Tag Archives: Sanctions

Venezuela’s Maduro seeks debt negotiations after U.S. sanctions

FILE PHOTO: Venezuela's President Nicolas Maduro speaks during a meeting at Miraflores Palace in Caracas, Venezuela August 25, 2017. Miraflores Palace/Handout via REUTERS

By Deisy Buitrago and Corina Pons

CARACAS (Reuters) – Venezuelan President Nicolas Maduro has invited bondholders to unspecified “negotiations” over the country’s foreign debt in coming days, in response to recent U.S. financial sanctions.

With Venezuela deep in recession and its currency reserves at their lowest in more than two decades, the Maduro government and state oil company PDVSA have to pay about $4 billion in debt and interest during the rest of 2017.

“All bondholders are invited to various rounds of negotiations over the next few weeks,” the president said in a speech late on Thursday to the new Constituent Assembly.

He reiterated Venezuela would keep honoring debt, but said he wanted to talk with bondholders affected by sanctions recently imposed by U.S. President Donald Trump.

Maduro said Vice President Tareck El Aissami, already under U.S. financial sanctions over drug trafficking allegations, and Finance Minister Ramon Lobo would coordinate talks and some “bilateral conversations” with bondholders had already begun.

In the same speech, Maduro said Venezuela would seek to “free” itself of the U.S. dollar and “implement a new system of international payments” using currencies such as the yuan, yen, rupee, euro and ruble.

The president did not, however, specify whether paying in a different currency was an option his government wanted to discuss with bondholders.

The Washington-based Institute of International Finance, which represents large banks and financial institutions, said it was advising a group of holders of Venezuelan bonds.

“This informal group will take note of the Venezuelan announcements and discuss how to proceed,” IIF Executive Managing Director Hung Tran told Reuters. The group was made up of bondholders from the United States and elsewhere, he said.

Tran said Venezuela could not change the currency of bonds without agreement by all or a large majority of holders.

Last month, Trump, who brands Maduro a “dictator,” signed an executive order that prohibits Americans from dealing in new debt issued by the Venezuelan government or PDVSA.

That could complicate any debt refinancing attempts.

Washington has also sanctioned PDVSA’s finance boss Simon Zerpa, meaning U.S. businesses are barred from dealing with him, and even Maduro himself in measures intended to punish the Venezuelan government for alleged corruption and rights abuses.

“I will be announcing Venezuela’s definitive response to the financial aggression we – and the international investors – have suffered from Donald Trump and (opposition leader) Julio Borges,” Maduro added in the speech on Thursday.

Borges, the head of the opposition-led congress whose role has been overridden by the Constituent Assembly, has been spearheading an opposition campaign for foreign financial institutions to put the squeeze on Venezuela’s government.

“Venezuela will take a position to defend the judicial and financial security of the republic and its investors or holders of financial instruments,” Maduro added.

BOND PRICES STABLE

Though Maduro gave no further details of what his government wanted to discuss with bondholders or where talks would be held, he did say 74 percent were American or Canadian.

Three bondholders consulted by Reuters said they had not received any formal approach to dialogue, though two said intermediaries for the government had been communicating with some investors informally.

“We didn’t receive an invitation or anything like that. Even if we had we don’t think we would take it too seriously,” said one portfolio manager at a large New York firm that owns Venezuelan debt, asking not to be named.

In trading on Friday, Venezuelan government and PDVSA bonds were little changed in price.

The OPEC nation of 30 million people is in the fourth year of a recession, with its population grappling with triple-digit inflation and shortages of food and medicine.

Critics say a long-failing socialist economic system is to blame for Venezuela’s financial troubles, while the government blames an alleged “economic war” by domestic foes and Washington.

International reserves stood at $9.873 billion on Wednesday, compared with nearly $30 billion five years ago, central bank data shows. They are at their lowest level since 1995.

Most of the country’s reserves are tied up in gold that cannot be used in financial transactions without going through a certification process in another country.

In another speech on Friday, Maduro said that Venezuela would begin selling its oil, gas, gold and “all products” in currencies other than the U.S. dollar, but gave no further details of the intended changes in export transactions.

(Additional reporting by Diego Ore and Andrew Cawthorne in Caracas, Davide Scigliuzzo in New York and Lesley Wroughton in Washington; Writing by Andrew Cawthorne; Editing by W Simon and Andrew Hay)

Putin says sanctions, pressure alone won’t resolve North Korea crisis

Putin says sanctions, pressure alone won't resolve North Korea crisis

By Denis Pinchuk and Christine Kim

VLADIVOSTOK, Russia/SEOUL (Reuters) – Resolving the North Korean nuclear crisis is impossible with sanctions and pressure alone, Russian President Vladimir Putin said on Wednesday after meeting his South Korean counterpart, adding that the impact of cutting oil would be worrying.

