Do U.S. Sanctions on Venezuela Work?

In Brief

Do U.S. Sanctions on Venezuela Work?

Given Venezuela’s urgent humanitarian needs and the global energy crunch, Washington is considering easing sanctions on Caracas in exchange for democratic reforms.

What sanctions has the United States placed on Venezuela?

Since 2006, the United States has imposed a wide variety of sanctions [PDF]. The most significant are preventing the Venezuelan government from accessing the U.S. financial system; freezing the bank accounts and other assets of the Nicolás Maduro administration; blocking oil imports from the state oil and gas company, PDVSA; and imposing penalties on individuals who the U.S. government determines have undermined democratic processes or committed human rights abuses. Among those targeted are Maduro himself, eight supreme court judges, and the director of the central bank.

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Other measures include

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  • terrorism-related sanctions, which prohibit all commercial arms sales to Venezuela and target individuals found to financially support terrorist organizations;
  • drug trafficking–related sanctions, which target individuals and companies labeled as Specially Designated Narcotics Traffickers; and,
  • broader sectoral sanctions, which block the assets and transactions of companies that benefit from the Maduro administration’s corrupt practices.

The governments of Canada, the European Union, Mexico, Panama, and Switzerland have also sanctioned the Maduro administration, including by freezing assets, embargoing arms sales, and banning travel.

Why did the U.S. government impose sanctions?

President George W. Bush’s 2006 ban on all U.S. commercial arms sales was in response to the Venezuelan government’s lack of cooperation on counterterrorism and anti-narcotics efforts. (Hugo Chávez was in power at the time.) In 2014, following widespread political protests and subsequent reports of abuse by Venezuelan police forces, the U.S. Congress authorized President Barack Obama to impose sanctions on individuals involved in human rights violations. The next year, Obama declared [PDF] Venezuela a national security threat and applied sanctions on several high-ranking officials. 

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Venezuelan peasant farmers protest against economic sanctions in front of UN headquarters in Caracas.
Venezuelan peasant farmers protest against economic sanctions in front of the United Nations headquarters in Caracas. Javier Campos/NurPhoto/Getty Images

In 2017, President Donald Trump began aggressively tightening sanctions with the aim of ousting Maduro in favor of an interim opposition government led by Juan Guaidó. The Trump administration cut off the Maduro regime’s access to the U.S. financial system; barred U.S. companies and citizens from purchasing Venezuelan debt; and blocked PDVSA from exporting to the United States, its primary destination. By the end of his term, Trump had issued seven executive orders targeting state-owned or -affiliated companies, government agencies, and the central bank.

With a few exceptions, President Joe Biden has kept these measures in place. Yet, he has opted to start direct talks with the Maduro government and has floated the idea of easing oil sanctions in exchange for democratic reforms.

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How much have sanctions hurt Venezuela?

This is a matter of debate. Critics of sanctions, particularly Trump’s aggressive measures, say they have increased Venezuela’s disease and mortality rates, worsened widespread hunger, accelerated the migration crisis, and exacerbated the country’s economic troubles [PDF]. Other researchers argue that sanctions are not primarily responsible [PDF] for Venezuela’s rapid decline. Instead, they say that economic mismanagement, and the resulting hyperinflation and collapse in living standards, long preceded most sanctions.

However, analysts generally agree that oil sanctions have hurt. The U.S. Government Accountability Office found [PDF] that sanctions placed on PDVSA in 2019 likely contributed to the collapse of Venezuela’s economy, which saw a 35 percent contraction in gross domestic product (GDP) that year. (The International Monetary Fund recorded a slightly lower contraction.) Oil production had long been falling, from a height of 3.2 million barrels per day in the 1990s to less than 1.4 million in 2018; in the wake of oil sanctions, output fell further, to 558,000 barrels per day in 2021. The country also faces fuel shortages due to failing refineries, leading its ally Iran to send shipments in defiance of U.S. sanctions.

The effect of sanctions on the Maduro administration in particular is less clear. The barrage of sanctions has cut the regime off from many financing sources, making it harder to access foreign currency needed to import basic goods. But the recent elections of left-wing leaders in Chile, Colombia, and Peru have lessened Venezuela’s political isolation in the region, and the economy is growing again. Meanwhile, support for Guaidó, recognized by most of the region since 2018 as Venezuela’s rightful president, has sharply eroded.

What are the prospects for sanctions relief?

Biden is reportedly considering easing sanctions to allow U.S. oil giant Chevron to resume operations in Venezuela. In exchange, Maduro would continue negotiations with the U.S.-backed opposition, led by Guaidó, over the terms of presidential elections scheduled for 2024. This is the fifth attempt at mediation after Maduro suspended the last round of talks in October 2021.

Some policymakers hope that giving Venezuela the green light on exports could help curb global energy prices, given that the country boasts the world’s largest proven oil reserves. However, many economists say that it will take time and billions of dollars in foreign investment to rebuild the oil industry after years of mismanagement. U.S. Secretary of State Antony Blinken has said that relaxing sanctions could be a way to stabilize Venezuela’s economy and alleviate the country’s humanitarian crisis, which has led tens of thousands of Venezuelan migrants to head toward the U.S. southern border.

Still, the idea has proved controversial, generating bipartisan blowback in Congress. Other Latin American experts say the time is ripe for a different approach, arguing that sanctions have contributed to the suffering [PDF] of the Venezuelan people and failed to unseat Maduro.

Will Merrow helped make the graphics for this In Brief.

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