Spotlight: Next steps with Venezuela

Despite increased, coordinated international pressure on Venezuela’s Nicolás Maduro, he continues to cling to power. Maduro’s staying power has outlasted the Trump administration’s optimistic timeline, but, in this case, the stated goal of regime change is one worthy of perseverance. The need for a timely solution is exacerbated by the extreme humanitarian crisis – created by years of Maduro regime mismanagement – that has already prompted 3.7 million Venezuelans to flee. In order to achieve its policy objective, the Trump administration’s strategy should be broadened beyond sanctions.

Sanctions are a useful tool when incorporated into a broader strategy, but rarely can sanctions—particularly primarily unilateral sanctions as in the case of Venezuela—fully achieve their stated objective. Even less likely a result from the application of unilateral sanctions is a timely outcome. The Trump administration is nearing the limits of what it can achieve in Venezuela through sanctions alone and a reconsideration of the current strategy is warranted.

In reviewing the strategy toward Venezuela, the Trump administration would be wise to consider five recommendations, laid out below. As with the current sanctions, it is unlikely that a single one of these factors will compel Maduro to cede control, but a thoughtful, revised approach to Venezuela informed by them should exacerbate the pressure on Maduro and create space for necessary political transition.

What are five next steps that can be taken by the US government to increase pressure on the Maduro regime?

Maintain Coordination: The unity of the Lima Group should not be taken for granted nor underappreciated. The willingness of these fourteen key regional governments to recognize interim President Juan Guaidó has magnified the Trump administration’s message and likely helped convince the over fifty countries that have individually recognized Guaidó to do so. As the Trump administration pursues its Venezuela policy, it should continue to do so in close coordination with allies. A broadened strategy should factor in the role of allies and opportunities for multilateral pressure.

Since both Russia and China—two of the five veto-wielding members of the United Nations Security Council (UNSC)—continue to prop up Maduro, the UNSC will continue to fail in achieving its stated goal of maintaining international peace and security, at least as it pertains to Venezuela. While this supposed gold standard of international cooperation remains out of reach, the weight of the loose coalition of likeminded countries supporting Guaidó should not be underestimated. Instead, this likeminded coalition should be consistently engaged in discussions of next steps toward Venezuela. Notably, the Trump administration has been sporadically increasing its efforts to do so, with Vice President Mike Pence’s February participation at the Lima Group and Secretary of State Mike Pompeo’s recent trip to the region to rally support. Such discussions should not be limited to coordinating humanitarian relief (though that is certainly an appropriate start) and should include opportunities for likeminded partners to identify other domestic or international pressure valves that may complement existing US sanctions. As the US considers further domestic actions, sensitivity should be paid to the potential impact on these allies and partners to avoid fracturing an otherwise impressive alliance.

Use Sanctions Effectively: The US currently administers an array of economic and financial sanctions programs with a Venezuela nexus. These sanctions primarily fall under targeted country-specific sanctions, though also include limited narcotics-related sanctions and some historic terrorism-related sanctions (due primarily to the presence in Venezuela of Hizballah). Despite this array of sanctions tools, there is a limit to the additional pressure the US government can project on Maduro through unilateral sanctions. The appetite and capacity for multilateral sanctions is also somewhat limited, though the European Union and Canada, among other likeminded allies, have demonstrated a willingness to use sanctions against Maduro in a targeted way. Notably many of these sanctions to-date have been announced unilaterally, with little evidence of coordination and a lost opportunity to magnify the messaging. For sanctions to be most effective, they should be multilateral in nature and messaging.

If the Trump administration intends to continue its trajectory of unilateral sanctions actions, two of its existing authorities could prove useful.  First, US Executive Order (EO) 13692 allows for sanctions on current and former officials of the government of Venezuela and those who are supporting or acting on behalf of them. EO 13692 has been used to target individuals across the Maduro government – though notably not the Maduro government in its entirety. The same authority has also been used to target a limited number of corrupt actors that prop up the Maduro regime, and further impactful sanctions under this EO on those among Maduro’s corrupt support network, provided they have assets, would likely increase pressure on Maduro. Such pressure could be compounded through coordinated efforts (particularly with the EU) to impose visa bans to eliminate travel opportunities for Maduro’s cronies and his family as well as close off their access to offshore assets. This  authority could also be used to rachet up broader pressure on the Venezuelan military and militia, though any effort to do so must include a well-messaged off-ramp (see below) similar to that in pending congressional legislation. If the messaging is mismanaged, such an action may only drive the military and militia closer to Maduro, strengthening its ranks.

