometimes are carried out with machetes.

Harden has faced off with MS-13 for decades, dating back to his days as a street agent.

“They’ve been here since the ’80s and have thrived to this date,” said Harden. “They’re a transnational or international gang. Their level of brutality is extreme and high, similar to what we read about and hear with the drug-trafficking cartels in Mexico.” More here from CNN.

Russia’s Move to Own Citgo, Rosneft is Sanctioned

Posted on May 16, 2017May 16, 2017 by Denise Simon

Primer:

From the gasoline that helps your family take vacations to the advanced medical equipment at your community hospital, CITGO is fueling good.

Image result for cities service signs

It’s amazing the difference petroleum-based products make in our everyday lives. Based in Houston, Texas, CITGO is a refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. In addition to these products, there’s probably a CITGO in your neighborhood, a convenient place to fill up with gas and grab a quick snack.

The story of CITGO Petroleum Corporation as an enduring American success story began back in 1910 when pioneer oilman, Henry L. Doherty, created the Cities Service Company.

When Cities Service determined that it needed to change its marketing brand, it introduced the name CITGO in 1965, retaining the first syllable of its long-standing name and ending with “GO” to imply power, energy and progressiveness. The now familiar and enduring CITGO “trimark” logo was born.

Occidental Petroleum bought Cities Service in 1982, and CITGO was incorporated as a wholly owned refining, marketing and transportation subsidiary in the spring of the following year. Then, in August, 1983, CITGO was sold to The Southland Corporation to provide an assured supply of gasoline to Southland’s 7-Eleven convenience store chain.

In September, 1986, Southland sold a 50 percent interest in CITGO to Petróleos de Venezuela, S.A., (PDVSA), the national oil company of the Bolivarian Republic of Venezuela. PDVSA acquired the remaining half of CITGO in January, 1990 and the company is owned by CITGO Holding, Inc., an indirect, wholly owned subsidiary. With a secure and ample supply of crude oil, CITGO quickly became a major force in the energy arena.

Russia To Become Second-Largest Foreign Owner Of U.S. Domestic Refineries, If Venezuela Defaults

Venezuela’s state-owned oil company, Petroleos de Venezuela (PDVSA), has owned Citgo, an American refiner with headquarters in Houston, Texas, since the 1980s. At the end of 2016, cash-strapped Venezuela, in the throes of a combined economic and political crisis,[1] put up a large stake (49.9%) in Citgo as collateral in exchange for a loan from the Russian state-owned oil company Rosneft. Should PDVSA default on the loan, Rosfnet will gain control over Citgo. It is noteworthy that the U.S. imposed sanctions on Rosfnet following Russia’s seizure of Crimea in 2014.

On May 3, a bipartisan group of U.S. Senators introduced a wide-ranging bill calling for sanctions against the Venezuelan government and demanding President Donald Trump to prevent a deal struck by PDVSA and Rosfnet. CBS News reported: “The bill calls for the [U.S.] State Department to coordinate an international response to the crisis in Venezuela… In addition, a section of the bill highlights a Nov. 30 loan given by Russia’s state-owned oil company, Rosneft, to Venezuela’s state-owned oil company PDVSA. The deal would allow the Russian company to take control of nearly half of the U.S. oil company Citgo, which PDVSA owns, if Venezuela defaults on its debts.

“Influential senators from both parties sponsored the bill, including Senators Ben Cardin, D-Md.; Marco Rubio, R-Fla.; John Cornyn, R-TX; Dick Durbin, D-Ill.; John McCain, R-Ariz.; Bill Nelson, D-Fla.; Tim Kaine. D-Va.; Chris Van Hollen, D-Md. and Bob Menendez, D-NJ.”[2]

Earlier, Republican Congressman Jeff Duncan and Democratic Congressman Albio Sires sent a letter to U.S. Secretary of Treasury Steven Mnuchin, asking him to undertake an “immediate review of a recent asset transfer between Venezuela’s state-owned oil company. PDVSA, and Rosneft, which is under U.S. sanctions. The situation, if left unchecked, could severely undermine U.S. national security and energy independence.”[3]

On April 14, the Russian media outlet Vestifinance.ru, published an article titled “Rosneft And Citgo: Risk Or Anti-Russian Hysteria?” The article stated that U.S. lawmakers’ actions against The PDVSA-Rosneft deal are prompted by anti-Russian “hysteria.” Vestifinance.ru wrote: “By an amazing coincidence, a letter to Mnuchin was written just before U.S. Secretary of State Rex Tillerson’s visit to Moscow. And as long as relations between Moscow and Washington are not improved significantly, politicians will keep finding new pretexts to incite fears.”

