US targets China’s telecoms grip in Venezuela with new sanctions carve-out

The United States has introduced new sanctions that target Venezuela's telecommunications sector, aiming to reduce China's influence while opening the market to Western investment and technology. The Office of Foreign Assets Control (OFAC) issued two general licenses that permit transactions involving state-owned provider CANTV and mobile operator Movilnet, but specifically exclude any dealings with China, Russia, Iran, North Korea, and Cuba, as well as entities linked to them.

This move is part of a broader effort by Washington to selectively ease sanctions on Venezuela, as it seeks to modernize the country's infrastructure and transition to 5G networks.

The new regulations could have significant implications for telecommunications suppliers, as Huawei and ZTE have long been crucial partners for Venezuelan operators. According to Alcides Leon, a veteran technology journalist, most of CANTV and Movilnet's technology now comes from Chinese companies, making it challenging to shift away from them.

The licenses allow for the supply of equipment, spare parts, fibre-optic capacity, satellite bandwidth, cloud services, data storage, servers, software, and network-support services, but explicitly prohibit transactions with Chinese entities.

The first license, General License 61, focuses on the maintenance, repair, upgrade, and operation of telecommunications infrastructure, while the second, General License 62, enables companies to negotiate conditional contracts for new investments and joint ventures. Both licenses explicitly exclude Chinese companies, which could prove consequential for Venezuela's telecommunications infrastructure.

As the country expands its 5G networks, these measures could create opportunities for new suppliers and investors, potentially redirecting Venezuela's technological development away from China's previous dominance in the sector.