Putin met South Korea’s Moon Jae-in on the sidelines of an economic summit in the eastern Russian city of Vladivostok amid mounting international concern that their neighbor plans more weapons tests, possibly a long-range missile launch ahead of a weekend anniversary.

Putin denounced North Korea’s sixth and largest nuclear bomb test on Sunday, saying Russia did not recognize its nuclear status.

“Pyongyang’s missile and nuclear program is a crude violation of U.N. Security Council resolutions, undermines the non-proliferation regime and creates a threat to the security of northeastern Asia,” Putin said at a joint news conference.

“At the same time, it is clear that it is impossible to resolve the problem of the Korean peninsula only by sanctions and pressure,” he said.

No headway could be made without political and diplomatic tools, Putin said, later telling the TASS news agency that Russian and North Korean delegations might meet at the Vladivostok forum.

Moon, who came to power this year advocating a policy of pursuing engagement with North Korea, has come under increasing pressure to take a harder line.

He has asked the United Nations to consider tough new sanctions after North Korea’s latest nuclear test.

Diplomats say the U.N. Security Council could consider banning North Korean textile exports, barring its airline or stopping supplies of oil to the government and military.

Other measures could include preventing North Koreans from working abroad and putting top officials on a blacklist aimed at imposing asset freezes and travel bans.

“I ask Russia to actively cooperate as this time it is inevitable that North Korea’s oil supply should be cut at the least,” Moon told Putin, according to a readout from a South Korean official.

Putin said North Korea would not give up its nuclear program no matter how tough the sanctions.

“We too, are against North Korea developing its nuclear capabilities and condemn it, but it is worrying cutting the oil pipeline will harm the regular people, like in hospitals,” Putin said, according to the South Korean presidential official.

Russia’s exports of crude oil to North Korea were tiny at about 40,000 tonnes a year, Putin said. By comparison, China provides it with about 520,000 tonnes of crude a year, according to industry sources.

Last year, China shipped just over 96,000 tonnes of gasoline and almost 45,000 tonnes of diesel to North Korea, where it is used across the economy, from fishermen and farmers to truckers and the military.

‘FREEZE FOR FREEZE’

Sanctions have done little to stop North Korea boosting its nuclear and missile capacity as it faces off with U.S. President Donald Trump, who has vowed to stop it from being able to hit the U.S. mainland with a nuclear weapon.

China and Russia have advocated a “freeze for freeze” plan, where the United States and South Korea stop major military exercises in exchange for North Korea halting its weapons programs, but neither side is willing to budge.

North Korea says it needs to develop its weapons to defend itself against what it sees as U.S. aggression.

South Korea and the United States are technically still at war with North Korea after the 1950-53 Korean conflict ended with a truce, not a peace treaty.

China objects to both the military drills and the deployment in South Korea of an advanced U.S. missile defense system that has a radar that can see deep into Chinese territory.

South Korea’s Defence Ministry said the four remaining batteries of the Terminal High Altitude Area Defense (THAAD) system would be deployed on a golf course in the south of the country on Thursday.

Two THAAD batteries have already been installed.

Chinese Foreign Ministry spokesman Geng Shuang reiterated China’s opposition to the system, saying it could only “severely damage” regional security and raise “tensions and antagonism”.

“China strongly urges the United States and South Korea to pay attention to China and other regional nations’ security interests and concerns, immediately halt the progress of the relevant deployment, and remove the relevant equipment,” Geng said.

BIG BLAST

Asian stocks fell on Wednesday after a slide on Wall Street overnight while the dollar was on the defensive with Korean tension showing few signs of abating.

Sunday’s test of what North Korea said was an advanced hydrogen bomb was its largest by far.

Japan upgraded its assessment of the North Korean test to 160 kilotons from 120 kilotons after the size of the earthquake it generated was revised to magnitude 6.1.

“We estimate this was far bigger than previous nuclear tests,” Defence Minister Itsunori Onodera told reporters.

Satellite imagery appeared to show the blast caused landslides at North Korea’s Punggye-ri test site, according to 38 North, a Washington-based North Korean monitoring project.

South Korean officials said they were watching for radioactive fallout from the test and for signs of preparations for more activity.

British Defence Secretary Michael Fallon said on Wednesday China held the key to resolving the crisis, reiterating comments made by Prime Minister Theresa May and Australian leader Malcolm Turnbull after they spoke with Trump.

