Today the White House released an Executive Order prohibiting US citizens from participating in “Maduro’s liquidation of the Venezuelan economy” by prohibiting them from dealing in new debt and equity issued by the government or state oil company PDVSA, as well as some existing bonds.
There are some important exceptions including financing for commercial and petroleum trade, as well as humanitarian goods.
Over the past three years WOLA has consistently criticized US sanctions on Venezuela (see David’s testimony to the Foreign Relations Committee of the US Senate here, see recent posts here and here) as counterproductive.
However, the two of us think the current round of sanctions have several virtues that should be underlined.
First, they target the nefarious process whereby the Maduro government is indebting Venezuela through new debt issuance in such a way that will burden the country for generations to come.
Second, they complicate the Maduro government’s finances in such a way that they will not have an immediate impact on the population (although in the longer term, they likely would).
Third, they do not target specific government officials, which in recent years has simply helped Nicolás Maduro develop a cadre of ultra-committed allies.
Finally, they are sanctions that could be quickly lifted if there is a significant change of course in the Maduro government’s authoritarian project.
That said, we would like to reiterate our opposition to broad, economic sanctions that would affect the population more than government leaders. We agree with the over 50 independent Venezuelan civil society organizations that have called on the international community to refrain from adopting unilateral or multilateral sanctions which could “elevate the humanitarian crisis” in the country.
Today’s sanctions will still allow Nicolás Maduro to play the nationalist card as he seeks to deflect blame for Venezuela’s governance debacle. We urge the Trump administration to seek multilateral support for any sanctions programs it considers. Diplomacy is always difficult, but multilateral policies are more effective and therefore worth the effort.