Tuesday, August 06, 2019

Thoughts on the Venezuela Sanctions

Here is the text of the new Venezuela sanctions. Headlines inaccurately refer to them as a "total economic embargo." They are not "total" because they focus only on specific people around Nicolás Maduro. The private sector is not targeted. For targeted people, they target "funds, goods, or services." But they do freeze all assets in the U.S.

This is obviously a severe tightening of what already exists, and it will really hurt Venezuelans, who are already leaving the country in large numbers. Note as well that this was not accompanied by any agreement on TPS. As Daniel Larison noted yesterday, this will lead to more suffering.

There is a lot of uncertainty here. For example:

--Anatoly Kurmanaev asks what happens to Venezuelans who rely on U.S. credit cards. There are many potential new avenues of economic strangulation that can lead directly to malnutrition and lack of medical care. Speaking of medicine, Trump says food and medicine are exempt, just as they are in Iran, but in Iran that is not actually the case.

--The order does not mention other countries. It is hard to imagine Russia or China backing off as a result of this, but we know John Bolton would love a confrontation (Trump, who likes Russia, seems much less likely to want to confront Putin). If they don't break off, then the regime might just keep limping along.

--With all assets in the US frozen, what happens with CITGO and its court battle? That was already a highly uncertain situation. Juan Guaidó now says CITGO is "protected."

--What will the impact be on neighboring countries already struggling to deal with the influx of Venezuelans? Just sending them a bit of money is woefully inadequate--it is a massive humanitarian crisis.

The final question is whether these sanctions will have their desired impact, which of course is forcing Maduro out. In response to Larison's post, Roger Noriega tweeted in a manner that I would see as characteristic of sanctions supporters:

The logic for the Cuba embargo is obviously identical in its pursuit of harsh unilateral sanctions, and it has not worked for almost 60 years. So it is perfectly reasonable to ask whether this is going to work either, and we know--I mean know--that many Venezuelans will suffer as part of "moving more decisively."


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