Garikai Chengu / Global Research & Alexander Campbell / The Center for Economic and Policy Research – 2019-02-11 00:45:51
Sanctions of Mass Destruction
Garikai Chengu / Global Research
(January 30, 2019) — American economic sanctions have been the worst crime against humanity since World War Two. America’s economic sanctions have killed more innocent people than all of the nuclear, biological and chemical weapons ever used in the history of mankind.
The fact that for America the issue in Venezuela is oil, not democracy, will surprise only those who watch the news and ignore history. Venezuela has the world’s largest oil reserves on the planet.
America seeks control of Venezuela because it sits atop the strategic intersection of the Caribbean, South and Central American worlds. Control of the nation, has always been a remarkably effective way to project power into these three regions and beyond.
From the first moment Hugo Chavez took office, the United States has been trying to overthrow Venezuela’s socialist movement by using sanctions, coup attempts, and funding the opposition parties. After all, there is nothing more undemocratic than a coup d’etat.
United Nations Human Rights Council Special Rapporteur, Alfred de Zayas, recommended, just a few days ago, that the International Criminal Court investigate economic sanctions against Venezuela as a possible crime against humanity perpetrated by America.
Over the past five years, American sanctions have cut Venezuela off from most financial markets, which have caused local oil production to plummet. Consequently, Venezuela has experienced the largest decline in living standards of any country in recorded Latin American history.
Prior to American sanctions, socialism in Venezuela had reduced inequality and poverty whilst pensions expanded. During the same time period in America, it has been the absolute reverse. President Chavez funneled Venezuela’s oil revenues into social spending such as free+6 healthcare, education, subsidized food networks, and housing construction.
In order to fully understand why America is waging economic war on the people of Venezuela one must analyse the historical relationship between the petrodollar system and Sanctions of Mass Destruction: Prior to the 20th century, the value of money was tied to gold. When banks lent money they were constrained by the size of their gold reserves.
But in 1971, US President Richard Nixon took the country off the gold standard. Nixon and Saudi Arabia came to an Oil For Dollars agreement that would change the course of history and become the root cause of countless wars for oil. Under this petrodollar agreement the only currency that Saudi Arabia could sell its oil in was the US dollar. The Saudi Kingdom would in turn ensure that its oil profits flow back into US government treasuries and American banks.
In exchange, America pledged to provide the Saudi Royal family’s regime with military protection and military hardware.
It was the start of something truly great for America. Access to oil defined 20th-century empires and the petrodollar agreement was the key to the ascendancy of the United States as the world’s sole superpower. America’s war machine runs on, is funded by, and exists in protection of oil.
Threats by any nation to undermine the petrodollar system are viewed by Washington as tantamount to a declaration of war against the United States of America.
Within the last two decades Iraq, Iran, Libya and Venezuela have all threatened to sell their oil in other currencies. Consequently, they have all been subject to crippling US sanctions.
Over time the petrodollar system spread beyond oil and the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. This system allows America to maintain its position of dominance as the world’s only superpower, despite being a staggering $23 trillion in debt.
With billions of dollars worth of minerals in the ground and with the world’s largest oil reserves, Venezuela should not only be wealthy, but her people the envy of the developing world. But the nation is essentially broke because American sanctions have cut them off from the international financial system and cost the economy $6 billion over the last five years. Without sanctions, Venezuela could recover easily by collateralizing some of its abundant resources or its $8 billion of gold reserves, in order to get the loans necessary to kick-start their economy.
In order to fully understand the insidious nature of the Venezuelan crisis, it is necessary to understand the genesis of economic sanctions. At the height of World War Two, President Truman issued an order for American bombers to drop “Fat Man” and “Little Boy” on the cities of Hiroshima and Nagasaki, killing 140,000 people instantly.
The gruesome images that emerged from the rubble were broadcast through television sets across the world and caused unprecedented outrage. The political backlash forced US policy makers to devise a more subtle weapon of mass destruction: economic sanctions.
The term “weapons of mass destruction” (WMD) was first defined by the United Nations in 1948 as “atomic explosive weapons, radioactive material weapons, lethal chemical and biological weapons, and any weapons developed in the future which have characteristics comparable in destructive effect to those of the atomic bomb or other weapons mentioned above”.
