The Power and the Money

Thinking outside the box on Venezuela

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. 

Trump immigration raids are for white voters in the Midwest

The Trump administration may or may not be seriously considering mobilizing the National Guard to deport illegal immigrants. (The link goes to the draft memo, not a secondary source.) The reason why the administration would need state governors to agree is that a federal mobilization of the ARNG to enforce domestic law would violate the Posse Comitatus Act. (Again, the link is to the actual text.)

But the Trump administration has begun making spectacular immigration raids. Those raids, however, are not picking up very many people: only 680 in the first week, according to this report. And the deportees are all criminals, whom the Obama administration was already deporting in massive numbers. 

So what is the point? Two possibilities.

1. This is just the start of a massively stepped-up program, including those National Guard mobilizations and lots of new federal spending.
2. This is intended to give Trump voters a sense that something dramatic is being done. The terror that it strikes among immigrants is collateral damage. (Or maybe collateral benefit, from Steve Bannon’s point of view.) 

Considering that this administration appears to be the opposite of a well-oiled machine in terms of management ability, but does seem to be taking the permanent campaign to a new level, I would bet on the latter. Like the infamous taco bowl tweet from the campaign, this is aimed squarely at angry white voters. 

The Ku Klux Klan really is different

 I need to point this out? This survey purports to show that Democrats are not a whole lot more tolerant than Trump supporters regarding the political rights of groups they dislike. Except, well, the measure really showed that Rubio supporters were as willing to deprive Ku Klux Klan members of political rights as Trump supporters were of “Islamic fundamentalists.” Meanwhile the Democrats, Cruz people, and Kasichistas were even more tolerant of Ku Klux Klan members than the Rubio people. 

Got that? Everybody but Trump supporters picked the terrorist organization called the KKK as their most disliked group and supported depriving members of said terrorist organization of at least some political rights.

Meanwhile, Trump supporters wanted to deprive Islamic fundamentalists of some political rights, which would be terrible, except I suspect that many of them read “fundamentalist” as “terrorist.” The survey did not ask about Muslims, it asked about the far more loaded term “Islamic fundamentalist.” Which therefore makes the results suspect, because the term is so easy to misread and what normal citizen of any country would be against banning violent organizations bent on killing civilians?

In short, maybe it is true that Trumpists have no monopoly on intolerance. But unless I completely misunderstood footnote #1, all this survey measures is intolerance towards an American terrorist organization for non-Trump supporters, which it then compares to how much Trump supporters dislike non-American terrorists. Why that information is interesting is a bit beyond me. 

Syrians to South America?

 Here is a question for you: why aren’t flights from the Middle East to South America crowded with Syrian refugees?

On paper, most of the Southern Cone countries have remarkably liberal immigration regimes. Start with Argentina. Refugees are automatically accorded two years of residency and receive legal representation. (See the 2010 Migration Act.) Now, the law is not as liberal as American activists would have you believe: undocumented migrants can still be deported (page 17), but the Argentine government has explicitly opened its doors to Syrian migration. Uruguayan immigration law is even more liberal than Argentine. All you need to do to migrate to Uruguay is demonstrate an income stream of $500 per month. After that, naturalization comes within a few years. Brazil has a liberal new refugee law. 

The problem isn’t cost. A ticket costs around $800, rather less than the monetary cost of making it overseas to Europe. 

But in practice, all three countries are pretty much closed.

Start with the official Argentine program for Syrian refugees. The refugees need to have links to an Argentine sponsor either through family ties (out the fourth generation) or via a “pre-existing personal relationship based on whatever legal, reasonable, and justifiable reason: family, social, educational, work, etcetera.” 

Unless a Syrian in a camp somewhere can demonstrate a tangible documented link with somebody in the Argentine Republic, then they do not get a visa. This policy lets Buenos Aires claim that the doors are open while actually keeping them firmly shut. 

The policy may change, depending on how seriously Argentine authorities take the definition of a family link. Supposedly, 4 million Argentines trace some ancestry to Syria. In reality, no. In the peak years of 1897-1913, net migration from Syria came to about 103,000. To get from that to 4 million you have to assume almost total exogamy, which is not likely. (For the pedantic: if you assume the same birthrates as the general Argentine population, a generation of 35 years, and total exogamy, then about 3.4 million Argentines should have some “Syrian” ancestry by now.)

