Sanctions and More Sanctions: Targeted

Nicolás Maduro gives National Electoral Council rector Tibisay Lucena a replica of Simón Bolívar’s sword after being sanctioned by the United States.

On July 26, the Trump administration added 13 current and former government officials to a targeted sanctions list, and suggested they are weighing some form of sanctions against the state-owned Petróleos de Venezuela (PDVSA) oil company. In yesterday’s post, we reviewed some of the critical commentary that has come out regarding the specter of economic sanctions. In this post we will look at the implementation of targeted sanctions and the prospects for their effectiveness.

Over the past three years we have consistently argued that the policy of unilateral US sanctions, targeting Venezuelan officials, would be self-defeating for the following reasons (2014 op ed here, 2017 Senate testimony here).

First, unilateral, US sanctions only reinforce and provide credibility to the Maduro government’s leading interpretation for its governance failures: that it is the victim of imperialist aggression which is undermining the Venezuelan economy and democracy. As implausible as it may seem, this discourse still convinces a segment of the population and functions as a coordinating ideology for the pro-government coalition.

Second, unilateral sanctions simply have less punch to them because they are easier to evade and send less of a moral signal when they are not mirrored by other countries. Lighter versions of resentment against US intervention are widespread throughout the region and unilateral sanctions reduce the likelihood that countries in the region will themselves pressure the Maduro government, as they do not want to be seen as collaborating with US interventionism.

Third, these sanctions have no clear path for being lifted. The result is that officials come to see their political and personal viability as entirely dependent on the continuation of the Maduro government. Put differently, sanctioned officials have big incentives to continue to collaborate, and no incentives to moderate.

The Effects of Sanctions so Far

All three of these factors were clearly borne out with the rollout of sanctions in March 2015. In a context in which there was growing pressure on the Maduro government both domestically and regionally, the obnoxious Executive Order rolling out the sanctions, which called Venezuela a “threat to national security” created a regional outcry. As a result, the Obama Administration ended up suspending plans to trickle out more names that year and instead charged Special Envoy Thomas Shannon with engaging Venezuela directly.

Within Venezuela, the sanctions generated a clear, but short-lived swing in polling, and gave Maduro a rallying cry and momentum going into the 2015 Summit of the Americas.

But the clearest effects have been with regard to the third reason. In Robert Dahl’s classic formulation, an authoritarian project like that of Nicolás Maduro needs to be addressed by increasing the costs of repression and reducing the costs of moderation. Targeted sanctions essentially seek to alter this equation by increasing the costs of repression. The goal is to sanction certain individuals for their actions, and thereby raise the costs for other non-sanctioned officials to the point that they moderate instead of continuing to repress.

However, looked at more closely, the processes that are generated are complex. First, for the officials who are actually sanctioned, the costs of moderation soar. They immediately feel they have a target on their back and must struggle to preserve the regime at all costs. Second, the sanctioning government is not acting in a vacuum. The sanctioned country is always going to respond, and it will do so in such a way that affects precisely this equation of costs of repression versus the costs of moderation. Indeed, Nicolás Maduro has frequently sought to reward officials who get sanctioned, with ceremonies, praise and positions. The result is a cadre of loyal officials who become indispensable players in Maduro’s inner circle.

The seven officials sanctioned in 2015 were each rewarded either with lucrative positions in state industries, or in the state security apparatus. General Antonio Benavides Torres served as the Chief Commander of the National Guard until recently, presiding over ruthless repression of protests. General Gustavo González López has served as the head of the Intelligence Service that has arrested multiple political prisoners.

In January, Maduro’s Vice President Tarek el Aissami was sanctioned under the Kingpin Act, for being accused of collaborating with drug traffickers. He has remained in that position and has even received additional responsibilities from Maduro. In May six Supreme Court justices were sanctioned for their actions in blocking and usurping the power the National Assembly. They too have remained in those positions and have consistently defended the government’s interests.

There is one case that sanctions-supporters can legitimately point to as evidence for their argument. Since the end of March, Attorney General Luisa Ortega has progressively broken with the government and opposed its plans. Insiders claim that the desire to avoid sanctions was one of her motivations in making this move. This is effectively the way sanctions are supposed to work. An unsanctioned official, observing that other officials have been sanctioned, moderates her actions.

