WORRIES MOUNT OVER HUMAN COST OF US SANCTIONS ON VENEZUELA

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8 JULY 2019 (SOURCE: FINANCIAL TIMES) – As the refugee exodus from once-wealthy Venezuela accelerates, concerns are mounting over the extent to which US economic sanctions are exacerbating the suffering of a population already beset by shortages of food, medicine and fuel.

Punitive US measures have included cutting off Venezuela’s access to most of the US financial system, freezing the assets of key government officials associated with President Nicolás Maduro and of the national oil company PDVSA, banning transactions with the Venezuelan central bank and prohibiting oil and gold sales.

Targeting the oil industry is crucial as it accounts for more than 95 per cent of Venezuela’s export revenues. As crude oil sales plunge, Venezuela has ever fewer dollars with which to import food, medicines and other necessities. Estimates of oil production lie between 740,000 and 850,000 barrels a day, far short of the 2.3m b/d level which Venezuela sustained as recently as 2016.

In a new study, Venezuelan economist Francisco Rodriguez at New York brokerage Torino Capital set out evidence that US financial sanctions are associated with a 797,000 b/d drop in oil production, worth about $16.9bn a year. He warned of disastrous consequences in a country which grows barely a third of the food it needs.

“We’re going to see a famine in Venezuela,” Mr Rodriguez said. “Total imports in April were only $303m and around half of those were oil-related. That is just 8 per cent of the 2012 figure . . . even if all the imports were of food, it would still be far off the amount needed to feed the country.”

The human cost of Venezuela’s crisis is rising fast. The UN High Commissioner for Refugees estimates that more than 5m people will have fled the country by the end of this year while the Organization of American States predicts that the exodus will top 8m by the end of next year.

US officials, however, believe sanctions will achieve their objective: regime change. In April the US national security adviser John Bolton said the “troika of tyranny — Cuba, Nicaragua and Venezuela” was “beginning to crumble”.

“The United States looks forward to watching each corner of this sordid triangle of terror fall,” he said in a speech to veterans of the failed 1961 CIA-backed Bay of Pigs attempt to invade Cuba.

Although the US has been open about its desire to to topple Mr Maduro’s socialist government, it rejects suggestions that the sanctions are primarily responsible for the dire conditions in which ordinary Venezuelans are living.

“Oil production has been declining for many years and the steady decline cannot be explained by the sanctions,” a senior US official said, instead blaming “corruption, mismanagement, lack of investment and departure of trained engineers . . . exacerbated by the lack of, or an interrupted supply of, electricity”.

Economists disagree over the impact of the sanctions. A study by Jeffrey Sachs and Mark Weisbrot blamed the US for what they termed the “collective punishment” of Venezuela, but a team at the Brookings think-tank found that most of the deterioration in conditions occurred before the imposition of US sanctions in 2017.

Thomas Shannon, formerly the top-ranking career diplomat at the US state department and now a senior policy adviser at the law firm Arnold & Porter, believes Washington should change its stance.

“Keeping these sanctions in place, with no mediating action, will have a profoundly negative impact on the Venezuela people,” he said. “It is amazing that some people deny this, but it highlights first the enormity of their miscalculation when they advocated the oil and gas sanctions, and second their willingness to cause great damage to Venezuela to drive Maduro from power. Kind of like the fire bombing of Dresden or Tokyo.”

Moises Naím, a Venezuelan columnist and distinguished fellow at the Carnegie Endowment, supports sanctions but believes that the focus should be on expanding individual measures against key members of the Maduro government, such as asset freezes and travel bans.

“There’s strong evidence that hurting the country doesn’t change the behaviour of the government,” he said. “If you want the government to change behaviour, individual sanctions is what matters.”

Mr Rodriguez, a former head of Venezuela’s congressional budget office, agrees that most of the damage to the oil industry was caused by the Maduro government’s mismanagement rather than sanctions. He nonetheless believes that some form of humanitarian exception is needed to stave off the risk of mass starvation, such as the oil-for-food programme run by the UN when Iraq was under sanctions.

Without a change of policy — or of government — in Venezuela, the country faces a dire future, many observers fear. “We are watching the destruction of Venezuela as a country and a society,” warned Mr Shannon.

“The consequences of this in South America and the Caribbean will be profound and approach those of Syrian migration to Europe,” he said. “That we would be wilfully part of such havoc is disturbing and regrettable.”

SOURCE

(FT) https://www.ft.com/content/cba0fe06-9d74-11e9-9c06-a4640c9feebb

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