Oil sanctions are not the way to topple Venezuela’s Nicolás Maduro
Venezuela is a human tragedy with few parallels. On current trends an estimated 8m people will have fled the country by the end of 2020, a larger number than left Syria. This is unprecedented in a nation not at war or facing a natural disaster.
The principal culprit is the socialist regime of Nicolás Maduro. Mr Maduro inherited the revolutionary mantle of his predecessor Hugo Chávez in 2013 and has mismanaged a once-wealthy economy so grotesquely that the economy has halved in size during the past five years. Oil production, the mainstay of the economy, has fallen prey to years of under-investment, corruption and the loss of foreign expertise.
Severe shortages of food, fuel and medicine are battering a country which is home to the world’s biggest oil reserves. Despite the unfolding disaster, Mr Maduro and his cronies have clung to power thanks to a rigged election and the support of key allies Russia, Cuba, China and Turkey. He consistently refuses to step down and allow a free and fair vote.
The EU has, rightly, responded with asset freezes and travel bans targeting key members of the Venezuelan government, and an arms embargo. The US has gone much further, imposing crippling economic sanctions on Venezuela with the explicit aim of regime change. These include cutting off the central bank from the US financial system, blocking gold exports, banning access to dollar debt and equity markets and choking off oil exports.
This year’s oil sanctions ban US companies and nationals from doing business with the state oil company PDVSA and freeze its US assets. They also forbid use of the US financial system for transactions involving Venezuelan oil, effectively extending the scope of the measures well beyond US shores.
The impact has been immediate. Oil production has fallen this year by a further 40 per cent from an already low base. Since oil accounts for almost all of export earnings and Venezuela produces only a third of the food it needs, this has crippled the country’s ability to feed itself.
Venezuela hawks such as John Bolton, US national security adviser, believe the measures will trigger the rapid collapse of the Maduro regime, followed by its Cuban backers, and a restoration of democracy in both nations. But some international officials warn of an alternative scenario for Venezuela. It is Zimbabwe — code for a regime which keeps itself in power for years through repression and enriches its key members while simultaneously visiting economic devastation upon its people.
The comparisons should not be overdone. Zimbabwe is not an oil producer and was never as wealthy. What is undeniable is the scale of the human tragedy in Venezuela and the fact that it is worsening rapidly. Mr Maduro bears the principal responsibility; it is his regime’s misplaced priorities, rather than sanctions, which are to blame for most of the shortages.
Yet tighter US sanctions have clearly contributed towards this year’s further drop in oil output, which has imperilled food imports. They have not so far toppled Mr Maduro. Nor have they prevented senior Venezuelan government officials from pursuing other ways to enrich themselves.
The time has come to recognise that while sanctions against individual Maduro government officials and some of the broader financial measures are fully justified, the oil sanctions risk causing disproportionate harm to the Venezuelan people and need review. Famine would be too high a price to pay for regime change.