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Pushing Venezuela Into the Abyss

The Trump administration would rather push Venezuela into the abyss for the sake of their disastrous regime change policy than accept a negotiated compromise that might offer the country some relief.
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The Wall Street Journal follows up on its earlier reporting on the Venezuela embargo with another story on the likely effects of the administration’s escalation of the economic war:

The sanctions could have a dramatic impact on Venezuela’s already-collapsing economy, said Francisco Rodriguez, a Venezuelan economist.

He said the little trade that Venezuela currently carries out with countries such as India and Malaysia could be undercut. U.S. financial institutions could be forced to further restrict transactions with businesses in Venezuela because of their interactions with the government in an economy with a large state influence, Mr. Rodriguez said.

Rodriguez has been consistently warning about the damaging effects of sanctions on the Venezuelan economy all year, and he has sounded the alarm about the increasing risk of famine. Venezuela was already on track to suffer what could be the worst famine on record in our hemisphere, and these new measures will make things even worse. Starving the government of its revenues is bound to have a deleterious effect on the entire economy, especially when the government has such a large role in the economy. Causing the economy to contract even more and even faster than it was contracting before now is a disaster for the population.

By causing extra hardship for the population, the administration is actually undermining opposition to the government:

The new U.S. sanctions could weaken efforts to remove Mr. Maduro inside Venezuela by deepening a humanitarian crisis that has forced millions of people to flee, said David Smilde, a Venezuela expert at the policy group Washington Office on Latin America, which supports negotiations and a new election.

“This is going to cause more economic difficulty for average people and what that does is it undermines mobilization against the regime,” he said.

As we have seen in other countries living under sanctions, ordinary people are so preoccupied with providing for themselves and their families that they have neither time nor resources to engage in political action. Since the U.S. is contributing to their misery, many people in Venezuela will probably be less inclined to support the outcome that Washington wants. Insofar as the opposition is identified with the sanctions, that is likely to hurt them politically. Sanctions usually do not weaken a regime internally, and instead it is the regime’s opponents that are harmed the most. As Rodriguez said in an FT article earlier this year:

“People thought that if you create an economic crisis you would bring down the government,” said Francisco Rodriguez, a Venezuelan economist at Torino Capital. “In democracies, that does happen but it’s not what happens in a dictatorship. The poorer the country is, the fewer resources there are, the more powerful the government becomes versus the rest of society.”

Perversely, the sanctions that regime changers want to use to collapse a government usually end up strangling the people while leaving the regime in place. The country as a whole is much worse off, but the people in power hang on.

While the administration tries to claim that the new measures won’t affect the private sector, Venezuelan businessmen don’t buy it:

An executive at a Venezuelan company said that he believed that the sanctions would have a negative impact on what is left of the private sector.

He said the plunge in oil revenues would lead to even less public spending and a further fall in demand. The government, which controls some raw materials, would be less able to supply private firms. Meanwhile, the costs of financing would rise, he said, and more companies that are vital in the supply chain would close.

The administration’s exemptions are mostly for public relations purposes to make the policy seem less destructive than it really is. We know from their Iran policy that these exemptions don’t work properly because of a lack of financing for payment and because fear of being penalized outweighs the benefit of doing business in the targeted country.

A negotiated solution to the crisis seems to be the only way forward that is likely to be successful, but the Trump administration’s action is a direct attack on the Norwegian-mediated dialogue currently taking place between the government and the opposition:

“He seems determined to sabotage them,” Phil Gunson, a Venezuela expert at the International Crisis Group, said of Mr. Bolton’s opposition to the negotiations and possible elections. “More than an ultimatum to Maduro, this sounds like an ultimatum to the opposition leadership.”

The administration seeks to undermine these negotiations because they stand a chance, however remote, that diplomacy can resolve something that their heavy-handed policy of sanctions and threats cannot. They would rather push Venezuela into the abyss for the sake of their disastrous regime change policy than accept a negotiated compromise that might offer the country some relief.

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