However, since she has broken with the government, all of her efforts have been blocked by the Supreme Justice (TSJ) that now has a sanctioned core of justices fully committed to the permanence of the Maduro government. And this same TSJ also named a substitute for her when they remove her: Katherine Harrington, another official sanctioned in March 2015. Thus, this one defection from the regime, potentially motivated by sanctions, seems to have itself been overwhelmed by the actions of officials who are sanctioned.

Luisa Ortega was able to break with the Maduro government because the position of the Attorney General has considerable institutional autonomy from the Executive branch. The Attorney General is named by the National Assembly for a seven-year term, and can only legitimately be removed by the National Assembly.

Two of the thirteen officials sanctioned last week have similar autonomy: Tibisay Lucena, the chief rector of the CNE, and Ombudsman Tarek William Saab. Both of them can only be removed by the National Assembly. Both of them, like Ortega, have histories of occasionally acting against the interests of Chavismo. All eyes have been on them in recent months to watch for any signs of defection.

Each of them could conceivably help put a stop to the current authoritarian slide. Lucena had the power, if one other pro-government rector had joined her, to put a stop to the election for the Constituent Assembly. If Tarek William were to break with the government, the Republican Moral Council—which consists of the Attorney General, Ombudsman and Comptroller—could be used to dismiss the TSJ justices irregularly named in December 2015. However, those hopes can now be set aside as the both of them, after being sanctioned, now will see their political and personal well-being as synonymous with continuance of the Maduro government.

There were, of course, no indications that they might break with the government. To the contrary, they both seemed to be ever more committed to the Maduro government—especially Lucena. But nor were there signs that Luisa Ortega might break with the Maduro government a year or even six months ago. Yet at a particular political conjuncture she decided that she could no longer be the good soldier. That is now all but unthinkable with Tarek William and Tibisay Lucena.

Other Countries Join in

One of the most important developments in recent weeks is that three countries in Latin America—MexicoPanama and Colombia—have indicated that they will adopt US targeted sanctions, freezing assets and prohibiting their nationals from doing business with sanctioned Venezuelan officials. As well, officials from Canada and the European Union suggested they may adopt sanctions.

In our view this is a positive development. As Smilde wrote recently: “Any sanctions to be considered must be collective, if not from within a multilateral agency then from a significant group of countries in the region.” When sanctions become collective rather than unilateral, it changes two of the three basic problems mentioned above.

  1. Having more countries involved complicates Maduro’s efforts at portraying sanctions as US sabotage. It is simply harder for the government to claim this is an imperialist conspiracy when there are Latin American and European countries involved. It would be much harder if there were more countries involved, especially countries that are not closely tied to the US.
  2. They are harder to evade. Freezing the US visas and assets of Venezuelan officials is, in many cases, only a symbolic measure, leaving the rest of the world wide open. Having more countries sign on makes them more effective.
  3. Nevertheless, making targeted sanctions collective, likely raises the exit costs even higher for sanctioned officials since they have even fewer options in the case of a transition.

In effect, when more countries sign on to a package of targeted sanctions it increases the costs of repression AND the costs of moderation. But there are two ways that this equation can be further altered: by getting still more countries to sign on, and by providing mechanisms by which those who are sanctioned could see them lifted.

Having four close allies to the US sign on to sanctions is a step in the right direction, but not yet enough to make much of a difference. If the European Union and other important regional players such as Brazil and Argentina were to join in, it could make sanctions significantly more effective and less easily used to reinforce anti-imperialist excuses for governance failures. This underlines the fact that the countries of the region need to continue diplomatic efforts to coordinate actions.

Finally, to be effective a sanctions policy needs to have some sort of reward for a change in behavior or actions. While the US Department of Treasury has a bureaucratic mechanism on its web page, there need to be much clearer messages, perhaps even as part of a program of transitional justice, for it to be effective.

Links for Further Research

A healthy skepticism of sanctions, especially unilateral sanctions, is borne out by academic international relations literature. A much-cited review of the use of economic sanctions in the last century by Gary Clyde Hufbauer, Jeffrey J. Schott, and Kimberly Ann Elliott found that they had a success rate of just 34 percent. Even this success rate has been criticized as inflated in a cross-study conducted by international security expert Robert Pape. Targeted sanctions, with much lower risk of harming citizens more generally, are understandably a more attractive option for policymakers. But targeted sanctions have been found to be even less likely to produce the impacts intended. A Peterson Institute for International Economics review of targeted sanctions found that they had a success rate even lower than economic sanctions, at just 25 percent. Moreover, research has shown that unilateral sanctions are significantly less likely to succeed than multilateral ones (see for instance, George A. Lopez on this subject).