Venezuela and Sanctions


Venezuela is currently in a state of political crisis, with President Nicolás Maduro’s authoritarian regime facing challenges from opposition groups and international pressure.

Presidential elections are scheduled for July 28, 2024, but there are serious concerns about whether they will be free and fair. The main opposition candidate, María Corina Machado, has been barred from running.  When students move to debate this topic in January 2025, we’ll have a better sense of the fallout, but it is likely that it will be significant.

The Maduro government has been cracking down on dissent, with over 270 political prisoners behind bars and increased repression of civil society.
There is ongoing tension between Maduro’s government and the international community, particularly the United States, which has imposed sanctions on Venezuela.

Venezuela’s economy has been in a state of crisis for years, though there are some signs of modest improvement recently. The country has experienced hyperinflation and economic contraction, though inflation has slowed and there was 5% GDP growth in 2023 according to government figures.

Venezuela’s oil industry, the backbone of its economy, has collapsed due to mismanagement and lack of investment.

U.S. sanctions have further impacted the economy, though some were temporarily eased in late 2023 in exchange for electoral commitments. There is widespread poverty, with about 19 million people in need of humanitarian assistance.

The ongoing crisis has had severe social consequences. There has been a mass exodus of Venezuelans, with over 7.7 million people fleeing the country since 2014, creating a major refugee crisis in the region.

The healthcare system has collapsed, leading to shortages of medicines and resurgence of previously controlled diseases. There are widespread food shortages and malnutrition issues.

Crime and violence rates remain high, with state security forces implicated in human rights abuses.

US Sanctions

The United States has imposed a wide range of sanctions on Venezuela over the past two decades, with the scope and intensity increasing significantly in recent years.

Here’s an overview of the key sanctions and the rationale behind them.

Early Targeted Sanctions (2006-2014)

In 2006, the U.S. imposed an arms embargo on Venezuela, citing lack of cooperation on counterterrorism efforts.
Starting in 2008, the Treasury Department began designating individuals and entities as “Specially Designated Narcotics Traffickers” under the Foreign Narcotics Kingpin Designation Act.

These early sanctions were relatively limited in scope and focused on specific individuals and entities involved in drug trafficking or supporting terrorist organizations.

Human Rights and Democracy Sanctions (2014-2016)

In 2014, Congress passed the Venezuela Defense of Human Rights and Civil Society Act, authorizing sanctions on individuals responsible for human rights violations.

In March 2015, President Obama issued Executive Order 13692, declaring Venezuela a national security threat and establishing a framework for targeted sanctions against officials involved in human rights abuses, undermining democratic processes, and public corruption. These sanctions were a response to the Venezuelan government’s crackdown on protests and increasing authoritarianism under Nicolás Maduro.

Escalation Under the Trump Administration (2017-2021)

In August 2017, President Trump issued an executive order prohibiting dealings in new debt and equity issued by the Venezuelan government and state-owned oil company PDVSA. In January 2019, the U.S. imposed sanctions on PDVSA, effectively implementing an oil embargo on Venezuela. Throughout this period, the Treasury Department designated numerous Venezuelan officials, including Maduro himself, as well as companies and individuals involved in various sectors of the economy.
The Trump administration’s “maximum pressure” campaign aimed to force Maduro from power and support the opposition led by Juan Guaidó, whom the U.S. recognized as interim president in 2019.

What impact has the sanctions had?

The U.S. has imposed sanctions on Venezuela’s financial sector, natural resource exports, defense industry, and sovereign debt.
These broad economic measures were designed to financially isolate Venezuela from the global economy and pressure the Maduro regime.

Recent Developments

The Biden administration has largely maintained the sanctions framework inherited from Trump, but has shown willingness to adjust sanctions in response to negotiations between Maduro and the opposition.

In October 2023, the U.S. temporarily eased some sanctions on Venezuela’s oil, gas, and gold sectors in exchange for electoral commitments. However, in April 2024, some sanctions were reimposed after Venezuela’s Supreme Court upheld a ban on opposition leader María Corina Machado from running for president.

The stated goals of U.S. sanctions on Venezuela have evolved over time but generally include:

Combating drug trafficking and terrorism
Promoting human rights and democracy
Punishing corruption and mismanagement
Pressuring the Maduro regime to negotiate with the opposition
Supporting a transition to a democratically elected government

However, the effectiveness and humanitarian impact of these sanctions remain subjects of intense debate. Critics argue that sanctions have exacerbated Venezuela’s economic crisis and caused significant suffering among ordinary Venezuelans, while supporters maintain they are a necessary tool to pressure an authoritarian regime.

There are arguments on both sides regarding the effectiveness of U.S. sanctions on Venezuela.

Arguments in Favor of Sanctiosn

Pressure on the regime. Sanctions have put significant economic pressure on the Maduro government, limiting its access to funds and resources. This has constrained the regime’s ability to maintain power and forced it to negotiate with the opposition at times.

Deterring human rights abuses. Targeted sanctions on individuals have helped deter further human rights abuses by Venezuelan officials, as they fear personal consequences.

Leverage for negotiations. The sanctions provide the U.S. with leverage to push for democratic reforms and free elections. The temporary easing of some sanctions in exchange for electoral commitments in 2023 demonstrates how they can be used as a bargaining tool.

Limiting resources for repression. By restricting Venezuela’s oil revenues, sanctions have limited the government’s ability to fund its security forces and maintain repressive policies.

Arguments that Sanctions are Not Effective.

Humanitarian impact. Sanctions have exacerbated Venezuela’s economic crisis and worsened the humanitarian situation for ordinary citizens, without achieving the goal of regime change.

Regime adaptation
. The Maduro government has found ways to evade sanctions, including cooperating with other sanctioned countries like Russia, Iran, and China to circumvent restrictions.

Strengthening authoritarianism. Sanctions may have inadvertently strengthened Maduro’s grip on power by allowing him to blame external forces for Venezuela’s problems and rally nationalist sentiment.

Limited impact on leadership. While sanctions have hurt Venezuela’s economy overall, they have not significantly impacted the ruling elite, who have access to alternative resources and illicit economies.

Counterproductive to negotiations. Broad sectoral sanctions may hinder efforts to negotiate a peaceful transition by leaving the government with little incentive to compromise.

Unintended geopolitical consequences. Sanctions have pushed Venezuela closer to U.S. adversaries, potentially undermining broader U.S. strategic objectives in the region.