Second, EO 13850 provides for sanctions against any person operating in the gold sector or any other specific sector (such as oil, which the Trump administration has done fairly effectively) of the Venezuelan economy. Maduro has been trying to use Venezuela’s gold to shore up its dwindling foreign currency reserves as the economy collapses and sanctions inhibit his ability to raise foreign currency. Despite this, US sanctions related to the Venezuelan gold sector have been limited to the Venezuelan state-run ferrous metals mining company, Minerven, and its president. Given the outsized role of outside actors in Venezuela’s gold sector, this sector is ripe for action. Calibrated sanctions against the Turkish entities responsible for refining over $900 million worth of Venezuelan gold last year would likely hit Maduro’s coffers. Following the Venezuelan gold trail to Uganda, Russia, the United Arab Emirates, and beyond should identify additional impactful sanctions targets and may also prompt those refining and purchasing Venezuelan gold to reconsider their choice. Thorough due diligence should be completed on any such targets to carefully calibrated any sanctions action and avoid unintended consequences for allies and partners.

When considering further unilateral sanctions, the Trump administration would do well to avoid the secondary sanctions that National Security Advisor John Bolton has threatened to use.  Such sanctions risk fracturing the likeminded alliance (see #1 above) and unnecessarily alienating partners. Also, of great import, the Trump administration must ensure that its humanitarian sanctions exceptions are effective in implementation and not hollow words. There is no faster way to risk loosing the hearts and minds of the Venezuela people than exacerbating the humanitarian crisis, which is the fault of the Maduro regime.

Create Space for Defectors: The combination of over 2,000 generals, militia, and Cuban intelligence officers have solidified Maduro’s rule – for now — and made defections difficult. For Venezuelans unsure of whom they can trust, the path to defection is fraught and narrow, particularly for the military. The Trump administration’s policy toward Venezuela thus far has done nothing to sway would-be defectors toward the risky choice.  Defectors – if they can even make it out of Venezuela – risk any family remaining in Venezuela being intimidated, attacked, or arrested.

In order to encourage defections, financial incentives may help incentivize a shift. For the immediate term, these could include payments accompanied by opportunities for safe relocation for the military members and their families.  For the medium- to long-term, the interim government could undercut Maduro’s financial support to the military with legitimate career opportunities and guaranteed revenue streams under a transition government. Such incentives could include income from PdVSA to facilitate domestic support for transitioning the energy company’s assets. While this may be viewed as a difficult sell to many Venezuelans who saw the military pilfer Venezuela’s domestic resources, it would tie the military’s future income to the shift of legitimate control and effective operation of PdVSA under the interim government. It would also capitalize on the military’s role as the protector of Venezuela and its natural resources in order to solidify its economic future.

Stroking the military’s ego for its role in defending Venezuela borders and maintaining domestic security by incorporating it in future plans for such activities will likely engender good will. The interim government has already tried to capitalize on this notion by offering amnesty to military and police officers who defect from supporting Maduro to align with them. Certainly there are unsavory characters among the ranks, but creating a safe space for the military to transition also creates opportunities for behavioral change. For those among the military ranks responsible for human rights violations and kleptocrats, legitimate prosecution should be pursued.

