US Sanctions Against Venezuela Will Hurt Americans
After fifty years of imposing embargoes and other sanctions, the United States never managed to topple Cuba's communist regime. After forty years of the same in Iran, the US met with similar amounts of success. Ongoing sanctions against North Korea have not toppled to regime there.
But, some people in Washington won't let decades of failure dissuade them.
Last week, Congressman Mike Coffman (R-Colo.) introduced new legislation to bar Americans from importing oil products from Venezuela. The Washington Examiner reports:
[T]he Protecting Against Tyranny and Responsible Imports Act, or the PATRIA Act ... would target Venezuelan President Nicolas Maduro after he stripped the country's democratically elected national assembly of its power and authority. According to the bill, the proposed ban on imports would last until the assembly's power is fully restored.
"The goal is to change the conduct, the character of the Venezuelan government under Maduro. I think the window is closing," Coffman told the Washington Examiner. "They are dependent upon the export of oil really to fund their government, and without that, they can't pay their security forces."
Experience suggests there is little reason to believe that sanctions will cause the regime to give up in Venezuela. If the regime has less oil money with which to pay the military, the regime can always steal more from the average citizen to make up the difference. In other words, ordinary Venezuelans will suffer more in response to US sanctions.
Moreover, aggressive moves such as these against the Venezuelan regime have tended to only solidify support for the regime among its supporters. Both the current president Maduro, and his predecessor Hugo Chávez, were both successful in building support for themselves on a platform of opposing US meddling in Venezuelan political and economic institutions.
When the US threatens to intervene in local politics, this only strengthens the resolve and support of the regime's supporters.
The US has already been acting in a reckless manner in this regard, as illustrated by President Donald Trump's recent speculations about invading Venezuela to effect regime change. As noted by Daniel Politi at Slate, American threats directed at the Venezuelan regime do nothing to help the opposition:
Throughout his power grab that has accompanied Venezuela’s descent into chaos, Maduro has long warned the United States was planning to invade the country. Trump’s words seemed to play straight into his narrative, recalling a time when Washington saw Latin America as its backyard where it could intimidate governments into doing its bidding. “Maduro must be thrilled right now,” said Mark Feierstein, who was a senior aide on Venezuela to former president Barack Obama. “It's hard to imagine a more damaging thing for Trump to say.”
Similarly, threatening Venezuela with more sanctions — something that may make the regime even more violent and desperate — do nothing to help the Venezuelan people in general, and only energize the regime's base.
Coffman claims the sanctions would be lifted if the Venezuelan regime were to restore the prerogatives and power of the national legislature, which has essentially been disbanded by Maduro.
RELATED: "Are Oil Prices to Blame for the Venezuelan Crisis?" by Daniel Fernández Méndez
In recent months, the Venezuelan regime has rapidly become more dictatorial as forces loyal to Maduro have increasingly clamped down on opposition politicians and essentially ignored the results of recent elections that have brought many opposition leaders to power in the National Assembly.
The working philosophy here, apparently, is that the imposition of sanctions will force the Venezuelan regime to democratize in response. One would be hard pressed to find examples of similar tactics actually working, however.
More astute observers might also ask why — if Coffman is so committed to democracy — he hasn't called for similar embargoes of Saudi Arabian oil. The Saudi regime, of course, has been a dictatorship ever since its founding, sponsors international terrorism, and tolerates no religious freedom or freedom of speech. The Saudi regime, for instance, routinely arrests critics of the regime, and the regime's spokesman has outright denied that elections should be allowed in Saudi Arabia.
If human rights are of such pressing concern to the Congressman, its unclear why Venezuela is at the top of the sanctions list.
As with all Trade Sanctions, Americans Suffer
As with any discussion of sanctions, of course, we need not even consider the strategic futility of sanctions, or the morality of foreign regimes.
Far from being a matter only of concern to foreigners, US sanctions are built on the cornerstone of limiting the freedoms of Americans.
As I noted earlier in regards to the Cuban embargo:
[S]upporting an embargo means supporting the government when it fines, prosecutes, and jails peaceful citizens who attempt to engage in truly free trade. Support for an embargo also requires support for a customs bureaucracy that spies on merchants and consumers, and the whole panoply of enforcement programs necessary to punish those who run afoul of the government’s arbitrary pronouncements on what kind of trade is acceptable, and what kind is verboten. Naturally, this is all paid for by the taxpayers...
At their heart, embargoes are nothing but a specific type of prohibition. Sometimes, the government imposes prohibitions on transactions involving certain goods, such as cannabis. Other times, the prohibition extends to all transactions with people in a certain place. The fundamentals are the same, however, in that they prohibit peaceful exchange, with heavy penalties for violators.
In the case of a new embargo against Venezuela, the effect would be to place prohibitions on American importers, and thus drive up prices for oil and energy for all Americans. Government bureaucrats would be dispatched to monitor private industry to make sure they don't violate the prohibitions. Government agents will impose fines, and make arrests if necessary. The American government will become more powerful at the expense of American consumers and American taxpayers.
Indeed, this has already been going on with smaller-scale sanctions imposed by the Trump administration against Citgo oil refineries. Thanks to the sanctions, Citgo refineries in the US, which constitute four percent of American fuel capacity, and which employ American workers, are finding it more costly to obtain the oil they need for the refineries. Both domestic and foreign suppliers must scramble to work around the new regulations in order to avoid fines and lawsuits from government regulators who oversee trade. The effect of this will be to put pressure on more marginal employees and on more marginal operations, leading to layoffs and diminished refining capacity. Ultimately, it is Americans who will pay the price.
Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for Mises Wire and The Austrian, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.