During the first year of his administration, U.S. President Donald Trump has taken an increasingly hard line against the government of Venezuela’s president, Nicolás Maduro. Washington has tightened sanctions on Caracas and even suggested a military intervention to remove the Venezuelan leader from office. Twelve months into Trump’s term, Maduro seems even more entrenched in power, and Venezuela’s opposition is more fractured than ever.
U.S. foreign policy toward Venezuela is premised on a series of misconceptions. Perhaps the most widespread and serious one is the idea that Venezuela is a totalitarian dictatorship. While Maduro has certainly done many things to undermine democracy, Venezuela is no North Korea.
Venezuela is not a tyrannical autocracy; it is a deeply divided and polarized society.Venezuela is not a tyrannical autocracy; it is a deeply divided and polarized society. Public opinion research shows strong and deep-seated support for Chavismo, the movement created by the late populist leader Hugo Chávez, among large swathes of the population. Many voters continue to credit Chavismo with redistributing the country’s oil wealth through its social programs and giving the poor a voice in Venezuelan politics. Around 25 percent of Venezuelans support Chávez’s successor, Maduro — a remarkably high number given the state of the economy — and about 50 percent believe that Chávez was a good president. Recent regional elections have shown that the government coalition is able to mobilize close to 6 million voters to support its candidates — nearly one-third of the country’s adult population, and more than enough to win a low-turnout election.
In addition to misreading the country’s political mood, American policymakers also seem convinced that the country’s authoritarian leader will only leave power by force. Economic sanctions are ostensibly intended to raise costs for the military and are expected to somehow spur a rebellion against Maduro. This misguided approach stems from a poor understanding of the government’s internal dynamics and an excessive faith in the effectiveness of sanctions as a tool for bringing about regime change.
Extensive academic research has shown that economic sanctions are rarely effective. When they work, it is because they offer the sanctioned regime incentives along with a way out by altering the conduct that led to the sanctions being imposed (such as the rollback of Iran’s nuclear program in exchange for access to international trade). By contrast, the sanctions against Venezuela have backed the regime into a corner, increasing the costs that the government would face upon leaving power and raising the incentives for Maduro to dig in his heels.
An even more problematic idea driving current U.S. policy is the belief that financial sanctions can hurt the Venezuelan government without causing serious harm to ordinary Venezuelans. That’s impossible when 95 percent of Venezuela’s export revenue comes from oil sold by the state-owned oil company. Cutting off the government’s access to dollars will leave the economy without the hard currency needed to pay for imports of food and medicine. Starving the Venezuelan economy of its foreign currency earnings risks turning the country’s current humanitarian crisis into a full-blown humanitarian catastrophe.
That’s what began to happen in 2017. Last year, Venezuela’s export revenues rose from $28 to $32 billion, buoyed by the recovery in world oil prices. Under normal conditions, a rise in a country’s exports would leave it with more resources to pay for its imports. But in the Venezuelan case, imports fell by 31 percent during the same year. The reason is that the country lost access to international financial markets. Unable to roll over its debt, it was forced to build up huge external surpluses to continue servicing that debt in a desperate attempt to avoid a default. Meanwhile, creditors threatened to seize the Venezuelan government’s remaining revenue sources if the country defaulted, including refineries located abroad and payments for oil shipments.
U.S. economic sanctions have stopped Venezuela from issuing new debt and blocked attempts to restructure its existing debt obligations. Major financial institutions have delayed the processing of all financial transfers from Venezuelan entities, significantly hampering the ability of Venezuelan companies to do business in the United States. Even Citgo, a Venezuelan-owned subsidiary that owns 4 percent of the United States’ refining capacity, hasn’t been able to get U.S. financial institutions to issue routine trade credit since sanctions were imposed.
Ever since the Vietnam War, most American policymakers have understood that foreign policy is not just about outgunning your opponent but also about winning the hearts and minds of the people. But 56 percent of Venezuelans oppose U.S. financial sanctions; only 32 percent support them. When it comes to foreign military intervention in Venezuela, 57 percent of those surveyed were opposed, while 58 percent support dialogue between the government and the opposition — and 71 percent believe that those talks should focus on seeking solutions to the country’s economic problems.
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