“China holds the key, the oil to North Korea flows from China … China has not just influence but has many of the levers that are needed to change behavior in North Korea,” Fallon told BBC radio.

For a graphic on nuclear North Korea, click: http://fingfx.thomsonreuters.com/gfx/rngs/NORTHKOREA-MISSILES/010031V7472/index.html

(Additional reporting by Soyoung Kim in SEOUL, Stephanie Nebehay in GENEVA, William Mallard and Kaori Kaneko in TOKYO, Christian Shepherd and Michael Martina in BEIJING; Writing by Lincoln Feast; Editing by Paul Tait, Robert Birsel)

Germany keen to avoid new ‘ice age’ in ties between Russia, West

U.S. Secretary of State Rex Tillerson (R) and German Foreign Minister Sigmar Gabriel walk out to meet the press where Tillerson made a statement about the flooding in Houston, Texas, but declined questions, prior to a bilateral meeting, at the State Department, in Washington, U.S., August 29, 2017. REUTERS/Mike Theiler

WASHINGTON (Reuters) – Germany and Europe want to ensure that new U.S. sanctions against Russia do not lead to a new “ice age” in ties between Russia and the West, German Foreign Minister Sigmar Gabriel said on Tuesday.

Gabriel said he spoke with U.S. Secretary of State Rex Tillerson about the sanctions in a meeting in Washington, adding that he was grateful that U.S. President Donald Trump had agreed to coordinate on further measures with U.S. allies.

“We as Europeans have great concerns that this will have unintended consequences for Europe. We don’t want to completely destroy our business relations with Russia, especially in the energy sector,” Gabriel said.

Trump this month approved new sanctions on Moscow for its 2014 annexation of Ukraine’s Crimea peninsula and for what U.S. intelligence agencies say was its meddling in the U.S. presidential election, a charge Russia denies.

Gabriel has criticized the United States for the move, saying the new punitive measures expose European companies involved in energy projects in Russia to fines for breaching U.S. law.

Economy Minister Brigitte Zypries even urged the EU to retaliate against the United States if the new sanctions on Russia should end up penalizing German firms.

Gabriel said European leaders were concerned that the latest sanctions would not only have economic consequences, but could also “lead to a new ice age between Russia and the United States and the West.”

Despite European concerns about the sanctions, Gabriel insisted that Moscow must do its part to implement a fragile ceasefire agreement in place for eastern Ukraine, including the withdrawal of heavy weapons.

“That would be a starting point for improved relations,” Gabriel said.

German Chancellor Angela Merkel and French President on Monday called for Russia and Ukraine to increase their efforts to implement the ceasefire agreement.

The conflict between Ukrainian forces and Russian-backed separatists has claimed more than 10,000 lives since it erupted in 2014. Germany and France have tried to convince both sides to implement a peace deal agreed in Minsk in 2015 but with little success so far.

(Reporting by Andrea Shalal; Editing by Hugh Lawson)

Russian-North Korea projects foundering because of missile tests

A guard walks along a platform past signs, which read "Russia" (L) and "DPRK"(Democratic People's Republic of Korea), at the border crossing between Russia and North Korea in the settlement of Tumangan, North Korea July 18, 2014.

By Polina Nikolskaya and Katya Golubkova

MOSCOW (Reuters) – Commercial ventures planned between Russia and North Korea three years ago are not being implemented because of Pyongyang’s missile testing program, the Minister for the Development of the Russian Far East, Alexander Galushka, said.

Russia has been under international scrutiny over North Korea because it has taken a more doveish approach to Pyongyang than Washington, and Russian trade with North Korea increased sharply at the start of this year.

The United States government earlier this month imposed new North Korea-related sanctions that targeted Russian firms and individuals for, it alleged, supporting Pyongyang’s weapons programs and providing oil.

However Galushka, in an interview with Reuters, said Moscow was faithfully implementing the international sanctions regime on North Korea, and held up the stalled bilateral projects as an indication that Pyongyang was paying an economic price for its weapons program.

“Russia has not violated, does not violate and will not work outside the framework (of the resolution) that was accepted by the U.N. Security Council,” said Galushka, who also heads a Russia-North Korean Intergovernmental Commission.

Russian businesses discussed a number of projects with North Korea in 2014. But then North Korea conducted military tests, including some involving nuclear weapons, and the projects became difficult to implement, Galushka said.

One such project, called “Pobeda”, or “Victory,” would have involved Russian investments and supplies that could be exchanged for access to Korean natural resources.

