Venezuelan sanctions not an embargo but can have same effect
What former US President Barack Obama started in March 2015 to punish the regime of Nicolas Maduro his successor has escalated with gusto. Citing human rights and other abuses in Venezuela, Obama declared a national emergency and blocked access to assets in the US of seven Venezuelans.
With conditions steadily deteriorating in the Latin American country, President Donald Trump has signed six more executive orders broadening and deepening the sanctions. The latest, on Aug. 5, blocks the Venezuelan government’s property and interests in the US.
It also threatens sanctions against non-Venezuelans supporting Maduro, which the US and other countries do not recognize as the country’s president.
Earlier executive orders aimed at hampering access by the Venezuelan government to finance and at blocking business by most US firms with the state oil company, Petroleos de Venezuela SA.
The sanctions are especially damaging to a county gutted by socialist authoritarianism. They do not, however, constitute an embargo.
Without explaining, Sec. of State Michael R. Pompeo added this semantic observation to an Aug. 6 summary of US grievances, saying, “This is not an embargo.”
How can that be?
Daniel Pilarski, a New York partner in the international law firm Watson Farley & Williams, offered an explanation in an Aug. 8 analysis.
“An ‘embargo’ is generally thought of as a comprehensive ban on most or all trade with a specified country or territory,” he said. Even after the new sanctions, most trade remains permitted between US persons and Venezuelan parties not owned by the government.
But not literally being an embargo doesn’t weaken the US program.
Because the government and PDVSA dominate the Venezuelan economy, conducting business in Venezuela will be difficult without them, Pilarski said.
“Even if the sanctions technically are not an embargo, they succeed in shutting down much trade with Venezuela, which has a similar economic effect to an embargo,” he said.
Still to be determined is whether they’ll cure a country that deserves better of centrally planned ruin.
(From the subscription area of www.ogj.com, posted Aug. 9, 2019. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)
Bob Tippee | Editor
Bob Tippee, Editor of Oil & Gas Journal, has written the weekly magazine's editorials since 1981. Since 1996, he also has written a weekly online feature called "Editor's Perspective," which appears first on OGJ Online and later in the print magazine. A member of the OGJ staff since 1977, Tippee has been chief editor since January 1999. He holds a degree in journalism from the University of Tulsa.