Moreover, a 1936 census registered only 11.2% of the Syrian-born residents of Buenos Aires as Muslim. (Page 17, once again.) Some of that is surely conversion, but it also implies that the “Syrians” came much more from Lebanon than from Syria.  

Nor is this policy in violation of Argentine refugee law. Article 10 exempts anyone under U.N. protection. Article 11 exempts anyone who has “voluntarily settled inside or outside the country which he left owing to fear of persecution.” Depending on the definition of “voluntarily settled,” that could include precisely every Syrian refugee. It certainly includes anyone in a UNHCR camp. Only a few hundred people have escaped under this not-so-generous regime. 

Uruguay is worse. After the country took in a whopping 42 refugee families, a counterreaction set in, and the door are now firmly shut. In theory, the country has pledged to admit ... wait for it ... 120. Now, Uruguayan law opens up an interesting way from European countries to send their unwanted refugees to Uruguay: give them an airplane ticket and a $500 per month stipend. That said, given what happened with the 42 refugees the law would be changed right quick if a European government tried to take advantage of it. 

Chile, meanwhile, has a liberal refugee law that only considers people who manage to make it to Chilean territory. So no visa for that plane ticket from Dubai. 

And then there is Brazil, which had settled 1,740 Syrian refugees as of March, and 2,077 as of this month. That is nice, but still a very small number. The Brazilian issue is that the bureaucracy is slow, so even without formal quotas few applications get processed. (The Brazilians also exempt anyone under U.N. protection.) It is probably the most open, but still not enough for a mass exodus.

The Brazilian case shows how much bureaucracy can turn an ostensibly open process into a closed one. The Mexican government is coming under a surprising amount of domestic pressure to accept 10,000 refugees. I bet there will even be a bill. And it will sound good.

But the devil will be in the details. Do not wait for Latin America to open its doors in any serious way.

Recommended reading on migration

Three recommendations. First, for those of you with a casual interest in the topic, there is a very brief review paper by Joseph Ferrie (Northwestern) and Timothy Hatton (Essex) on the last two centuries of international migration. (The paper actually covers the last four centuries, although it moves quickly over the 17th and 18th centuries.)

Second, Paul Collier’s new book, Exodus. It is a very well-written and thought-provoking brief in favor of immigration restrictions. If you click the link, it will take you to multiple reviews of the book. Most of the negative ones are tendentious and a little strange. This fellow here argues that countries should abandon all income redistribution in order to facilitate open borders. In that, he concedes Collier’s main argument, which is precisely that unlimited immigration could destroy the national sentiments that underpin liberal democracies. (Collier has a fascinating discussion of the theoretical circumstances under which this might happen; it is not a blanket argument. A blanket argument would obviously be stupid.) Nathan Smith at Open Borders starts by conceding Collier’s main point and calling for countries to impose special taxes on migrants instead of preventing their entry. (As an American, I recoil at that idea: differential taxation based on birthplace is contrary to the 14th Amendment. It is an odd suggestion for a proponent of open borders.) He follows up by saying that democracy is bad as part of an attack on Why Nations Fail, by Jim Robinson and Daron Acemoglu.To be fair, I am not sure that he realizes that he is arguing that democracy is bad. (I should mention that Jim Robinson is a friend.) Kenan Malik argues against a caricature of the book. One of the best parts about Exodus is how Collier lays down the conditions under which a diaspora will grow indefinitely and those under which it will not. Malik, however, writes, “A key argument in Exodus is that the levels both of migration and of problems created by it are linked to the size of diasporas.” Well, sometimes! But not always. I was left unclear what troubled Malik, other than that Collier is wrong about Great Britain. (Not being British, I can’t say, although Collier explicitly gives large shout-outs to the U.S. and Canada for our ability to assimilate immigrants.)

Finally, here is an incredible bit of investigative reporting into a Nigerian human trafficking ring. It is horrifying ... and quite amazing how the reporters made their escape.