“We told our North Korean partners more than once … that it hampers a lot, makes it impossible, it restricts things, it causes fear,” Galushka said, referring to the weapons testing.

Another joint project between the two countries is a railway link with North Korea, from the Russian eastern border town of Khasan to Korea’s Rajin.

It is operating but below its potential. The link could work at a capacity of 4 million tonnes a year, officials have said previously, but now it only carries around 1.5 million tonnes of coal per year, according to Galushka.

UN sanctions also prohibit countries from increasing the current numbers of North Korean laborers working in their territories.

According to Galushka, around 40,000 employees from North Korea worked in Russia. Mainly they are engaged in timber processing and construction.

Russian business is interested in access to the North Korea workforce, Galushka said, but the numbers will stay in line with what the sanctions permit.

He said 40,000 workers from North Korea “is a balance formed in the economy, neither more nor less.”

Bilateral trade between the two countries has been decreasing for the last four years, from $112.7 million in 2013 to $76.9 million in 2016, according to Russian Federal Customs Service statistics.

But it more than doubled to $31.4 million in the first quarter of 2017 in year-on-year terms. Most of Russia’s exports to North Korea are oil, coal and refined products.

Asked to explain why trade was rising if political issues were hurting commercial projects, a spokeswoman for Galushka’s ministry said in an email: “According to the latest data, there was an objective increase due to exports to North Korea, primarily oil products. But the export of oil does not violate the agreements of the UN countries in any way.”

The interview with Galushka took place before the U.S. imposed the sanctions targeting Russian entities and individuals for trading with North Korea.

Galushka’s ministry referred questions about the new sanctions to the Russian foreign ministry.

Maria Zakharova, a foreign ministry spokeswoman, told reporters Washington’s unilateral sanctions worsened tensions on the Korean peninsula, and that Russia is fulfilling its international obligations in full.

 

(Editing by Andrew Heavens)

 

Trump slaps sanctions on Venezuela; Maduro sees effort to force default

Venezuela's President Nicolas Maduro speaks during a meeting at Miraflores Palace in Caracas, Venezuela August 25, 2017. Miraflores Palace/Handout via REUTERS ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY.

By Alexandra Ulmer and David Lawder

CARACAS/WASHINGTON/ (Reuters) – U.S. President Donald Trump signed an executive order that prohibits dealings in new debt from the Venezuelan government or its state oil company on Friday in an effort to halt financing that the White House said fuels President Nicolas Maduro’s “dictatorship.”

Maduro, who has frequently blamed the United States for waging an “economic war” on Venezuela, said the United States was seeking to force Venezuela to default — but he said it would not succeed.

The order is Washington’s biggest sanctions blow to date against Maduro and is intended to punish his leftist government for what Trump has called an erosion of democracy in the oil-rich country, which is already reeling from an economic crisis.

It suggests a weakening in already strained relations between the two countries. Just three days ago, Maduro said the relations between Caracas and Washington were at their lowest point ever.

“All they’re trying to do to attack Venezuela is crazy,” said Maduro on a TV broadcast on Friday. “With the efforts of our people, it will fail and Venezuela will be stronger, more free, and more independent.”

Venezuela faces a severe recession with millions suffering food and medicine shortages and soaring inflation. The South American nation relies on oil for some 95 percent of export revenue.

Citgo Petroleum [PDVSAC.UL], the U.S. refiner of Venezuela’s ailing state-run oil company PDVSA, is “practically” being forced to close by the order, warned Maduro, adding that a preliminary analysis showed the sanctions would impede Venezuelan crude exports to the United States.

He said he was calling “urgent” meetings with U.S. clients of Venezuelan oil.

The new sanctions ban trade in any new issues of U.S.-dollar-denominated debt of the Venezuelan government and PDVSA [PDVSA.UL] because the ban applies to use of the U.S. financial system.

As a result, it will be it tricky for PDVSA to refinance its heavy debt burden. Investors had expected that PDVSA would seek to ease upcoming payments through such an operation, as it did last year, which usually requires that new bonds be issued.

Additional financial pressure on PDVSA could push the cash-strapped company closer to a possible default, or bolster its reliance on key allies China and Russia, which have already lent Caracas billions of dollars.

“They want us to fall into default,” said Maduro, adding that just under two-thirds of Venezuelan bond holders are in the United States.

Maduro insisted that Venezuela would continue paying its debts.

The decision also blocks Citgo Petroleum from sending dividends back to the South American nation, a senior official said, in a further blow to PDVSA’s coffers.

