May 02, 2024

The Real Cost of Reimposing Sanctions on Venezuela

Last month, the Biden administration announced that sanctions relief on Venezuela would not be renewed. Reinstating the sanctions that were temporarily lifted in October was a carefully crafted decision intended to maximize the United States’ leverage. But sanctions will never be effective so long as Venezuelan President Nicolás Maduro values his political survival above his country’s economic well-being.

Almost a decade after the Obama administration first levied individual sanctions against the Maduro government in 2015, sanctions on Venezuela have served mainly as symbolic measures. While moral signaling is important, using sectoral sanctions exclusively as signaling devices undermines both Venezuela’s path to democracy and broader U.S. strategic objectives. Maduro’s sanctions evasion and cooperation with Russia, Iran, and China reveal that the overuse of sanctions can drive affected actors to unite beyond the watchful eye of the dollar—thus fueling, rather than curbing, illicit economies.

Venezuelans are waiting for the other shoe to drop. Now that the looming threat of sanctions has already been realized, Maduro’s reaction is not only unpredictable, but unrestrained.

The Barbados agreement, which was signed in October 2023 between Maduro’s government and the United States-backed opposition, effectively exchanged sanctions relief on Venezuela’s oil and gas sector for electoral guarantees. It was hailed as a diplomatic success. The agreement set an April deadline for Maduro to comply with electoral guarantees or face reimposed sanctions.

While there have been some subsequent wins for Venezuela’s opposition, including a decision to allow international electoral observation for the upcoming presidential elections, Maduro’s government only partially fulfilled other commitments. In addition to upholding a 15-year ban on María Corina Machado, the candidate who won the opposition’s primary, Maduro’s government prevented her chosen substitute from even registering in the elections. An increase in repression resulted in the arbitrary detention of high-profile human rights activist Rocío San Miguel and Machado’s campaign staff as well as the expulsion of a U.N. human rights agency. Facing insufficient electoral progress and a belligerent Maduro, the White House felt compelled to take a harder stance.

However, the Biden administration is unwilling to return to the “maximum pressure” policies introduced by former President Donald Trump. It has only partially reimposed sanctions. While the U.S. Treasury Department discontinued General License 44, which authorized investment in and trade with Venezuela’s oil and gas sector, it preserved General License 41, which permits Chevron’s activities in Venezuela. Companies can even apply for specific, case-by-case licenses, allowing the Biden administration flexibility to drip feed investment into Venezuela and signaling to the Maduro government that Washington remains engaged and open to talks. Francisco Palmieri, the chief of mission of the U.S. Venezuelan Affairs Unit, said last week that “License 44 should not be seen as a final decision,” underlining the White House’s hopes that ongoing talks will continue to progress.

Read the full article from Foreign Policy.

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