Sanctions and Venezuela's PoorWith the recent political unrest in Venezuela surrounding the controversial election of President Nicolás Maduro, the United States has placed financial sanctions on Maduro and some of his high-ranking officials. These sanctions are aiming to freeze any of Maduro’s U.S. assets as well as halt all business between him and U.S. citizens. However, there may be an unfortunate connection between U.S. oil sanctions and Venezuela’s poor.

These individual embargoes may not be enough, though. The Trump administration is still considering whether or not to place economic sanctions on Venezuela’s oil sector, according to Reuters. This would hit the country hard, as the oil industry accounts for upwards of 95 percent of Venezuela’s export earnings. Venezuela is also the third largest supplier of oil exports to the United States.

While it is important to analyze the effects of economic sanctions on a nation’s elites, what are the effects of these actions on Venezuela’s general populace? More specifically, what effects will these actions against President Maduro have on his people, and are there potential collateral effects linking U.S. oil sanctions and Venezuela’s poor?

First, it should be noted that there are multiple types of sanctions that a country can pass. In terms of U.S. embargoes pertaining to Venezuela, the kinds of sanctions being enacted and debated are in regard to the Specially Designated Nationals and Blocked Persons (SDN) List and the Sectoral Sanctions Identification (SSI) List, respectively.

As described in a case study by the U.S. State Department, sanctions targeting the SDN List are against individuals and entities, such as President Maduro and his high-ranking officials. SSI sanctions, on the other hand, target sectors in a foreign economy, such as the oil and gas industries in Venezuela.

According to the Council on Foreign Relations, the U.S. uses economic and financial embargoes more than any country or any body of countries in the world. As of 2015, the most notable U.S. sanctions historically have been levied against Cuba since 1960, Iran since 1984, North Korea since 2008, and the Ukraine/Russia since 2014.

U.S. embargoes against Venezuela began in 2015 when President Barack Obama issued an executive order targeting seven of Maduro’s high-level officials. New sanctions from late July added President Maduro himself to the SDN List.

In general, embargoes levied against individuals on the SDN List appear to have minimal collateral effects on that person’s respective regional economy. This is what the Obama administration argued when it placed sanctions on Venezuelan officials in 2015, and it is what the Trump administration is arguing now.

Sectoral sanctions, however, seem to have a broader impact on the country at large. The more a sanctioning country is a contributor to the economy of its target, the higher the potential is for collateral damage to occur.

For example, after monitoring the effects of sanctions placed on Russia by the United States and the European Union in 2014, U.S. State Department Deputy Chief Economist Daniel Ahn and Georgetown University professor Rodney Ludema concluded in a study that “sanctions [on Russia]…appear to be ‘smart,’ in the sense of hitting the intended targets…while causing minimal collateral damage.”

The E.U., however, who is Russia’s largest trading partner, had a different story. A study by the European Parliament in 2015 noted that Russian officials predicted an 8-10 percent loss of the country’s GDP due to the E.U. sanctions, resulting in a multitude of indirect collateral effects on the Russian economy and its people.

The scale of trade relations, therefore, directly correlates to the collateral damage sanctions have on an economy, and this must be considered when discussing U.S. sanctions and Venezuela’s poor. The oil sector accounts for 95 percent of Venezuela’s export earnings and 25 percent of their GDP, and because the United States is the country’s largest export destination according to OPEC, a sectoral sanction of this size could potentially have massive effects on Venezuela’s populace.

If Venezuela were to cease relations with their primary trade partner and lose the respective export earnings from their primary resource, the result would be a substantial decrease in national revenue. Money that would normally be used for social programs would be stifled, bringing more harm to a population that is already suffering from economic and political hardships plaguing the country.

Because of all this, it is important to watch the Trump administration and see how the President decides to handle the complex issues surrounding Venezuela. There is a viable argument that collateral damage would result from U.S. oil sanctions and Venezuela’s poor would bear the brunt of that damage.

John Mirandette

Photo: Flickr

Since 1999 when President Hugo Chavez came into power, more than one million Venezuelans have left their country in the hope of a better future. Within this group, 90 percent of the emigrants held a bachelor’s degree or more. The migration of these skilled individuals to foreign countries has created a significant brain drain in Venezuela. Now the country must focus on ways to stop the outflow of human capital before its skilled labor force is further depleted.

The citizens leaving Venezuela have been looking for a better quality of life and greater personal security. The International Monetary Fund is predicting inflation in Venezuela to increase by 720 percent this year and then, in 2018, by 2068 percent. Along with hyperinflation, this year the unemployment rate is expected to surpass 28 percent in 2018.