However, the order stops short of a major ban on crude trading that could have disrupted Venezuela’s oil industry and worsened the country’s faltering economy.

It also protects holders of most existing Venezuelan government and PDVSA bonds, who were relieved the sanctions did not go further. Venezuelan and PDVSA bonds were trading broadly higher on Friday afternoon.

“Maduro may no longer take advantage of the American financial system to facilitate the wholesale looting of the Venezuelan economy at the expense of the Venezuelan people,” U.S. Treasury Secretary Steven Mnuchin said on Friday.

Venezuela’s Oil Ministry and PDVSA did not immediately respond to a request for comment.

 

PDVSA UNDER PRESSURE

PDVSA, the financial engine of Maduro’s government, is already struggling due to low global oil prices, mismanagement, allegations of corruption and a brain drain.

Washington last month sanctioned PDVSA’s finance vice president, Simon Zerpa, complicating some of the company’s operations as Americans are now banned from doing business with him.

Trump has so far spared Venezuela from broader sanctions against its vital oil industry, but officials have said such actions are under consideration. The Republican president has also warned of a “military option” for Venezuela, although White House national security adviser H.R. McMaster said on Friday that no such actions are anticipated in the “near future.”

Venezuela has for months struggled to find financing because of PDVSA’s cash flow problems and corruption scandals have led institutions to tread cautiously, regardless of sanctions.

Russia and its state oil company Rosneft have emerged as an increasingly important source of financing for PDVSA, according to a Reuters report.

On at least two occasions, the Venezuelan government has used Russian cash to avoid imminent defaults on payments to bondholders, a high-level PDVSA official told Reuters.

“At this point our view is that the country can scrape by without defaulting this year, largely with the help of Chinese and Russian backing and by further squeezing imports. Next year is a tossup,” said Raul Gallegos, an analyst with the consultancy Control Risks.

However, China has grown reticent to extend further loans because of payment delays and corruption. Russia has been negotiating financing in exchange for oil assets in Venezuela, sources have told Reuters, but going forward it would be difficult for the OPEC member to provide enough assets to keep up loans destined for bond payments.

Venezuela’s government has around $2 billion in available cash to make $1.3 billion in bond payments by the end of the year and to cover the import of food and medicine, according to documents reviewed by Reuters.

 

(Reporting by David Lawder in Washington and Alexandra Ulmer in Caracas; Additional reporting by Deisy Buitrago, Girish Gupta, Eyanir Chinea, Corina Pons, Deisy Buitrago and Hugh Bronstein in Caracas, Marianna Parraga in Houston, Tim Ahmann and Ayesha Rascoe in Washington, Rodrigo Campos and Riham Alkousaa in New York; Writing by Alexandra Ulmer and Girish Gupta; Editing by Leslie Adler)

 

U.S. weighs ban on trade in Venezuela debt: U.S. official

President Donald Trump waves to Marines as he departs Marine Corps Air Station Yuma in Yuma, Arizona. REUTERS/Joshua Roberts

WASHINGTON (Reuters) – The Trump administration is considering additional sanctions against Venezuela’s government, including a ban on trading the country’s debt, a U.S. administration official with knowledge of discussions said on Wednesday.

“It is just one option that is being talked about,” the official told Reuters, speaking on condition of anonymity.

The Wall Street Journal, which first reported on Tuesday the possibility that the United States could prohibit trading of some Venezuelan bonds, said one option would be a ban on trading of new debt issued by Venezuela or its state-owned entities, with an exemption for debt issued under the authority of the National Assembly that Maduro has stripped of power.

Venezuela bonds fell on Wednesday.

The Trump administration has imposed sanctions against Maduro and senior officials in his administration to punish them for what the United States sees as their role in undermining democracy in the oil-producing country.

On Aug. 9, Washington imposed sanctions against eight more individuals, including the brother of late socialist leader Hugo Chavez.

U.S. Vice President Mike Pence, speaking in Miami on Wednesday, said the Trump administration was ready to do more.

“You may be assured that under the leadership of President Donald Trump, the United States will continue to bring the full measure of American economic and diplomatic power to bear until democracy is restored in Venezuela,” Pence said, urging Latin America to also do more to pressure Maduro’s government.

“The United States has already issued three rounds of targeted sanctions against Maduro and his inner circle, and there is more to come,” Pence said.

Venezuela’s government has around $2 billion in available cash to make $1.3 billion in bond payments by the end of the year and to cover imports of food and medicine, Reuters reported in August.

