Many parts of Venezuela remain without power
As Venezuela was staggering under water shortages and a deadly blackout Monday, Washington piled on the problems, hitting Nicolás Maduro with additional sanctions designed to leave his regime starved for resources.
The U.S. calculation seems clear: It’s gambling that the short-term pain required to push Maduro out of office will be less than the long-term pain of allowing him to finish his term in 2025.
But as Venezuela’s political stalemate enters its second month — and electricity, water, food, gasoline and communications are increasingly scarce — questions about the human toll of Washington’s actions will undoubtedly mount.
On Monday, the U.S. Treasury Department sanctioned Evrofinance Mosnarbank, a Moscow-based bank that is jointly owned by Russian and Venezuelan state-owned companies. In conjunction with existing financial and oil sanctions, the move cuts off one more source of hard currency for Venezuela’s state-run PDVSA oil company — the nation’s economic lifeline.
The deep and biting economic measures are predicated on the idea that Maduro will fall quickly and interim President Juan Guaidó — recognized by Washington and more than 50 countries — can form a transitional government and call new elections, said Phil Gunson, a Caracas-based analyst with the Crisis Group.
“But what if the plan doesn’t work? Suppose the government holds on and then you’ve duplicated the suffering and you haven’t solved the problem,” he said. “The prospect that it can be apocalyptic but not produce an outcome can be quite scary.”
Over the weekend, U.S. Reps. Debbie Wasserman Schultz and Donna Shalala of Florida got a firsthand view of the catastrophe as they toured Cúcuta, the Colombian border town that has turned into an escape route for millions of Venezuelans fleeing their country. After meeting with hungry, sick and injured Venezuelans, they said they were more convinced than ever that Maduro must go. And they said additional sanctions are needed to help Guaidó take full control.
“The sanctions are effective and have helped them [the Guaidó administration] advance politically the cause of transitioning to a democratic system once again,” said Wasserman Schultz, “But the sanctions need to go deeper.”
Since 2008, Washington has hit more than 100 current and former Venezuelan officials and their allies with economic measures but more people need to be on that list, she said.
“We need to pierce the layers below the leadership and go down to the middle management and even the families — using sanctions to create a more painful situation for those that are perpetuating the crisis,” she said.
Shalala, Wasserman Schultz and their Democratic colleagues plan to push new bills through committee this week that will target companies, particularly Russian, that supply Venezuela with weapons and military equipment. And both women said Congress needs to consider new sanctions against Cuba, which reportedly has numerous military advisers in Venezuela supporting Maduro.
“Cuba is a very, very significant infection that has been allowed by Maduro to essentially strangle the Venezuelan people into submission,” Wasserman Schultz said.
If the measures pass, they’re unlikely to cause direct hardship for regular citizens. But they will be more bricks in an imposing wall of sanctions that is scaring off lenders and investors and further crippling the country at a time when it’s already on its knees.
In particular, financial sanctions rolled out in 2017 made it difficult for Venezuela to refinance loans and get fresh funding. Then, in January, Washington used “the nuclear option” and blocked money from Venezuela’s U.S. oil sales from going to Maduro’s coffers — effectively costing the country billions.
Venezuela imports 80 to 90 percent of all its goods — including food and medicine — and asphyxiating PDVSA limits the country’s ability to bring in necessities. Venezuela’s imports in 2018 fell to an estimated $11.7 billion down from $66 billion in 2012, according to Torino Capital. And the firm expects imports to fall to about $7 billion this year.
Mark Weisbrot, the co-director of the Center for Economic and Policy Research, a Washington-based think tank, argues that all unilateral sanctions are illegal and violate international conventions on collective punishment. He says that even sanctions on individuals have broader economic implications, as banks and institutions often steer clear of countries where officials are being targeted.
And while he admits that Venezuela had “serious problems” before the U.S. measures took effect, he says the sanctions are now keeping Maduro from taming hyperinflation, increasing oil production or keeping his citizens fed and healthy.
“The truth is, the U.S. government is preventing Venezuela from taking any step to fix the economy,” he said.
When the U.S. imposed similar oil sanctions in Iraq from 1990 to 2003, infant mortality spiked. According to hotly debated research, the sanctions were responsible from anywhere from 40,000 to half a million additional deaths. And similar effects might be seen in Venezuela, Weisbrot said.
“You are talking about really destroying their capacity to import all sorts of essential goods — spare parts, medical equipment — all sorts of items you need to keep things running,” he said. “I don’t see how you can get around that.”
Advocates of the sanctions say Maduro and his associates are the only ones responsible for Venezuela’s economic woes. Two decades of single party rule have bred corruption, cronyism and mismanagement that have destroyed what was one of South America’s most prosperous countries. The faster Maduro leaves, they say, the more lives will be saved.
“The severe shortages you’re now seeing in Venezuela — gasoline, food — it’s a crisis of epic proportions and it’s 100 [percent] the responsibility of the Maduro regime,” Florida Sen. Marco Rubio wrote last week. “They are stealing and have stolen billions of dollars that belong to the Venezuelan people. They are the ones that created this crisis, and the only solution is for the Maduro crime family, which is a mafia, to be ousted out of power and replaced by a real democracy that responds to its people.”
Shalala said Venezuela is already “a disaster and it cannot get worse.”
“What’s important is that, working with the rest of the world, we are putting every sanction we possibly can on this government,” she said. “We will keep the pressure on this illegitimate regime.”
The new sanctions come as large swaths of the country have been without power since Thursday, when there were problems at the Guri hydroelectric dam. Venezuelan opposition deputy José Manuel Olivares said at least 21 people have died at hospitals that didn’t have backup generators. The number of deaths could not be independently confirmed but is likely to increase in coming days.
Adding to the misery, the capital’s water-treatment plant has been off-line, sending desperate Venezuelans to dirty creeks and storm sewers looking for water.
While Maduro blames U.S. sabotage for the electrical problems, there’s mounting evidence that neglect and lack of financing are the true culprits. It is true that the country’s most dire problems — hunger, blackouts, fuel shortages, collapsing hospitals — were present long before the U.S. ever put its thumb on the scale.
“Some people forget that the [Maduro] government already had an immense problem borrowing money because the risk premium was through the roof and it was incredibly expensive for them to borrow on the international market,” Gunson said.
But the Washington measures are also not negligible. “It’s a complex technical issue to determine what additional problems those financial sanctions imposed, but clearly the difference was not zero,” he said.
Despite President Donald Trump’s repeated claims that “all options are on the table” when dealing with Venezuela, there seems to be little appetite for armed intervention. And that likely means that more sanctions will keep coming.
Both Guaidó and Maduro seem to believe they have time on their side, Gunson said, and neither man appears ready to compromise. Guaidó is calling for new demonstrations on Tuesday to force Maduro’s exit.
“The longer this drags on the more incredibly painful and distressing it becomes,” Gunson said. “This is an unstoppable force meeting an immovable object, and ordinary Venezuelans are getting ground between the two of them with no end in sight.”