Below are excerpts from the Vestifinance.ru article:[4]

(Source: Rt.com)

PDVSA Still Owes Russia $62 billion

“PDVSA, the Venezuelan state-owned oil company, has paid off its [Russian] loan along with interest in the amount of $2.2 billion. This is good news as PDVSA avoided a default. However, the Vice President [of Venezuela] Tarik El Aissami characterized the situation as ‘a merciless economic war’ being waged against the Maduro government. The bad news is that PDVSA still owes [Russia] $62 billion.

“It is well-known that some members of the U.S. Congress are quite concerned about a possible default by Venezuela, since Russian-owned Rosneft can then get access to the American company Citgo. Citgo owns 48 oil terminals in 20 U.S. states as well as 3 oil refineries. It is the control of Rosneft over the American refineries that worries lawmakers the most.

“‘The Russian government could readily become the second-largest foreign owner of U.S. domestic refinery capacity. Such a development would give the Russians more control over oil and gas prices worldwide, inhibit U.S. energy security, and undermine broader U.S. geopolitical efforts’, [U.S. congressmen] wrote in a letter to Treasury Secretary Steve Mnuchin. ‘We remain deeply concerned over the implications for U.S. national security.’

How Rosneft Can Take Over CITGO

“Venezuela has been desperate for cash lately. Petroleos de Venezuela (PDVSA), the Venezuelan state-owned oil company, has owned Citgo since the 1980s. In exchange for obtaining a loan from Rosneft in December, the Venezuelan oil company put up a large stake (49.9%) in Citgo as collateral. If PDVSA is unable to pay off the loan on time, Rosneft will almost certainly gain control over Citgo. All Rosneft would need for a majority share would be to buy a few more PDVSA bonds, thus clearing the 50% threshold of ownership.

[Rosneft] Is Not Going To Waste Money For The Illusory Opportunity To Harm The U.S.’

“The concerns expressed by [the U.S] congressmen are rather strange. What exactly is Rosneft going to do with three oil refineries? U.S. politicians believe that the Russian company will be able to take part in a conspiracy that will lead to a restriction of gasoline production, raise gas prices and thus cause damage to the U.S. national security or the American economy. This is plain silly. Even though Rosneft is a state-owned company, its purpose is still making profit, and it is not going to waste money for the illusory opportunity to harm the U.S. And the scenario offered by congressmen has no bearing on reality whatsoever. “Three refineries is a mere drop in the ocean compared to the rest of the U.S. oil assets. Even assuming that production could be reduced at these refineries, this may at most affect one region in the short term, but then other producers will quickly capture the market and stabilize it. And so if Rosneft takes over Citgo, it will simply produce and sell gasoline in the U.S., making money on it, rather than making insane plans to threaten the U.S. national security.

“Reports in the U.S. media treat the lawmakers’ letter with a healthy dose of irony and that is why it is difficult to avoid the conclusion that the congressmen are deliberately trying to incite anti-Russian fears. By an amazing coincidence, a letter to Mnuchin was written just before U.S. Secretary of State Rex Tillerson’s visit to Moscow. And as long as relations between Moscow and Washington are not improved significantly, politicians will keep finding new pretexts to incite fears.

“As far as Venezuela is concerned, yielding control of Citgo is a good way to reduce its debt burden. Most likely, this will happen no later than in the fall of 2017, since there is very little chance its economy will stabilize. Most likely, Venezuela will default and begin to restructure its debt this year. According to the credit-default swaps market, investors estimate the chances of Venezuela’s default in the next six months at 41%. And in March that indicator was below 34%.”

(Source: Latinamericapost.com)

[1] See MEMRI Special Dispatch N. 6903, Russia’s Support For The Venezuelan Regime – An Update, May 2, 2017.

[2] Cbsnews.com, May 3, 2017.

[3] See letter sent by Congressmen Jeff Duncan and Albio Sires.

[4] Vestifinance.ru, April 14, 2017.