Are US Sanctions Against Venezuela a Regime Change Precursor?

The attempt to change the government in Venezuela and the unequivocal support of the opposition from the United States can hardly be considered a spontaneous phenomenon. For Washington, Nicholas Maduro has been a hostile figure from the very beginning of his rule in 2013. Economic sanctions are a traditional instrument of pressure on such leaders. The dynamics of ramping up US sanctions against Venezuela is an informative indicator of the American policy. It is also interesting from the point of view of the practice of using sanctions to solve foreign policy tasks.

The attempt to change the government in Venezuela and the unequivocal support of the opposition from the United States can hardly be considered a spontaneous phenomenon. For Washington, Nicholas Maduro has been a hostile figure from the very beginning of his rule in 2013. Economic sanctions are a traditional instrument of pressure on such leaders. The dynamics of ramping up US sanctions against Venezuela is an informative indicator of the American policy. It is also interesting from the point of view of the practice of using sanctions to solve foreign policy tasks.

The restrictive measures against Caracas reflect patterns that are well described in academic literature. A change of political regime or a change of the domestic political course is one of the most common reasons for introduction of unilateral sanctions. They often precede attempts of coup d’état, revolutions or other forms of regime change. In the case of Venezuela, it is difficult to estimate the role of foreign special services in the developments that are unfolding now. It is obvious that the country has a high protest potential both in society and in elite groups and it would be an exaggeration to link what is happening only to the actions of foreign agents. However, the sanctions have consistently weakened the economic base of the current government.

The first sanctions against the Maduro government were imposed by the Americans in December 2014. It is interesting that they were initiated by Congress, not by the US president, although the initiative is usually taken be the executive. The introduction of sanctions was apparently preceded by a rather lengthy assessment of the situation in Venezuela by the Americans. The main motive for the introduction of restrictive measures was the human rights situation and the general perception of Maduro as a leader who was trying to concentrate the power in his hands. On December 18, 2014, Congress adopted the “Venezuela Defense of Human Rights and Civil Society Act” (PL 113-278). The Act pointed to a serious decline in the quality of life in the country as a result of government actions, including judiciary infringement, journalists harassment, public protests suppression, arrests of opposition leaders, etc. Of course, the document proclaimed the US commitment to promote democracy in the name of the people of Venezuela.

However, the sanctions themselves, stipulated by the Act, can hardly be called harsh ones. They were limited by assets freezing and visa restrictions for those involved in human rights violations in Venezuela. American citizens were forbidden to come into economic relations with such individuals and legal entities. In addition, the Act required to report to Congress on the state of media freedom in Venezuela. Nevertheless, the new legislation created the basis for further actions by the administration. It also practically excluded the abolition of sanctions in the current political conditions due to much more complicated legislative procedures in comparison with the executive bodies.

Later on, US presidents consistently ramped up the sanctions pressure on Caracas by their executive orders. On March 8, 2015, President Barack Obama declared a state of emergency in connection with the violation of human rights in Venezuela, which, according to an official document, posed a threat to US national security and foreign policy (Executive Order 13692). The order enacted the International Emergency Economic Powers Act (IEEPA), as well as the National Emergencies Act (NEA) – a standard legislative set in such situations (in the US, a state of emergency can be imposed by the president on a variety of issues – many emergency cases can coexist with the imposed sanctions). In general, Obama’s executive order clarified the provisions of Act PL 113-278.

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Meanwhile, Donald Trump surpassed his predecessor in the use of sanctions against Venezuela. He signed four executive decrees to build on the previous documents. The first one (Executive Order 13808), introducing substantial financial penalties, was released in August 2017. American individuals and legal entities were prohibited from purchasing debt securities with a maturity of more than 90 days from Petroleos de Venezuela, the state oil production monopolist on the continental shelf of Venezuela. It also prohibited transactions with government obligations (maturity of more than 30 days) and actions with other financial instruments of the Venezuelan government.

The following three executive orders were released in 2018, which became the most intense year in terms of density of Trump’s actions against Venezuela. On March 19, he signed Executive Order 13827 to block the use of cryptocurrency in Venezuela to circumvent sanctions. On May 21, Executive Order 13835 imposed restrictions on any debt obligations of the Venezuelan government, as well as companies where the government’s share exceeded 50%. On November 1, 2018, Executive Order 13850 imposed sanctions against the gold industry complex of Venezuela. In addition, measures have been introduced against corrupt officials or government projects that are corrupt in nature (apparently, the US Treasury could qualify as such a significant number of state-owned companies and projects). To date, 103 individuals and legal entities are in the “Venezuelan package” in the US Treasury SDN list.

In other words, a wide range of measures have been used against Caracas. In general, they reflect the tendency of the last two decades to apply the so-called pinpoint sanctions and rely on financial and sectoral restrictions, rather than on trade ones. However, given the importance of the energy sector in the Venezuelan economy and the role of the public sector, sectoral sanctions are becoming comprehensive by nature.

The sanctions buildup against Venezuela coincided with serious fluctuations on the oil market, so it is quite difficult to measure the economic damage caused by the sanctions themselves. Nevertheless, if the current political explosion or subsequent coup attempts do lead to a regime change, American analysts and practitioners will have an additional argument in favor of the effectiveness of sanctions as a tool to influence foreign and domestic policies of target states. If this does not happen, that will be a proof of Daniel Drezner’s “sanction paradox” suggesting the efficiency of sanctions against allies and their low usefulness against opponents on the world stage. China and Russia, as alternative counterparties of Caracas, can play an important role in one or another course of developments.

Author: Ivan Timofeev is Programme Director of the Valdai Discussion Club, Director of Programs at Russian International Affairs Council (RIAC).

First published in Valdai Discussion Club.