Be Strategic: As the United States contemplates further Venezuela policy changes, it is essential that any such policies be considered on their merits vis-à-vis Venezuela and not for the secondary or tertiary domestic or political benefits. Frustration over Havana’s “unwavering support” of Maduro, for example, should prompt policy changes that target the means through which Havana supports Maduro – namely through intelligence and economic resources, including oil. Petty policy changes toward Cuba under the guise of attacking Maduro – such as terminating the ability of Cuban baseball players to come to the United States absent human smugglers and rolling back Helms-Burton waivers– risk undermining an otherwise strong international coalition with little tangible impact on Maduro. Efforts to penalize Cuba for its role in Venezuela should instead be strategic and impactful. For example, creating openings for increased engagement and business with Cuban entrepreneurs and the Cuban private sector will empower the nascent middle class and undercut revenue to the Cuban military, intelligence and security services, and therefore indirectly to Maduro. The Trump administration should be weary of further politicizing an already sensitive issue, particularly ahead of the 2020 elections.

Cuba is only one of the external actors bolstering Maduro, however, and the continued support from Russia and China is softening the otherwise sharp blow of US and allied efforts. Historically, Russian economic support bolstered Maduro, but Moscow is expanding its support to counter efforts in favor of the interim government. Moscow sent military planes equipped with supplies and technical advisors to Venezuela and the Russian military is reportedly increasing its presence. The limitless meddling by Moscow in third country affairs warrants a US response; however, such a response is already overdue for Russian interference in the US elections, its illegal annexation of Crimea, and its culpability in the Skripal chemical weapons attack. Rather than addressing Moscow’s interference in Venezuela haphazardly, the Trump administration should develop and implement a thoughtful policy to address and counter Russia’s nefarious activity writ large.

Similarly, Beijing continues to shore up Maduro through economic and military support. By the end of 2018, China provided Venezuela with over $67 billion in energy, mining and infrastructure loans and investments solidifying Beijing’s influence in Venezuela and Maduro’s dependence on China. China continues to accept Venezuelan oil as payment on these outstanding debts with no clear repayment date in sight. Further, China’s sale of military equipment and weapons to Maduro may well have helped arm the very military that fired tear gas and stopped crowds trying to bring humanitarian aid across the border in February. Strategic efforts to contain China’s influence in Venezuela should be made, with an awareness of the significant Venezuelan debt that will likely drive Beijing’s calculus. The Trump administration’s relationship with Beijing, however, is complicated by the ongoing trade dispute, decision to rescind Iran oil waivers, among other factors. As such, a horizontal strategy to convince Beijing to shift its support to the interim government, likely enticed by commitments to repay at least a portion of the outstanding debt, is prudent. This strategy must be broader than Venezuela given the other factors complicating the US-China relationship.

Focus on the Transition not the Individuals: While President Trump and other US government officials have generated an idealized view of Guaidó and the Venezuelan interim government, this focus on Guaidó as an individual threatens to hamper the broader transition process. Instead of projecting a US expectation of democratic transition in Venezuela, US officials need to recognize that any effective transition in Venezuela will likely need to include some of the very people they have been antagonizing. Venezuelan society is not easily divisible into pro- Guaidó or anti-Maduro camps. Moderate Chavistas will need to be incorporated in a meaningful and lasting transition. Government bodies, including the Supreme Court, currently composed of Maduro supporters will need to be carefully reconstituted while retaining those bureaucrats that defect or simply are willing to move forward (assuming they have not committed a crime).

Working closely with international financial institutions, such as the International Monetary Fund, the World Bank, and the InterAmerican Development Bank, the United States should support debt restructuring and lending to help the interim, then new Venezuelan government start off strong. When focusing on its vision for post-Maduro Venezuela, the US should maintain its attention to PdVSA and prioritizing the integrity of the company and its structures to ensure opportunities for legitimate employment and revenue. A transparent plan for credible elections, to include international funding and monitors, must be put in place with the buy-in of the Venezuelan people. No transition is perfect; however, so the US would do well to manage expectations and not allow the perfect to be the enemy of the good.

Samantha Sultoon is a senior fellow with the Atlantic Council’s Global Business and Economics Program and the Scowcroft Center for Strategy and Security.

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Image: Venezuela's President Nicolas Maduro gives a speech during a rally in support of his government in Caracas, Venezuela April 6, 2019. (REUTERS/Manaure Quintero)