Economics and Siege Warfare in Venezuela, Part 2
Oil economics, Pink Tide and America Foreign Policy
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Trump, Maduro and Guaidó
Now that the United States had domestic oil dependence it could now pursue a more aggressive regime change policy to unlock oil fields for private companies. The Maduro government could no longer tow the line and were pushed into the exiled sphere of countries as they cracked down on protest they claimed were helped by the United States. When America cast a country as a new enemy it sends a shockwave through its economic and political connections. The sanctioned ministers accused of human rights violations could no longer trade and work arounds were slow to be found. Partners backed out of their relationships with Venezuela and low oil prices stagnated productivity and the welfare state.
Venezuela was also being pushed out of the most key part of the international economic sphere, access to American dollars. The Obama sanctions caused Citibank to close The Venezuelan State Bank’s account cutting off direct access to American credit. This event dramatically weakened the Venezuelan state’s ability to acquire goods and essential items. More than 90% of Venezuelan export revenue is historically gained through the oil trade.
The Venezuelan economy relies on the short-term credit gained through this export to import goods. The country has for decades relied on food imports and essential goods to be procured through these credits. The highest percentage of imports come from Brazil and America who began to slow down their activity. Inaccessible US dollars and rising inflation caused importing goods to become incredibly difficult. International lines of credit were becoming scarce due to the increased toxification of trade with Venezuela due to American influence.
The overarching strategy of America from the start of Obama’s sanctions was to coerce Venezuela into destroying the domestic socialist movement through accelerating tension. Protests movements continued and opinions towards Venezuela on social media and in Academic settings began to formulate it as a failed state. Maduro’s mustache became an iconic symbol of supposed dictatorial incompetence closely followed by an entourage of Vice documentaries, YouTube explainers and academics.
The election of Donald Trump brought new players and ideas to the situation in Venezuela. The Trump administration still agreed that a modern siege through sanctions and international pressure would be the best method of change. However, tactics would become more aggressive and shrewder. The main route of attack was the financial world. About a year into his term Trump began passing an array of sanctions against Venezuela. The effects of these sanctions comprehensively blocked “Venezuelan state assets” from accessing the American backed global financial market. Venezuelan reserves in America and the United Kingdom were frozen and assets stripped. It also barred the state from further accessing lines of credit from countries dealing in American dollars.
This made ever decreasing oil production and sales continue to decline as new customers were wary to deal in the oil market in a currency other then US Dollars. Venezuela could also not use its historic oil credit swaps to issue new debt abroad therefore, continuing to limit imports. The Venezuelan state’s economic handicap made groups like the International Monetary Fund and banks like Credit Suisse cease their relationship with the country and call in their debts. After the beginnings of the Trump sanctions were passed, Goldman Sachs attempted to purchase Venezuelan bonds but were chastised by the American state and ceased the transaction.
Hybrid War
These types of financial attacks can only be interpreted as one tactic in a new form of hybrid war that has built out of Obama’s demonization of Venezuela as an “extraordinary threat” to American security. Due to Venezuela’s inability to access debt restructuring services and credit in American dollars, their currency began to hyperinflate. Venezuelan money could no longer stabilize itself through guaranteed sales of oil and accompanying imports and it became almost impossible to trade with other countries. This also thoroughly invigorated the Venezuelan black market and organized crime.
A period of extreme hyperinflation occurred after the first Trump sanctions until 2019. This spectacle of hyperinflation continued to be used by American media as a means of saying the Venezuelan state is incompetent and illegitimate. However, these categorizations completely ignore that Venezuela has been locked out of the international financial market. Unlike Cuba in the Cold War, there does not exist a Soviet like economic option to turn to. Venezuela’s economic collapse would continue without any possible economic lever to pull. Their international economic sovereignty had been completely eroded at this point.
The political and economic situation in Venezuela reached its peak throughout 2019 as the year began with an election in January. The events of this election were internationally covered as Maduro proclaimed victory as the main opposition parties boycotted the election. They boycotted because they viewed Maduro as increasing his dictatorial power through alienation of the National Assembly of Venezuela. Mass protest and counter protests were in the streets and a lack of imports due to a lack of credit produced tantalizing photos of empty store shelfs. The United States and its allies even proclaimed the leader of the National Assembly Juan Guaidó, the President of Venezuela. They now offered the Venezuelan government the ultimatum of resigning and letting Guaidó take power.
