Venezuela’s tragedy: Economic collapse predates US & EU sanctions

Venezuela’s tragedy: Economic collapse predates US & EU sanctions

by Joshua Curzon
article from Tuesday 28, August, 2018

SUPPORTERS of the Venezuelan regime promote the idea that sanctions on Venezuela are responsible for its current economic woes, and that if the US and EU would withdraw these sanctions then everything would return to normal. This belief is categorically untrue and those who advocate it are at best disingenuous. This article will examine sanctions on Venezuela, and the reasons why they have had nothing to do with Venezuela’s economic catastrophe.

The US sanctions started with an Act of Congress in 2014, followed by an executive order in March 2015, both solely concerned with assets freezes and limits on US entry of Venezuelan officials involved in violence and illegality.

The EU began sanctions against Venezuela in November 2017 with an arms embargo, and escalated its sanctions with asset freezes and travel bans on seven Venezuelan officials in January and eleven in June 2018. To argue that an arms embargo and targeted sanctions on 18 people are responsible for a Venezuelan economic crisis which began in 2012 is absurd. An arms embargo does not prevent toilet paper and medicine reaching Venezuela.

Further US sanctions in August 2017March 2018, and May 2018 forbid US citizens from buying Venezuelan government or state oil company debt, or buying the (largely imaginary) Petro cryptocurrency. Notably, the sanctions do not ban the import of goods into Venezuela nor the import of Venezuelan oil or other goods into the US. Their economic effect is minuscule, notably because no-one in their right mind would buy Venezuelan debt now, as the country is completely bankrupt. The executive order banning the purchase of debt outright was only issued a few months ago. Even if it had some minor economic effect, how could it have caused a deep crisis that was already spiralling out of control in 2015?

Blaming the US and EU for sanctioning Venezuela and causing its collapse is fantasy. Not only did the US and EU only sanction Venezuela very recently, but most sanctions affect only corrupt and violent regime members, with the few economic ones having no real effect.  If the US wished to cause serious economic harm to Venezuela it would stop buying its oil. Regardless, that option will soon cease to exist, as the Venezuelan regime’s incompetence will shortly succeed destroying its entire oil industry. There are many factors in Venezuela’s downfall, that much is strikingly obvious to any observer: corruption, oil dependence, Dutch disease, and irresponsible economic policies. But sanctions are not one.

More information on The Venezuela Campaign can be found on its website

This article was first published on the Adam Smith Institute blog.

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