Options for U.S. Policy in Venezuela

March 02, 2017

Testimony
Testimony by CFR fellows and experts before Congress.

More on:

Venezuela

Corruption

Economics

Shannon K. O’Neil testified before the U.S. Senate Committee on Foreign Relations, addressing the ongoing crisis in Venezuela and proposing U.S. policy options aimed at combatting the political, economic, social, and humanitarian crises in the country. She called for targeted sanctions against human rights abusers, drug traffickers, and corrupt officials, a concerted effort to rally Venezuela’s South American neighbors in condemning Venezuela’s authoritarianism, and how the United States should prepare to help a new and more receptive Venezuelan government in the future.

Takeaways:

  • Venezuela faces unprecedented economic hardship; the economy shrinking by over 30 percent over the last four years, and over half of the population suffering extreme poverty as a result of both a steep decline in oil prices and gross economic mismanagement.
  • Widespread corruption, too, is at the center of the ongoing crises, with tens of billions of dollars stolen through officials arbitraging exchange rates for personal gain, selling government-purchased foodstuffs on the black market, or straightforward theft.
  • Venezuela’s challenges threaten to undermine economic stability, security, and democracy in the Western Hemisphere. The third largest oil producer in the hemisphere, production disruptions could affect U.S. refineries and lead to general hike prices. The Maduro government’s willingness to permit drug traffickers, organized crime networks, and potential terrorists to operate within its borders undercuts U.S. national and regional security efforts.
  • And Venezuela’s authoritarian turn contradicts long standing U.S. foreign policy ideals and goals, and erodes stability, peace, and development in the region as a whole.

Policy Options:

  • The United States should continue to use targeted sanctions against human rights abusers, drug traffickers, and corrupt officials, denying these individuals access to the United States and the benefits of its financial system, while simultaneously avoiding the humanitarian costs that broader sanctions would inflict on the Venezuelan population.
  • The United States should work to build a regional coalition to condemn Venezuela’s authoritarian regime, and work through the Organization of American States (OAS) to sanction and suspend Venezuela given its failure to comply with the OAS’ Inter-American Democratic Charter.
  • The United States should work with Colombia, Brazil, Guyana, and nearby Caribbean nations to prepare for a surge in refugees. It should also begin coordinating to help a future receptive government deal with the economic and financial chaos, bringing together the International Monetary Fund (IMF), creditors, and other interested parties to prepare to develop a rescue package and debt restructuring.
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