Boz, one of the most perceptive analysts of Latin America out there, wrote the following:
If the only Venezuela policy options you can think of are no sanctions, targeted sanctions and oil sanctions, you lack imagination.
— boz (@bloggingsbyboz) August 4, 2017
So I thought about it! Mexico City is conducive to the imagination. And here is what I came up with, in order of reverse crazy.
(1) Blockade: I do not mean “bloqueo” the way Cubans hyperbolically refer to it. I mean a real genuine blockade, nothing in or out. That would strangle the Venezuelan economy. It would also kill small children. And be an act of war. Not a good idea.
(2) Covert action: Venezuela is a perfect target for American covert action. We have full intelligence. We have full cultural understanding. Hell, POTUS is practically venezolano! So it is certainly tempting. But it is still a bad idea. Playing with coups is dangerous, even at home.
(3) Oil sanctions: The United States could stop buying Venezuelan oil. How much would that hurt? Badly, but not as badly as banning American exports to Venezuela. Right now, Venezuela is exporting about 1.9m bpd, expected to fall to 1.7m bpd by the end of the year. Of that, the U.S. takes about 750,000.
Venezuela produces heavy sulfurous crude. That requires specialized refineries to process it. American Gulf coast refineries are so specialized. Elsewhere, not so much: as of 2011, the United States possessed a bit more than half of all heavy-crude refining capacity. (Figure 4.) That has been changing, however, as China builds new capacity. In addition, Europe has some refineries that could process heavy crudes if need be. In other words, alternative markets exist for that 750,000 bpd.
It would cost Venezuela. First, shipping cost estimates run as high as $6 per barrel. (Page 15 and page 25.) That is around $4 more per barrel than to ship to the gulf coast. Second, foreign refineries would need to be bribed to take Venezuelan oil over its counterparts. Third, Venezuela currently imports light oil to blend with its exports in order to make them more palatable for refineries; it would have to import even more if it had to move its oil to refineries less optimized to take it. Switching to other suppliers there would cost another dollar per barrel. Call it a worst-case loss around $7 per barrel. Considering that the Venezuelan export basket fetches around $44, that is a lot.
But it is not catastrophic. The U.S. could wreck Venezuela by imposing a ban suddenly, but that would also hurt U.S. refiners and raise oil prices at home. A phase-in would avoid that, but it would also give the Venezuelans some time to adjust. If the U.S. imposes sanctions, there will be a phase-in, so count against catastrophe.
The awful drawback is that oil sanctions would kill children from the resulting (further) contraction in imports, since the current regime seems to have no compunctions about cutting off supplies to its enemies. And the best case is that the resulting hardship promotes either a coup (see above) or civil war. (Luckily the Russian Federation is broke; otherwise it would also result in a giant Russian naval base in the Caribbean and Tupolevs buzzing U.S. airspace from the south.) I am not a fan of this option.
(4) Criminal indictments: Not a terrible idea, but not likely to work. First, while European law is clear, American law is far fuzzier. Second, it would have the effect of making the regime dig in for fear of what might happen should they step down. And unless we are willing to do a bigger version of Operation Blue Spoon — call that Option Zero — it would not have much effect.
(5) Targeted sanctions: Already happening. Note that people are willing to pay money for power. So good luck with that.
(6) Diplomatic isolation: A great idea, but you run into the problem of the West Indian microstates. Venezuela will not be able to keep buying them off for long, but it has done a good job of it for longer than anyone expected. This resulting diplomatic fracaso is another reason why the West Indies should become one country as of yesterday, as if more reasons were needed, but that’s unlikely to happen before my children battle robot armies in the world revolution or Skynet kills us all.
The list shows imagination, even if the images are mostly stupid. So what else? Well, Boz suggests trying to help the Venezuelan population. I am all in favor of that. But I do not see how it would weaken the regime. Consider Africa: aid has been blamed for propping up dictatorships and prolonging civil wars. (The link is a to a paper by Nathan Nunn and Nancy Qian.) Still, the Nunn and Qian paper suggests that food aid has little to do with starting civil wars, which is what we want to head off in Venezuela. It also finds that the effect is more pronounced in countries with a recent history of civil war, which Venezuela does not have. (Mostly.) So it probably will not lead to war but it could prop up the dictatorship.
Is this missing anything? Help! A great American nation needs your ideas.
Venezuela is not the only issue here. The country is full of Cuban operatives, literally 1000's of them. They even control the notaries and identification services. The support shown by the military for the regime is no coincidence. Chavez spread out tons of money amongst them and gave them lots of opportunity to have rabos de paja, tolerated drug running and other antics. The Cubans learned from the the Chile experience and rapidly targeted the Vzln military to emasculate it. The G2 has totally permeated the Vzln military. Only Chavez loyalists and racketeering milicos are left.
Measures should also include Cuba. Taking out the Alba-1 fibre-optic internet cable would be one relatively easy option to make life difficult for the Cuban handlers. It was tended to give the Cuban people access to intent and defeat the gringo blockade, or at least the regime sold it as that.
Vzla has already been intervened by a foreign government.
Posted by: Nebelwald | August 12, 2017 at 07:33 PM
Well President Trump hasn't ruled out Option Zero - Operation Blue Spoon: The Caracas Edition
What would such an operation look like and what might it conceivably achieve?
Posted by: J.H. | August 13, 2017 at 12:29 PM