This endorsement of Juan Guaidó was also a political attack against Maduro who was now in more then 40 countries not the official head of Venezuela. This technicality has made it even more difficult for Venezuela to work in international bodies like the United Nations. It is further evidence of the United State’s willingness to sit and wait out an unfavorable government. Guaidó promises a full privatization of the oil industry along with other state-run companies. In return, the United States promises to lift the sanctions and allow imports to the country and access to credit.
Maduro and his allies continued to not yield to financial and political pressure throughout 2019. The Trump administration responded to the stubborn former bus driver by appointing a new Special Envoy to Venezuela. Elliot Abrams was appointed to the position shorty after the electoral crisis and continues in this position to the present day. He had got his start as Ronald Reagan's Assistant Secretary of State for Human Rights and Humanitarian Affairs. He mainly helped oversee Reagan’s official and covert backing of far-right rebel groups in central America. Notably, he was indicted for lying to Congress about his role in the Iran-Contra affair but was later pardoned by George H.W Bush. Abrams returned as a foreign policy advisor to Bush Jr and The Observer reported he had advanced knowledge of the 2002 coup attempt. He is the embodiment of some of the darkest sides of American foreign policy.
Communist governments were the worst human rights violators in the world, Abrams believed, so virtually anything done to prevent Communists from coming to power (or to overthrow them) was justifiable on human rights grounds. This theory fit neatly into the Cold War presumptions that framed Reagan's foreign policy and allowed the administration to rationalize supporting murderous regimes so long as they were anti-Communists. In practice, it was little different from Henry Kissinger's realpolitik that discounted human rights issues entirely.
- William M. LeoGrande
On February 8, 1982, you testified before the Senate Foreign Relations Committee about U.S. policy in El Salvador. In that hearing, you dismissed as communist propaganda reports about the massacre at El Mozote in which more than 800 civilians, including children as young as 2 years old, were brutally murdered by U.S.-trained troops. During that massacre, some of those troops bragged about raping a 12-year-old girl, girls, before they killed them. You later said that the U.S. policy in El Salvador was a “fabulous achievement.” Yes or no, do you still think so?
- Ilhan Omar questioning Elliot Abrams at an approval hearing for his position for Special Envoy of Venezuela
Maduro has claimed that since the appointment of Abrams there has been multiple attempts on his life. He has kept to the claim that America’s key ally neighboring Columbia, has been supporting the Guaidó coalition and even armed groups in urban Caracas. These claims have varying degrees of solid reporting and evidence. However, it is quite well documented that when the DEA offered a 15-million-dollar bounty for the arrest of Maduro the Venezuelan opposition attempted a coup. Working in conjunction with a Florida based mercenary group that employed former green berets. Guaidó and his allies in Popular Will had hired this small army through a negotiation in Columbia. An attempted coup by this band failed pathetically as a Maduro supporting fishermen militia captured the plotters with ease.
Pain and Suffering
From the start of the Trump sanctions, the economic and humanitarian situation in the country has been catastrophic. The most effected sector of Venezuela’s lack of ability to import goods and lack of American cash is in Medicine. The drying up of the oil for medicine trade especially when most medication is produced in the United States has caused thousands of preventable deaths. There has been an 85% reduction in access to medical supplies. Imports of medical supplies dropped by more than 50% after the start of the Trump sanctions. Shortages of other hygiene products and the cutting off food for oil trades has exacerbated the medical crisis. This shows the seriousness of American policy towards Venezuela. Starving out enemy state’s medical systems is a tactics was developed during the early stages of this new siege war, specifically in regard to 1990’s Iraq.
60 Minutes correspondent Lesley Stah asking about Iraqi sanctions to US ambassador to the UN Madeline Allbright in 1996:
“We have heard that half a million children have died. I mean, that is more children than died in Hiroshima. And, you know, is the price worth it?”
“I think that is a very hard choice, but the price, we think, the price is worth it.”
This has been a factor in Venezuela’s COVID-19 response. Due to the sanctions Venezuela cannot access the international COVAX program. In September of 2021 the intercept published a report saying on request of the United States, a Portuguese bank is still holding paid for COVID supplies from Venezuela. In good news, Venezuela will receive vaccines from Cuba.