As unemployment was 7.4 percent in 2015, the significant stresses on the Venezuelan economy have led to great political unrest. Since April 1, thousands of citizens have been arrested in protests, hundreds have been injured and more than 60 people have died. In 2016, 2732 political arrests were made, suggesting high levels of state repression.

Maria Alesia Sosa, a freelance journalist in Miami who was a part of the significant brain drain in Venezuela, explains that while working 14 hour days she would earn less than $50 a month in her home country. Along with low pay, the high crime rates led to her decision to leave the country. Every 25 minutes a person is murdered in Venezuela. In 2016, three locations in Venezuela were listed in the top 10 most dangerous cities in the world, with Caracas taking the number one spot, according to a Mexican thinktank.

On top of job insecurity, weak purchasing power and significant criminal activity, one of the country’s main sources of revenue has been reduced in recent years. Crude oil output supplies Venezuela with 95 percent of its GDP. However, in 2002 and 2003, the oil strikes to overthrow President Chavez had the country facing large layoffs within the state controlled oil company, PDVSA.

This was the beginning of the large brain drain in Venezuela when many highly skilled industry workers left their home country to work for multinational corporations like ExxonMobil and Chevron. In 2013, when President Nicolás Maduro was announced as Chavez’s successor, oil production fell by 16 percent and still has not recovered. This outcome was a result of further government intervention in PDVSA which led to a drain on the expertise needed to boost production.

With these significant decreases in the nation’s skill set, emigration is harming key industries from health and medicine to banking and finance. The human capital necessary to rebuild the nation after the political turmoil ends is depleting.

With 44 percent of Venezuelans stating that they left due to personal or professional development needs, job creation becomes an important consideration. The country should consider providing more scientific research funding to create an attraction for emigrants to return to their country. Additionally, it would provide incentives for citizens within the country to pursue further education as the nation currently has stalled recruitment for new talent. With success, the investment in research would benefit the medical industry as well as many others.

In addition, the government should focus on providing better job opportunities while promoting inclusion. This would improve the opportunities for citizens to gain economic returns while also reducing the unemployment rate in the country. Additionally, by improving job prospects, Venezuela can improve the security of its nation. By increasing employment, crime and underground economic activity are reduced as can be seen in many places from Chicago to Liberia.

Providing job opportunities will not fix all the issues of poor economic conditions alone. These strides must be coupled with reductions in corruption as this negatively influences the quality and returns to education. Therefore, governments should implement anti-corruption measures by increasing transparency and enhancing bureaucratic quality.

The prospective changes in Venezuela may not bring back those citizens who have already left yet they could make the country more attractive for those remaining. While political strife has created a brain drain in Venezuela there is still hope to improve the quality of life and security within the country to bring the people back.

– Tess Hinteregger

Photo: Google

Crime in Venezuela
February 12 was National Youth Day in Venezuela, a day to commemorate the Battle of La Victoria of 1814, when Venezuelan students and troops achieved victory over Spanish colonists.

To celebrate, millions of students passively protested the Venezuelan government, which is led by President Nicolas Maduro. Youth in Venezuela are tired of living in an unstable and insecure environment. Last year, almost 25,000 homicides took place in the country, which has a population of about 30 million people.

While students peacefully marched their way through Caracas, Merida, Valencia, San Cristobal and Puerto Ordaz to bring to light the corrupt government, the Venezuelan military used gas bombs and guns to control the crowds. On February 12, three protesters were shot and killed in Caracas and many were injured.

In a nation already filled with tension, citizens who were pessimistic about the situation before National Youth Day are becoming increasingly cynical now. Last year in Venezuela, prices rose 56 percent and the country recorded almost 25,000 murders.

The government has tightened security on all airways of communication, taking control of television, radio and the Internet. Venezuelans have been using Twitter to communicate among each other and to the world. However, the government has now shut down this medium of communication, therefore restricting people’s access to information.

The political unrest has caused food shortages, economic stress and increased crime in Venezuela. As inflation and crime reach all-time highs in the country, citizens are looking to escape. A website that helps Latinos emigrate, mequieroir (“I want to leave”) reported record traffic during the past month. The worsening state of public affairs in the country is pushing people to look elsewhere to make a living and enjoy a high quality of life.

– Haley Sklut

Sources: Venezuela , YouTube, NBC News
PhotoSpillers of Soup