Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
It’s your last chance to make a tax-deductible donation to CounterPunch in 2017. Help us gear up to fight the status-quo in 2018! Every dollar counts!
FacebookTwitterGoogle+RedditEmail

Trump Sanctions on Venezuela Will Cause More Harm

by

Photo by Andreas Lehner | CC BY 2.0

The Trump administration announced new, unprecedented sanctions against Venezuela on Friday that are designed to cut off financing to Venezuela. The Trump team pretends that the sanctions are only directed at the government. But as any economist knows, this is clearly false. By starving the economy of foreign exchange, this action will harm the private sector, most Venezuelans, the poor, and the vulnerable.

These sanctions will deepen the severe depression that Venezuela’s economy has been in for more than three and a half years, which has already shrunk income per person by more than a third. They will worsen the shortages of food and essential medicines. They will exacerbate the country’s balance of payments crisis, and therefore feed thespiral of inflation (600 percent over the past year) and depreciation of the currency (on the black market) that has been accelerating since late 2012.

And they will further polarize an already divided country. Opposition leaders who support the sanctions, or are associated with them because of their longstanding ties to the US, will be seen as treasonous ― much as Republicans in the Trump administration, including Trump himself, are portrayed by those who believe they collaborated with the Russian government to win the 2016 election.

Trump’s sanctions are also illegal under both US and international law. They violate the charter of the Organization of American States (Chapter 4, Article 19) and other international treaties that the US has signed. To comply with US law, the president also has to lie and say that Americans are suffering from a “national emergency” due to an “unusual and extraordinary threat to national security” posed by Venezuela. This is obviously ridiculous.

The sanctions do their damage primarily by prohibiting Venezuela from borrowing or selling assets in the US financial system. They also prohibit CITGO, the US-based fuel industry company that is owned by the Venezuelan government, from sending dividends or profits back to Venezuela. In addition, if Venezuela wanted to do a debt restructuring, so as to reduce debt service during the current crisis, it would be unable to do this because it wouldn’t be able to issue new bonds. Basically, Trump’s executive order will cut off most sources of potential financing, other than from Russia or China. This would cause imports, which have already fallen by more than 75 percent over the past five years, to fall further. This means more shortages and further economic decline, since much of Venezuela’s domestic production is dependent on imports.

The executive order carries an exemption for oil imports from Venezuela.

Why would Trump do something that even his right-wing allies in Latin America, and most of the Venezuelan opposition did not support when Trump threatened to do this last month? As with many apparently irrational decisions by this president, it’s not that easy to know for sure. But it seems that the strategy is to further destroy the economy to the point where people will rise up and overthrow the government, or perhaps to provoke a military coup.

In the last few weeks, the violent street protests have died down. Most of the opposition leaders have agreed to participate in the long-delayed October regional elections. This is a positive development for those who would like to see a peaceful resolution of the conflict. But for regime-change extremists like Marco Rubio, whom Trump seems to be listening to on Venezuela, peace is bad news, especially for the media strategy of “if it bleeds, it leads.” They may see exacerbating the economic crisis and suffering to their advantage, hoping to bring people back into the streets and away from the negotiations that will be necessary to settle the conflict.

Finally, we cannot discount the possibility that Trump has also issued this order as yet another distraction from his bad political fortunes at home. Distraction has been his modus operandi since his presidential campaign last year. In this case it is particularly dangerous because he has also threatened military action against Venezuela, and US sanctions of this magnitude have often been followed by military attacks.

As Trump’s disgraced presidency continues to putrefy, the urge to rescue it with war will certainly grow. Venezuela is not the best target for public relations purposes because the “security threat” is a tough sell. But Trump and his advisers may see it as less risky than some of the alternatives, such as North Korea, Iran, or Syria.

This article originally appeared in The Hill.

More articles by:

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

Weekend Edition
December 15, 2017
Friday - Sunday
Paul Street
What’s Not Happening With Mr. Jones
Timothy M. Gill
The Height of Racial Resentment: White Cops
Andrew Levine
Democrats Have Much to Learn and the Odious Have Much to Teach Them
Luciana Bohne
Operation Jerusalem Capital: Second Balfour Declaration or Arab-Israeli NATO?
Anthony DiMaggio
#Me Too: Women are Speaking Out, Are We Listening?
Jeffrey St. Clair
Out Walked Monk
Ann Robertson - Bill Leumer
The Demoralizing Impact of Trump, But Hope Has Arrived
Samantha Paez – Sandra de los Santos
The Most Dangerous Place for Mexican Women is in the Streets
Martin Billheimer
Assassins of the Image: the CIA as Cultural Gatekeeper
Jérôme Duval
From Slave Trade to Debt: Occupation Disguised as “Discovery”
Vijay Prashad
The October Revolution
Steve Martinot
Twisted Thinking: Police Militarization in Berkeley
Robert Fantina
Juvenile Delinquency in U.S. Government
Dave Lindorff
Stupidity and Blindness Have Destroyed Whatever Democracy the US Ever Had
Pete Dolack
You are Working Harder and Getting Paid Less
Joseph Natoli
The Axioms of the Other
Susan Babbitt
Why Don Quixote?
Ralph Nader
What Does Trump Mean by “Make America Great Again”?
Ramzy Baroud
Towards a New Palestinian Beginning
Binoy Kampmark
Escaping Reality: Roy Moore and the Rage of Decency
Mark Luskus
Corporate Interests Are Warping the Internet
Ron Jacobs
Sinking in the Swamp
Brian Cloughley
Prepare! Peruse!! Prevail!!!
Jill Richardson
We Agree Assault is Bad, Now Let’s Agree on How to Punish It
Jeremy Corbyn
The Greatest Threats to Our Common Humanity
Walter Clemens – Stephen Advocate
The Amoral Code of America’s Dirty Old Men
Jessicah Pierre
Trump’s Cruel Policy on Haitian Refugees
George Wuerthner
Water Rights or Water Privileges?
Nick Pemberton
What I Learned in Ghana 
Missy Comley Beattie
It’s Capitalism
Tom H. Hastings
Stop Trump movement
Thomas Knapp
The Real Internet Censorship Threat
Robert Koehler
Peace on the Far Side of Nuclear Weapons
Kary Love
Christmas Letter to Jesus
Tom Clifford
China: From the Treasure Fleet to One Belt, One Road
Charles R. Larson
Trump’s Blueprint for State Capture
M. Shadee Malaklou
Jay-Z’s 4:44 Moves Black Radical Thought Through and Beyond the Classroom
Michael Dickinson
What About Our Debts, Pope Francis?
Phil Rockstroh
What Was Verifiably Great About America: Fragments of a Memoir Set to a Musical Soundtrack
Edward Curtin
A Man Turns
December 14, 2017
John W. Whitehead
Surveillance That Never Sleeps
Pam Martens - Russ Martens
Roy Moore’s Loss: a Victory for the Young Girls of America
Eric Toussaint
Debt is a Determining Factor in History
Kenneth Surin
Selective Impressions of the New Zealand-Aotearoa Conjuncture
Liaquat Ali Khan
Appropriation of Jerusalem
FacebookTwitterGoogle+RedditEmail