There are also shortages in refined fuel and diesel because Venezuela previously relied on their CITGO refineries in the United States. This has caused a further lack of productivity in the country. Venezuela has been selling their oil and mineral goods at extremely discounted prices because their exile from the American finical markets have dried up their trade and shut out customers. They are still an OPEC member but cannot hope to reach maximum productivity or sales with the present sanctions.
Previously heavily supported social infrastructure like the Bolivarian communes and expansive social housing has suffered through a period of deterioration due to a lack of state funds. Through this decay of the socialist project, American intellectual influence can proclaim the failures of socialism and the justness of Guaidó’s liberal ideals. The American press can also conveniently ignore their own role in the situation in Venezuela by continuing to exaggerate the humanitarian nature of sanctions. Both the Trump and Obama administration say they are simply defending human rights in Venezuela, but their political and economic motivations are seen much more clearly considering Venezuela’s history. These are crude political games not the work of peacemakers.
Conclusion
are crude political games not the work of peacemakers.
So if it is so clearly obvious that what is occurring in Venezuela is not simply state incompetence but at the very least partially a measured attacked on an enemy state then where is the criticism for America’s actions? Even if it is not covered on 24/7 news, several diplomats and scholars have written reports showcasing the cruelty of sanctions policy. There has also been two separate United Nation Special Rapporteurs who have published reports detailing the deliberate effects of American sanctions on Venezuela.
Both these reports stress the sanctions exacerbate the already existing economic deterioration due to low oil prices and limited economic diversification. Both reports demonstrate how sanctions have cascading effects. The sanctions throughout COVID for example have caused internet prices to skyrocket and limit access to online education. Lack of jobs due to a lack imports and cash have caused massive migration and brain drain out of the country. Along with these two reports, more then 800 non-government organizations across north and south America have called for the alleviation of sanctions.
Hugo Chavez was originally elected in an economic atmosphere where Venezuela’s economy was stagnated and oppressive. Wages had been driven down and Venezuela had hit a low in standard of living. Chavez was a popular leader that represented a new dignity for Venezuelan governance. Through his geopolitical skill he managed to stabilize oil prices and use them to create a socialist republic. This type of economic belligerence in the American world could not be tolerated and Venezuela slowly was cast out into the company of Iran and North Korea. Since the nationalization of oil and the 2002 coup attempt, American policy makers have been conducting a 21st century siege attempting to bring about a more favorable Venezuelan leader.
It is most effective to conceive of this pattern as a long historical trend. The nationalization of oil by governments has made effective enemies with the United States for decades. American anti-socialist policy throughout the Cold War was notable violent and cruel. It should not be shocking that the same man who helped illegally arm the Contras throughout the 1980’s is now helping run American policy towards Venezuela. These types of actions by the United States are done in accordance with economic interest to stabilize their geopolitical hedgemony backed by their globally intertwined financial system. A rogue new power petrol power like Venezuela in the western hemisphere had to be stunted.
Throughout the pandemic, Maduro has done several interviews with American financial press and has returned to negotiations with the opposition in Mexico City. His main demand is the lifting of US sanctions which he has also recently stressed at the United Nations summit. Some might think that sanctions are a great rhetorical tool for Maduro. However, the arguments within this essay prove these sanctions are much more than a diplomatic slap on the wrist. Maduro won’t stop talking about this point because there is nothing else to say, there is no magic button he can press. The Venezuelan economy is essentially out of money and effective trading partners until the state of siege is lifted.
Work Cited:
The majority of economic statistics were found through the Trading Economics and World Bank databases
https://www.wsj.com/articles/u-s-expands-sanctions-against-venezuela-into-an-embargo-11565053782
https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/venezuela-related-sanctions
https://www.independent.co.uk/news/world/americas/venezuela-us-sanctions-united-nations-oil-pdvsa-a8748201.html
https://venezuelanalysis.com/analysis/15205
https://www.forbes.com/sites/rrapier/2016/01/15/president-obamas-petroleum-legacy/?sh=5965a706c10f
https://venezuelanalysis.com/images/15295
https://www.venezuelablog.org/crude-realities-understanding-venezuelas-economic-collapse/
https://venezuelanalysis.com/video/15167
https://venezuelanalysis.com/news/15323
https://www.counterpunch.org/2014/04/25/the-dirty-hand-of-the-national-endowment-for-democracy-in-venezuela/
https://archive.globalpolicy.org/component/content/article/170-sanctions/41952.html
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