Apologists for the Maduro regime continue to blame sanctions for economic collapse in Venezuela. There is a great deal of confusion as to what sanctions against Venezuela actually entail – sanctions can mean anything from a total economic blockade, enforced by military might, to a travel ban for a head of state.
This article will examine the actual sanctions on Venezuela and attempt to dismiss some myths about their effects.
The EU began sanctions against Venezuela in November 2017 with an arms embargo, and escalated its sanctions with asset freezes and travel bans on seven Venezuelan officials in January 2018 and eleven in June 2018. In November 2018, these were renewed for another year, maintaining the arms embargo and continuing sanctions on the 18 individuals already targeted.
The US sanctions began with an enabling Act of Congress in 2014, followed by an executive order in March 2015, both solely concerned with assets freezes and limits on US entry of Venezuelan officials involved in violence and illegality. Further US sanctions in August 2017, March 2018, and May 2018 forbade US citizens from buying Venezuelan government or state oil company debt and buying the (largely imaginary) Petro cryptocurrency. Considering that Venezuela and PDVSA are currently defaulting on $52 billion of bonds, one would not think that investors needed further discouragement from the US government.
In November 2018, an executive order was issued allowing the US to sanction persons and entities involved in corruption. As part of the anti-corruption drive, in January 2019 sanctions were imposed on 7 persons and 23 entities involved in a corrupt foreign exchange scheme. Most dramatically, less than a week ago on the 28th of January 2019, the USA announced that payments from US entities for Venezuelan oil would not be made to the Maduro regime, but only to a legitimate Venezuelan government. This was because PDVSA, Venezuela’s state oil company, had become nothing more than a money laundering operation for the regime.
Venezuela’s economic collapse of approximately 50% has been spectacular, comparable to the effect of the Second World War on Germany and Japan, but both countries had endured years of total war: Japan had been bombed with atomic weapons twice. To equate an arms embargo and sanctions on corrupt officials with the aftermath of the deadliest conflict in human history is absurd. Granted, the belated sanctioning of PDVSA by the US this past week will have some effect. But the economic collapse began at the latest in 2014, and the economy already lies in ruins. Their imposition is an addendum to the crisis, not the cause.