01:54 - Source: CNN
Why Venezuelans are protesting

Story highlights

Economic sanctions could compound Venezuelan's misery

US biggest export market for Venezuelan oil

CNN  — 

US President Donald Trump described Venezuelan President Nicolas Maduro as a “bad leader” and an aspiring “dictator” on Monday, and threatened to take “strong and swift economic actions” if Maduro goes ahead with plans to rewrite the country’s constitution.

Maduro is pushing a plan to create a new Constituent Assembly with the power to rewrite Venezuela’s constitution. The body would replace the National Assembly, which is currently controlled by Maduro’s opponents. A nationwide referendum is due to be held on the issue at the end of the month.

On Sunday 7.2 million opposition supporters, almost a third of the country’s registered electorate, voted in an unofficial non-binding referendum to reject the proposed assembly. The opposition is also calling for fresh elections before Maduro’s term ends in 2019.

“Yesterday, the Venezuelan people again made clear that they stand for democracy, freedom, and rule of law,” Trump said in a statement released Monday.

“Yet their strong and courageous actions continue to be ignored by a bad leader who dreams of becoming a dictator. The United States will not stand by as Venezuela crumbles. If the Maduro regime imposes its Constituent Assembly on July 30, the United States will take strong and swift economic actions,” Trump said.

“The United States once again calls for free and fair elections and stands with the people of Venezuela in their quest to restore their country to a full and prosperous democracy.”

Venezuela reacts

Venezuela’s foreign minister, Samuel Moncada, denounced the White House threat to impose economic sanctions and ridiculed its “low level and poor quality” statement. He said the Constituent Assembly will dismiss the threat “posed by a xenophobic and racist empire.”

“Obviously, the US government is accustomed to humiliating other nations through its international relations and believes that it will get the subordinate response it is used to,” Moncada said.

Moncada said the United States unashamedly favors “the violent and extremist sectors of Venezuelan politics, who support terror to overthrow a popular and democratic government.”

“We do not know who could have written, let alone authorized, a statement with such conceptual and moral poverty,” he said.

“The thin democratic veil of the Venezuelan opposition has fallen, and reveals the brutal interventionist force of the US government, which has been behind the violence suffered by the Venezuelan people in the last four months.”

Sanctions would be devastating

Economic sanctions on Venezuela would have a devastating impact, as the country’s oil-dependent economy is already reeling from the impact of low oil prices. “There have been US sanctions on Venezuela but they were just targeted at certain individuals with asset freezes and stopping them going to the US, rather than sanctions on oil exports which would be much more explosive,” said Edward Glossop, Latin America economist with the London-based economic think tank Capital Economics.

“There is no real indication that the US is willing to go as far as sanctioning the oil industry because it’s not clear who that hurts. It might hasten the end of Maduro’s regime but would also definitely make the humanitarian crisis worse in the near-term at least,” he said.

According to the International Monetary Fund, the US is still the biggest market for Venezuelan oil. Venezuela also has the largest oil reserves in the world yet imports refined oil because the oil in Venezuela is very heavy and must be mixed with lighter oil grades to create petroleum.

Almost 100 people have been killed in popular protests against the proposed constitutional reforms in Venezuela and economic hardship that has been compounded by low oil prices.

CNN’s Leyla Santiago contributed to this report