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Sanctions Without a Goal

Venezuela’s populist president is having a field day blasting new American sanctions. What is Washington hoping to accomplish?

Venezuelan President Nicolas Maduro delivers a speech before supporters gathering outside the presidential palace in Caracas on March 18, 2015. Leaders from leftist Latin American regional bloc ALBA gathered Tuesday for a summit in Caracas, a show of support for Venezuela in its mounting standoff with the United States. AFP PHOTO/FEDERICO PARRA        (Photo credit should read FEDERICO PARRA/AFP/Getty Images)
Venezuelan President Nicolas Maduro delivers a speech before supporters gathering outside the presidential palace in Caracas on March 18, 2015. Leaders from leftist Latin American regional bloc ALBA gathered Tuesday for a summit in Caracas, a show of support for Venezuela in its mounting standoff with the United States. AFP PHOTO/FEDERICO PARRA (Photo credit should read FEDERICO PARRA/AFP/Getty Images)

Washington’s sanctions imposed on Venezuela earlier this month have been great for President Nicolás Maduro. Within days of the March 9 restrictions, he’d gotten the country’s legislature to give him permission to rule by decree while he fights the so-called imperialist threat from the United States. His latest stunt: launching a nationwide campaign to gather 10 million signatures demanding the Obama administration revoke the executive order declaring Venezuela a threat to U.S. national security.

The sanctions freeze the U.S. assets of seven Venezuelan officials, including the head of its intelligence service and a top prosecutor, who were allegedly involved in Caracas’s harsh crackdown on the country’s political opposition. Clashes between police and demonstrators during widespread protests in February 2014 resulted in more than 40 deaths, and the Venezuelan government responded by arresting opposition leader Leopoldo López. While U.S. administration officials and lawmakers have also condemned widespread corruption in Venezuela, no one has yet been sanctioned for taking state funds.

A bipartisan group of U.S. senators continues to push for further sanctions, but it’s unclear if they will do anything other than boost Maduro’s nationalistic narrative of coups and conspiracy theories.

“It’s hard to see a coherent Venezuela strategy here because the administration has been kind of laying low in relation to Maduro, letting him make proclamations about coup attempts,” said Barbara Kotschwar, an economist who studies Latin America at the Peterson Institute for International Economics. “This seems to play right into Maduro’s hands.”

Indeed, while U.S. officials have scoffed at Maduro’s characterization of the sanctions program, it’s unclear what broader strategy the economic measures are meant to serve. The Venezuelan economy is already in free-fall and the individual officials hit with asset freezes earlier this month have been praised by Maduro and promoted to higher posts in Caracas.

“This seems heavy-handed if the goal is to help Venezuela back to a more democratic, more centrist administration,” Kotschwar said.

Ordinary Venezuelans have been suffering through a severe economic downturn in the two years since the death of former strongman Hugo Chávez, a fierce critic of the United States who used the country’s oil wealth to create generous — and politically popular — social welfare programs. The good times have long since ended, however: The Venezuelan economy contracted by 2.7 percent last year and, according to the International Monetary Fund, could shrink by another 7 percent this year. The country has an inflation rate of almost 70 percent, the highest in the world, leaving consumers facing widespread shortages of food and medicine.

David Smilde, a Venezuela-based senior fellow at the Washington Office on Latin America, an advocacy group, said Washington has made it very easy for Maduro to argue that the United States has his country in its sights and bears the blame for the country’s financial and economic woes.

“His main explanation of this dire economic situation is that there is an economic war — that there are all these scarcities because there’s induced inflation, which is all absolutely not true, but then in the middle of this the U.S. comes forward with these sanctions,” said Smilde.

The moves against Venezuela come as the administration begins loosening sanctions against Cuba in an admission that the decades-long embargo against the communist nation failed to bring down its government. Without a clear strategy for Venezuela, the Obama administration risks entering another long and fruitless campaign like the one against Havana, which only served to empower Fidel Castro’s anti-U.S. bona fides.

“Sanctions should never be an end to themselves,” said Zachary Goldman, a former Treasury Department sanctions official who now heads New York University’s Center on Law and Security. “They should always be integrated into a larger strategy approach to a particular foreign-policy problem.”

Maduro quickly cast the sanctions as evidence of nefarious U.S. designs on his country. He accused President Barack Obama of personally colluding with the “U.S. imperialist elite” to take over his country and control it from Washington.

American lawmakers and officials have ridiculed those charges and reiterated that the sanctions are meant to target the named officials, not the Venezuelan people.

“These sanctions are not against the government of Venezuela,” Republican Senator Marco Rubio of Florida said at a congressional hearing last week. “These sanctions are not against the people of Venezuela nor do they aim to deny the people of Venezuela anything.”

Instead, Rubio said the asset freezes and visa bans were only meant to keep the seven officials from traveling stateside or using their money in the United States.

To be sure, Maduro’s ability to use the sanctions for political gain could disappear if the measures were expanded to impact ordinary Venezuelans or leading members of the country’s political and business classes. They could act as a deterrent. The threat of future asset freezes, for example, could discourage other Venezuelan officials from going after political opposition figures in the future.

The sanctions also drive home the message that Washington profoundly disagrees with Maduro’s style of leadership. But it’s also prompting messages of sympathy from other countries that oppose American policy in Latin America, including Cuba and Bolivia.

Bolivian President Evo Morales called the U.S. move “a threat not only to Venezuela but to Latin America.”

While only seven officials are on the blacklist so far, Rubio is calling for more names to be added — and he has his own list of suggestions, which include the minister of justice and the head of military intelligence. Rubio sponsored the Venezuelan sanctions law, which was passed in December. The law directs the president to sanction officials responsible for the crackdown on countrywide protests on Feb. 4, 2014, and states that it is U.S. policy to “support the people of Venezuela in their aspiration to live under peace and representative democracy.”

“The question now is whether these will be merely symbolic measures, which the Maduro regime then uses to bludgeon his opposition and the United States — or whether this will be a comprehensive financial pressure campaign intended to change the policy choices and calculus in Caracas,” Juan Zarate, a former senior Treasury Department official and counterterrorism expert who oversaw sanctions programs during President George W. Bush’s administration, said in an email.

It is clear what the sanctions are not targeting. In addition to not targeting the Venezuelan people, Obama administration officials made clear when the asset freezes were announced that the measures were not meant to hurt the Venezuelan economy.

That’s one piece of good news for Maduro, who is doing a fine job of pushing the economy to the brink all on his own. Falling oil prices have compounded the economic headache for Maduro — nationalized energy companies taking in less revenue means fewer bolivars in government coffers. The economic free-fall might hurt the Maduro government long before the sanctions do.

“Venezuela’s not a security threat to the United States,” Kotschwar said. “It’s a threat to itself.”


 Twitter: @jtrindle

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