Business & Economy

Venezuela feeling sanctions’ impact

By Carlos Seijas Meneses

Caracas, May 9 (EFE).- The sanctions imposed on Venezuela by the United States almost five years ago have divided businessmen and opposition sectors, among whom there are those who are asking for them to be lifted to alleviate their economic impact and those who are pushing for them to be maintained to continue to exert pressure on the Nicolas Maduro government.

Recently, a group of academics, researchers, businessmen and activists sent a letter to US President Joe Biden in which they asked him to continue with “substantive and productive negotiations to resolve the Venezuelan crisis,” focusing on lifting the sanctions, which they said “have not achieved their objective” of driving Maduro from office.

The missive was much criticized by another opposition sector, the members of which also sent a letter to the US leader in which they demanded that the sanctions be strengthened to prevent the “tyranny” in Venezuela from continuing, given that they do not believe that the country’s crisis is the result of these measures but rather of “the theft” of funds that were allocated to improve services.

Economist Victor Alvarez told EFE that the sanctions implemented since 2017 have caused “tremendous damage to the economy and to the society” due to their effects not only on state-run firms but also on private companies and humanitarian organizations.

“The private companies’ accounts have been closed in the US, in the banks and in the financial system of the US. They have lost lines of credit. The providers, who sold them primary materials, supplies, spare parts, machinery (and) equipment, simply don’t want to do business with Venezuela,” Alvarez said.

He said that the “services crisis” has gotten worse due to the fact that the public companies that provide electricity, potable water, gas and telecommunications have also lost their suppliers.

In Alvarez’s opinion, it would be “absurd” to argue that socio-economic conditions have improved thanks to measures that were applied with the aim of “financially suffocating the regime and harming the economy and the society so that discontent might lead to a social explosion that would topple the government.”

Five years after the imposition of the first sanctions – he said – the measures “have not fulfilled their objective” of “removing” Maduro, who “is more bolted down than ever,” while the opposition “looks very divided and weakened.”

The sanctions, he said, have also given the government the “perfect pretext to build a whole new narrative of epic anti-imperialist resistance.”

Economist Omar Zambrano, in contrast to Alvarez, said that there exists “a temporary coincidence between the … sectoral sanctions and the rebirth of Venezuelan economic activity, that has been pulled down by almost eight years of recession.”

Zambrano told EFE that Venezuela has seen an improvement in the last three years in the level of its economic activity, producing “some better levels of wellbeing,” despite the coercive measures.

He said that per capita income in dollars since 2020 has been “recovering by more than 100 percent” and that, starting in 2017, “the import levels of medicines and food (have grown) due to the recovery of the private sector.”

“The worst of the crisis is over, and Venezuela’s economy, sectors and socio-economic indicators are starting to recover within an environment where there are sanctions … The crisis was created without sanctions, and with sanctions we’re getting out of the crisis,” he said.

On April 25, Executive Vice President Delcy Rodriguez said that “more than 502 coercive measures” have “massively (violated) the people’s human rights,” although the majority do not affect the public economy, but rather weigh on the personal assets of officials and members of the Chavista regime, or on their ability to mobilize those resources.

Rodriguez, who did not explain the difference between the various sanctions in place, said that the country’s earnings moved from $52.6 billion in 2013 to “just” $743 million in 2020, or a 99 percent drop in seven years.

Nevertheless, although there have been losses, because of the sanctions, Alvarez said, the state-run PDVSA oil company has been forced to give “enormous discounts” on the crude that it has been able to sell to countries, now that many nations, including the US, have stopped buying.

According to the Ecoanalitica analysis firm, PDVSA lost $4 billion in 2021 due to discounts it had to provide to sell its oil.

Given this situation, Alvarez proposed the creation of international supervised funds into which the additional income received by Venezuela could be deposited after the lifting of sanctions to guarantee that the money would go to alleviating the “humanitarian emergency.”

However, Zambrano said that “the public sector has different objectives in resolving the knots of the humanitarian crisis,” which – in his opinion – is shown by the “sale of 49 percent of the Dominican Republic refinery (Refidomsa), money that did not necessarily go to satisfy humanitarian needs.”

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