The Donald J. Trump administration has just announced an economic embargo intended to put an end to Nicolas Maduro’s authoritarian regime in Venezuela. In a letter to Congress on Monday, Trump said that the embargo was due to Maduro’s “continued usurpation of power.”
Trump’s economic embargo targets any company or individual outside of Venezuela doing business with Maduro’s government. Companies that support the regime indirectly are also targeted. All Venezuelan government assets in the United States are now frozen.
Although the new measures represent a significant escalation from previous sanctions, which mainly targeted government officials and some key industries such as oil and gas, gold and finance, the embargo is unlikely to work.
Too Late for Embargo
After years of mismanagement and corruption by Maduro’s government, the Venezuelan economy is already in shambles. The minimum wage (roughly $7 per month) is not enough to cover basic goods for family of five, according to a report published by the U.N. in July. The IMF has recently announced that hyperinflation has hit 10 million percent annually.
Since this has been a gradual decline, wealthy people in general and corrupt government officials in particular have had time to put their money in foreign markets. In the case of corrupt officials from Maduro’s regime, many have moved their fortunes to European and Asian markets. American sanctions don’t have the same weight they might have had several years earlier.
An Embargo that Falls Short
Although the embargo constitutes the strongest sanction imposed by the United States on Maduro’s regime so far, it falls short of being a full trade embargo. Imports and exports with the private sector are unaffected, as are remittances of Venezuelans living abroad.
Trade with the private sector and the influx of dollars from remittances will likely keep the ailing Venezuelan economy afloat for some time. An incomplete embargo will not provoke complete economic collapse.
Poor Will be Most Affected
Today most people in Venezuela are poor. The U.N. estimates that 90 percent of people live in poverty, compared to 48 percent in 2014.
In Venezuela’s dollarized economy, some people obtain dollars from the remittances sent by family members (over four million Venezuelans have left the country since the crisis intensified four years ago). Others had the opportunity to save in dollars before the intensification of the crisis.
However, the vast majority of the population does not have access to dollars. They are the ones who are starving, who constantly experience shortages of food and medicine, and who rely on government subsidies to survive. They will be the ones who will suffer the most with Trump’s economic embargo, not Maduro’s corrupt government.
Lack of Support from China and Russia
When the Trump administration led efforts earlier this year to recognize Juan Guaido as the legitimate president of Venezuela, China and Russia ignored the pledge. This occurred despite wide support to the U.S. move by the international community, including the European Union, Canada, Australia, and most Latin American countries.
In addition, every time the United States has tried to pass resolutions against Maduro’s regime at the U.N. Security Council, they have been shot down by Russia and China, which hold veto power as permanent members.
While China sees economic opportunities in Venezuela’s vast natural resources, Russia sees the South American nation as a strategic geopolitical partner in the Western hemisphere, in its efforts to undermine American influence.
Neither of the two countries will support an economic embargo to Venezuela.
Cuba’s Failing Embargo
Finally, as in the case of Cuba, which celebrated the 66th anniversary of its revolution this year, the U.S. embargo on Venezuela is unlikely to produce regime change.
Instead, it will fuel Maduro’s anti-American rhetoric and will give him more ammunition to blame the U.S. for the country’s economic woes.