Examining the Effects of Economic Sanctions on Venezuela: Representative Ocasio-Cortez's Remarks
Key Highlights :
The ongoing crisis in Venezuela has been a major source of debate in the United States, with many politicians and citizens alike voicing their opinions on the best course of action. The Trump administration enacted a “maximum pressure” policy, which included sweeping sanctions on Venezuela’s financial and oil sectors, among others, and ceasing to recognise Nicolas Maduro as president. While the sanctions were intended to lead to regime change, they have had the opposite effect, leading to economic and humanitarian crises. Representative Alexandria Ocasio-Cortez (D-NY) recently commented on Face the Nation that “we need to re-examine the nature of these sanctions” and that they are “punishing the overall economy, harming everyday working people”. Her remarks came just days after Senator Robert Menendez (D-NJ), a key proponent of sanctions, was indicted on corruption charges.
Across Latin America, the mood has been changing as more political figures agree that broad or sectoral sanctions have worsened the existing economic and humanitarian crisis. In Venezuela’s neighbourhood, no incumbent president backs the “maximum pressure” policy. In September of 2022, Senator Chris Murphy (D-CT) said that “we are stuck inheriting a policy that did not work, that has in part contributed to a humanitarian disaster”. Representative Ocasio-Cortez is not the first to voice this opinion in Capitol Hill, while it is increasingly held across Washington DC.
Venezuelan investment banker Rodrigo Naranjo argues that broad sanctions are suppressing private activity. As a result, most business leaders are in favour of economic sanctions being lifted. Adán Celis, the president of Fedecámaras, the largest business union, has also called for an end to economic sanctions. The Venezuelan government has also been in coordination with four opposition state governors to jointly demand an end to economic sanctions.
The Biden administration is expected to ease some restrictions on Cuba, “to allow more US financial support of small businesses”. Senator Menendez, who has been charged for receiving gifts in the form of “cash, gold, a Mercedes Benz and other things of value”, was trying to pass through legislation to enshrine sanctions on Venezuela in law. This effort was coming into conflict with White House negotiations with President Nicolas Maduro’s government, as part of a broader deal that could involve democratic guarantees for Venezuela’s 2024 election.
Oil-related and secondary sanctions are likely to go away first. As reported, the trading ban on Venezuelan bonds is hurting US interests while it hardly affects President Maduro's position, according to various experts. Nearly a month later, the Financial Times reported a Venezuelan sovereign bond rally as investors increasingly expect a deal in this sector. Some insiders even argue that economic sanctions policy will be determined by domestic US politics.
The effects of economic sanctions on Venezuela have been disastrous, leading to economic and humanitarian crises. Representative Ocasio-Cortez's recent remarks on Face the Nation have highlighted the need to re-examine the nature of these sanctions and to consider more effective solutions. The Biden administration is expected to ease some restrictions on Cuba and could be working towards a broader deal with President Nicolas Maduro’s government. As more political figures agree that broad or sectoral sanctions have worsened the existing economic and humanitarian crisis, it is important to consider the effects of economic sanctions and to find a better way forward.
