“If the Venezuelan economy has already slowed, it’s going to come to a grinding halt” should the sanctions be fully enforced, Sergio Guzman, of Colombia Risk Analysis, predicted.
The executive order, announced late Aug. 5, freezes Venezuela’s assets in the United States, bans entry to Venezuelan citizens believed to have aided the dictator, and could lead to measures being taken against any countries that continue to trade with Nicolás Maduro’s government.
All business dealings with “property and interests in property of the Government of Venezuela” within the United States will now be prohibited, according to the statement released by White House.
Private Venezuelan businesses aren’t affected, as the order stops short of a full embargo—such as the one enforced on Venezuela’s socialist ally, Cuba. It remains, however, the most symbolic wave of U.S. sanctions to date on the country, enforcing blanket measures instead of targeting individuals—as was previously the case—to break the ongoing political impasse.
“While the order falls short of an outright trade embargo, it represents the most determined U.S. action to remove Maduro since the Trump administration recognized opposition leader Juan Guaidó as Venezuela’s rightful leader in January,” said Geoff Ramsey, assistant director for the Washington Office on Latin America.
Guaidó, the head of the country’s National Assembly, declared himself interim president in January with the backing of the United States and more than 50 other nations, but has yet to succeed in replacing Maduro, who Guaidó says was elected fraudulently.
Under Maduro, Venezuela’s economy has tanked, with oil production in the world’s most oil-rich country plummeting to about a third of what it was just five years ago. Hyperinflation is estimated to reach 10 million percent this year, according to the IMF, with economists widely acknowledging the country’s decline to be the result of mismanagement.
Trump’s order could mean Venezuela’s economic crisis reaches new depths as it joins the likes of North Korea and Iran: Anyone who engages in business deals with the country now risks facing U.S.-forced exile from the international financial system.
“This complicates Maduro’s ability to move funds and to sell crude, restricting his financial capacities,” said Asdrubal Oliveros, economist and director of Venezuelan data analysis firm Ecoanalitica. “Until the political situation is resolved and with this scenario, the Venezuelan economy is going to continue to contract. We estimate that it will fall 39.9 percent this year.”
Caracas officials have branded the latest move “economic terrorism,” while Maduro’s foreign office said it formalizes a “criminal economic, financial and commercial embargo that … has caused deep wounds in Venezuelan society.”
Guaidó has welcomed the order, which he has reiterated “is not an embargo,” as it exempts items such as food, clothing, and medicine, which can alleviate human suffering.
“It is essential to bear in mind that the dictatorship does not have popular support, but a structure whose loyalty is maintained by money stolen from the Republic. This action seeks to protect Venezuelans,” Guaidó wrote on Twitter hours after the order’s announcement, claiming that it protected the country’s assets from corruption.
Questions still remain, however, on how strictly the sanctions will be enforced, and if waivers will be allowed.
“Will there be further exceptions to this; does this embargo mean the U.S. capitulates on trying to seize assets in Venezuela?” Guzman asked, noting that Chevron Corp. has already received a waiver.