The 27-page paper was authored by economists Mark Weisbrot and Jeffrey Sachs, who determined that sanctions have “inflicted very serious harm to human life” in Venezuela.
“The sanctions are depriving Venezuelans of lifesaving medicines, medical equipment, food, and other essential imports,” Weisbrot, Co-Director of CEPR, said in a press release. For his part, Sachs added, “American sanctions are deliberately aiming to wreck Venezuela’s economy and thereby lead to regime change.”
Weisbrot and Sachs pointed out in the report that sanctions “would fit the definition of collective punishment of the civilian population as described in both the Geneva and Hague international conventions, to which the US is a signatory.”
While the legal groundwork for sanctions was laid by President Obama’s 2015 executive order declaring Venezuela an “unusual and extraordinary threat” to US national security, Washington significantly escalated its unilateral coercive measures in August 2017 when the Venezuelan government and state oil company PDVSA were cut off from financial markets.
The authors contend that the impact of the sanctions went well beyond US financial markets as other international financial actors“had good reason to fear that there would be further sanctions affecting them,” something which would indeed happen later.
The August 2017 sanctions severely affected the country’s oil production, with an estimated US $6 billion in lost oil revenue over the ensuing 12 months. Weisbrot and Sachs argue that the loss in foreign exchange, needed for vital imports of food, medicine and productive inputs, caused by US sanctions, were the “main shock” that pushed Venezuela into hyperinflation in late 2017. They also contend that sanctions have also stunted any possibilities of tackling hyperinflation and Venezuela’s severe economic crisis.
Sanctions were significantly escalated in January, following Juan Guaido’s self-proclamation as “interim president” with strong US backing. The Treasury Department imposed a de facto oil embargo which brought oil exports to the United States from an average of 586,000 thousand barrels per day (bpd) to zero in March. If current production levels were to be maintained in lieu of further plummeting, this drop would amount to another $6.8 billion in lost export revenue.
The CEPR paper highlights that the latest measures further accelerated the decline in oil production, which was compounded by the March electricity crisis. Venezuela’s electric grid has also been severely affected by sanctions, with authorities unable to service equipment, while the oil embargo also led to shortages of fuel necessary to activate backup thermoelectric plants.
Weisbrot and Sachs explain that sanctions, beyond the immediate effect of lowering foreign exchange earnings and the billions worth of assets that have been frozen, have the additional effect of making financial transactions for food and medical imports much more difficult. The risk of violating US sanctions has seen a growing number of banks refuse to work as intermediaries in financial transactions involving the Venezuelan government or state companies.
Based on a number of different studies, the report estimates that sanctions were responsible for 40,000 deaths in 2017-2018, and that there are a further 300,000 people at risk due to lack of access to medicines. This includes “80,000 HIV patients who have not had antiretroviral treatment since 2017, 16,000 people who need dialysis, 16,000 people with cancer, and 4 million with diabetes and hypertension.”
The report likewise argues that sanctions have contributed to a deterioration of Venezuelans’ caloric intake and to malnutrition, with food imports down to $2.46 billion in 2018, from $11.2 billion in 2013. The authors warn that the decline in oil production caused by sanctions could shrink this number even further in 2019.
Weisbrot and Sachs stress that sanctions are illegal under the Organization of American States’ Charter, while pointing out that US officials have explicitly said that their goal is the overthrow of the Maduro government.
“The sanctions also violate US law,” they go on to say, since the executive orders are based on the premise that the US faces a “state of emergency” as a result of the “unusual and extraordinary threat” posed by Venezuela. “This also has no basis in fact,” they add.
[“T]he death toll going forward this year, if the sanctions remain in place, is almost certainly going to be vastly higher than anything we have seen previously,” the report concludes.
Edited by Lucas Koerner from Caracas.