The funds that could be used for debt payment include $1.3 billion in cash and IMF Special Drawing Rights held in central bank reserves, and $700 million in separate accounts that the central bank lists as “other financial assets,” according to a report by local firm Financial Synthesis.

(Reporting by Tim Ahmann and Lesley Wroughton; editing by Mohammad Zargham)

Japan urges pressure on North Korea as U.S. spells out choices

FILE PHOTO: Japanese Foreign Minister Taro Kono gestures during a news conference on the sidelines of the 50th Association of Southeast Asia Nations (ASEAN) Regional Forum (ARF) in Manila, Philippines August 7, 2017. REUTERS/Dondi Tawatao

By Kiyoshi Takenaka and Stephanie Nebehay

TOKYO/GENEVA (Reuters) – Japan said on Tuesday the world must keep pressure on North Korea to rein in its nuclear and missile programs as the United States spelt out the choice for impoverished Pyongyang between belligerence and prosperity.

North Korea has pursued its weapons tests in defiance of U.N. Security Council resolutions and sanctions and ignored all calls, including from major ally China, to stop, prompting a bellicose exchange of rhetoric between the North and the United States.

North Korea justifies its weapons programs, including its recent threat to fire missiles towards the U.S. Pacific territory of Guam, by pointing to perceived U.S. hostility, such as military exercises with South Korea this week.

Japanese Foreign Minister Taro Kono said pressure must be maintained until the North demonstrated it would give up its nuclear program.

“It’s not the time to discuss (the resumption of) six-party talks,” Kono said, referring to international negotiations involving both Koreas, the United States, Russia, China and Japan for the denuclearization of the Korean peninsula.

“It’s time to exert pressure,” he told reporters.

U.S. President Donald Trump’s top priority is to protect the United States and its allies against the “growing threat” from North Korea and America is ready to use “the full range of capabilities” at its disposal, a U.S. envoy said.

U.S. disarmament ambassador Robert Wood told a U.N.-sponsored Conference on Disarmament in Geneva the “path to dialogue still remains an option” for Pyongyang and it had the choice between poverty and belligerence and prosperity and acceptance.

There was no immediate reply from the North Korean delegate in the room.

‘CRAZY’ TO SHARE TIMELINE

The head of the U.S. military’s Pacific Command said diplomacy was key.

Admiral Harry Harris was in South Korea to observe annual joint military drills with the South Korean military, which the North called a step towards nuclear conflict masterminded by U.S. and South Korean “war maniacs”.

“So we hope and we work for diplomatic solutions to the challenge presented by Kim Jong Un,” Harris told reporters at a U.S. air base in Osan, about an hour from the capital, Seoul, referring to the North Korean leader.

He said diplomacy was “the most important starting point” in response to the North’s threat, when asked what actions by North Korea might trigger a preemptive U.S. strike against it.

“As far as a timeline, it would be crazy for me to share with you those tripwires in advance. If we did that, it would hardly be a military strategy,” he said.

The United States and South Korea began the long-planned exercises on Monday, called the Ulchi Freedom Guardian, which the allies have said are purely defensive.

The drills end on Aug. 31 and involve tens of thousands of troops as well as computer simulations designed to prepare for war with a nuclear-capable North Korea.

A North Korean army spokesman repeated a threat of retaliation against the United States for readying a preemptive strike and a war of aggression, using the drills as an excuse to mount such an attack.

“The U.S. will be wholly held accountable for the catastrophic consequences to be entailed by such reckless aggressive war maneuvers, as it chose a military confrontation,” the unidentified spokesman said in comments carried by the North’s official KCNA news agency.

The United States and North Korea are technically still at war with the North because their 1950-53 conflict ended in a truce, not a peace treaty.

(Additional reporting by Christine Kim in Pyeongtaek, South Korea, Tim Kelly in Tokyo; Writing by Jack Kim and Nick Macfie; Editing by Robert Birsel)

Iran could quit nuclear deal in ‘hours’ if new U.S. sanctions imposed: Rouhani

Iran could quit nuclear deal in 'hours' if new U.S. sanctions imposed: Rouhani

DUBAI (Reuters) – Iran could abandon its nuclear agreement with world powers “within hours” if the United States imposes any more new sanctions, Iranian President Hassan Rouhani said on Tuesday.

“If America wants to go back to the experience (of imposing sanctions), Iran would certainly return in a short time — not a week or a month but within hours — to conditions more advanced than before the start of negotiations,” Rouhani told a session of parliament broadcast live on state television.

Iran says new sanctions that the United States has imposed on it breach the agreement it reached in 2015 with the United States, Russia, China and three European powers in which it agreed to curb its nuclear work in return for the lifting of most sanctions.

The U.S. Treasury imposed sanctions on six Iranian firms in late July for their role in the development of a ballistic missile program after Tehran launched a rocket capable of putting a satellite into orbit.

In early August, U.S. President Donald Trump signed into law new sanctions on Iran, Russia and North Korea passed by the U.S. Congress. The sanctions in that bill also target Iran’s missile programs as well as human rights abuses.

The United States imposed unilateral sanctions after saying Iran’s ballistic missile tests violated a U.N. resolution, which endorsed the nuclear deal and called upon Tehran not to undertake activities related to ballistic missiles capable of delivering nuclear weapons, including launches using such technology.

It stopped short of explicitly barring such activity.

Iran denies its missile development breaches the resolution, saying its missiles are not designed to carry nuclear weapons.

“The world has clearly seen that under Trump, America has ignored international agreements and, in addition to undermining the (nuclear deal), has broken its word on the Paris agreement and the Cuba accord…and that the United States is not a good partner or a reliable negotiator,” Rouhani said.

Trump said last week he did not believe that Iran was living up to the spirit of the nuclear deal.

(Reporting by Dubai newsroom, Editing by Robin Pomeroy and Angus MacSwan)

U.S. slaps new sanctions on Venezuela, fugitive mayor defiant

Demonstrators block a street at a rally against Venezuela's President Nicolas Maduro's government in Caracas, Venezuela August 8, 2017. REUTERS/Marco Bello

By Hugh Bronstein and Matt Spetalnick

CARACAS/WASHINGTON (Reuters) – Washington imposed sanctions on eight Venezuelan officials on Wednesday for their role in creating an all-powerful legislative body loyal to President Nicolas Maduro, while a mayor-turned-fugitive called for more anti-government protests.

The new U.S. sanctions targeted politicians and security figures but stopped short of actions against Venezuela’s vital oil industry. Energy sector sanctions, which could cripple Venezuela’s already ailing economy, are still being considered, U.S. officials said.

The sanctions followed Friday’s installation of a legislative superbody known as the constituent assembly, made up entirely of allies of the ruling Socialist Party and armed with the power to re-write the constitution.

The assembly’s first action was to fire Venezuela’s chief prosecutor, who had accused Maduro of human rights abuses, confirming opposition fears that the assembly would purge the government of dissenting voices.

Maduro’s loyalist Supreme Court has, meanwhile, stepped up the prosecution of opposition politicians including Ramon Muchacho, mayor of the wealthy Chacao district of capital city Caracas.

Muchacho appeared in a video shot from a secret location after the court removed him from office and sentenced him to 15 months in prison on Tuesday for failing to halt anti-government protests in his district.

“To all Venezuelans, the message is to continue in this struggle,” said a bearded Muchacho, clad in a white T-shirt emblazoned with the Venezuelan flag and appearing before a plain white backdrop. The video was circulated on social media.

Chacao has been the epicenter of demonstrations against Maduro and Muchacho’s video could help breathe new life into the protest movement. The massive street protests seen before the election of the assembly have lost steam while anti-Maduro activists try to draw up a strategy for the future.

The Supreme Court said on Wednesday via Facebook that it had sentenced David Smolansky of the El Hatillo district of Caracas to 15 months in prison, fired him from his post and ordered his arrest. Smolansky, the fifth mayor to face such sanctions this year, was also accused of defying an order to prevent opposition protests from blocking streets.

FROZEN ASSETS

The sanctions unveiled Wednesday will freeze U.S. assets of the officials targeted, ban them from travel to the United States and prohibit Americans from doing business with them. Among those named was constituent assembly member Adan Chavez, brother of the late socialist leader Hugo Chavez.

“We absolutely reject this act of aggression by the North American empire, by the government of Washington, and we do not recognize any sanction against the people of Venezuela,” said Foreign Minister Jorge Arreaza in a televised broadcast.”

“Venezuela cannot be sanctioned by anything or anyone.”

Washington clamped sanctions on Maduro himself last week following actions against 13 Venezuelan figures last month.

Experts say individual sanctions have had little or no impact on Maduro’s policies and that broader oil-sector and financial sanctions may be the only way to make the Venezuelan government feel economic pain.

More than 125 people have died in violence since the opposition began a sustained wave of protests in April. Met by rubber bullets, water cannon and tear gas fired by the National Guard, the protesters say the crisis demands an early presidential election that they are sure Maduro would lose.

His popularity has been pounded lower by triple-digit inflation and acute food and medicine shortages which Maduro blames right-wing conspirators in league with the U.S. “empire”.

The opposition, which gained control of Venezuela’s congress in 2015 only to see its decisions nullified by the Supreme Court, boycotted the July 30 election of the legislative superbody known as the constituent assembly.

Maduro says the 545-member assembly will bring peace and prosperity to Venezuela. Laws passed by the new body will not need approval from Venezuela’s traditional congress, which met on Wednesday to discuss the region’s response to the new body.

In a joint declaration released on Tuesday, countries including Canada, Brazil, Argentina, Mexico, Chile and Colombia condemned the “breakdown of democratic order” in Venezuela and said they would not recognize any action taken by its “illegitimate” new constituent assembly.

(Additional reporting by Corina Pons, Eyanir Chinea, Diego Ore, Deisy Buitrago, and Girish Gupta; Editing by W Simon and Tom Brown)

Tillerson in Thailand presses for more action on North Korea

U.S. Secretary of State Rex Tillerson shakes hands with Thailand's Foreign Minister Don Pramudwinai at the Ministry of Foreign Affairs in Bangkok, Thailand August 8, 2017. REUTERS/Athit Perawongmetha

By Amy Sawitta Lefevre

BANGKOK (Reuters) – U.S. Secretary of State Rex Tillerson on Tuesday pressed Thai leaders for more action on North Korea during the highest level visit to Thailand by a U.S. official since a military coup in 2014 soured relations with the United States.

Tillerson’s top priority has been urging Southeast Asian countries to do more to cut funding streams for North Korea.

The United States believes North Korean front companies are active in Thailand and is trying to encourage the Thais to shut them down, Assistant Secretary for East Asian and Pacific Affairs Susan Thornton told reporters aboard Tillerson’s plane.

The companies are using Bangkok as a regional hub and change their names frequently, she said.

Before meeting Tillerson, Prime Minister Prayuth Chan-ocha said Thailand would support a U.N. resolution on new sanctions on Pyongyang over its missile tests. But he made no mention of specific action.

The United States was encouraging Thailand to take as many North Korean refugees as it can handle, Thornton said. Reuters reported exclusively last week that the number of North Koreans slipping illegally into Thailand has surged in recent months.

Thailand’s own politics and human rights record were also in focus, as Washington strengthens relations with its oldest ally in the region after they were downgraded following the coup.

“We want Thailand to emerge as a strengthened democracy that respects and guarantees human rights and fundamental freedoms at home and plays a leading role in advancing regional security and prosperity,” a US embassy spokesman said.

“UPS AND DOWNS”

Tillerson offered no specific message on human rights when he spoke to the American community at the ambassador’s residence and highlighted the 200-year-old relationship.

“We want to continue to grow that relationship, even in its ups and downs,” he said.

Tillerson met Thailand’s foreign minister, Don Pramudwinai, before junta chief Prayuth. Don also emphasized support for the U.N. resolution on North Korea.

Following his meeting with Tillerson, Don told reporters in Bangkok that trade between Thailand and North Korea had dropped by as much as 94 percent over the past year.

“Thailand will act as a good member of the United Nations … one result is trade which dropped significantly. It dropped 94 percent,” Don told reporters.

U.S. President Donald Trump has spoken to Prayuth by telephone and invited him to the White House, but no date has been set yet.

Human rights groups have voiced concern about the re-establishment of normal relations while Thailand’s junta continues to crack down on critics.

“It would be a practical mistake for Tillerson to not condition positive diplomatic relations on improvements in the protection of human rights,” Matthew Smith, of the Fortify Rights group, told Reuters.

Thailand’s military seized power in May 2014 after months of street protests with a promise to eventually restore democracy, but elections will not happen before next year and a new constitution retains a powerful political say for the army.

Since the coup, Thailand has aligned itself more closely with Beijing, and this year approved purchases of more than $500 million worth of Chinese submarines, tanks and helicopters, besides construction of a new rail link.

Another source of friction is Thailand’s trade surplus over the United States. It was the 11th largest last year, at nearly $19 billion, although Thai officials expect a sharp rise in U.S. imports to reduce it.

During his five-hour visit to Bangkok, Tillerson signed a condolence book for the revered late King Bhumibol Adulyadej, whose death after seven decades on the throne was felt deeply in Thailand.

Tillerson’s visit follows his attendance at a regional security forum in Manila at the weekend.

(Additional reporting by Aukkarapon Niyomyat, Juarwee Kittisilpa and Panu Wongcha-um; Editing by Matthew Tostevin and Clarence Fernandez)