Sanctions Are Clearly the 21st Century’s
Deadliest Weapon of Mass Destruction
In 2001, the US administration told us that Iraq had weapons of mass destruction; Iraq was a terrorist state; Iraq was tied to Al Qaeda. It all amounted to nothing. In fact, America already knew that the only weapons of mass destruction that Saddam had were not nuclear in nature, but rather chemical and biological. The only reason they knew this in advance was because America sold the weapons to Saddam to use on Iran in 1991.
What the US administration did not tell us was that Saddam Hussein used to be a strong ally of the United States. The main reason for toppling Saddam and putting sanctions on the people of Iraq was the fact that Iraq had ditched the Dollar-for-Oil sales.
The United Nations estimates that 1.7 million Iraqis died due to Bill Clinton’s sanctions; 500,000 of whom were children. In 1996, a journalist asked former US Secretary of State, Madeleine Albright, about these UN reports, specifically about the children. America’s top foreign policy official, Albright, replied:
“I think this is a very hard choice, but the price – we think the price is worth it.”
Clearly, US sanctions policies are nothing short of state-sanctioned genocide.
Over the last five years, sanctions have caused Venezuelan per capita incomes to drop by 40 percent, which is a decline similar to that of war torn Iraq and Syria at the height of their armed conflicts. Millions of Venezuelans have had to flee the country.
If America is so concerned about refugees, Trump should stop furthering disastrous foreign policies that actually create them. Under Chavez, Venezuela had a policy of welcoming refugees. President Chavez turned Venezuela into the wealthiest society in Latin America with the best income equality.
Another much vilified leader who used oil wealth to enrich his people, only to be put under severe sanctions, is Muammar Gaddafi. In 1967 Colonel Gaddafi inherited one of the poorest nations in Africa; however, by the time he was assassinated, Gaddafi had turned Libya into Africa’s wealthiest nation. Perhaps, Gaddafi’s greatest crime, in the eyes of NATO, was his quest to quit selling Libyan oil in US Dollars and denominate crude sales in a new gold backed common African currency.
In fact, in August 2011, President Obama confiscated $30 billion from Libya’s Central Bank, which Gaddafi had earmarked for the establishment of an African Central Bank and the African gold-backed Dinar currency.
Africa has the fastest growing oil industry in the world and oil sales in a common African currency would have been especially devastating for the American dollar, the US economy, and particularly the elite in charge of the petrodollar system.
It is for this reason that President Clinton signed the now infamous Iran-Libya Sanctions Act, which the United Nations Children’s Fund said caused widespread suffering among civilians by “severely limiting supplies of fuel, access to cash, and the means of replenishing stocks of food and essential medications.” Clearly, US sanctions are weapons of mass destruction.
Not so long ago, Iraq and Libya were the two most modern and secular states in the Middle East and North Africa, with the highest regional standards of living. Nowadays, US Military intervention and economic sanctions have turned Libya and Iraq into two of the world’s most failed nations.
“They want to seize Libya’s oil and they care nothing about the lives of the Libyan people,” remarked Chavez during the Western intervention in Libya in 2011.
In September 2017, President Maduro made good on Chavez’s promise to list oil sales in Yuan rather than the US dollar. Weeks later Trump signed a round of crippling sanctions on the people of Venezuela.
On Monday, US National Security adviser John Bolton announced new sanctions that essentially steal $7 billion from Venezuela’s state owned oil company. At that press conference Bolton brazenly flashed a note pad that ominously said “5,000 troops to Colombia”. When confronted about it by the media, Bolton simply said,
“President Trump stated that all options are on the table”.
America’s media is unquestionably the most corrupt institution in America. The nation’s media may quibble about Trump’s domestic policies but when it comes to starting wars for oil abroad they sing in remarkable unison. Fox News, CNN and the New York Times all cheered the nation into war in Iraq over fictitious weapons of mass destruction, whilst America was actually using sanctions of mass destruction on the Iraqi people. They did it in Libya and now they are doing it again in Venezuela.
Democracy and freedom have always been the smoke screen in front of capitalist expansion for oil, and the Western Media owns the smoke machine. Economic warfare has long since been under way against Venezuela but military warfare is now imminent.
Trump just hired Elliot Abrams as US Special Envoy for Venezuela, who has a long and torrid history in Latin America. Abrams pleaded guilty to lying to Congress about the Iran Contra affair, which involved America funding deadly communist rebels, and was the worst scandal in the Reagan Era. Abrams was later pardoned by George Bush Senior. America’s new point man on Venezuela also lied about the largest mass killing in recent Latin American history by US trained forces in El Salvador.
There is nothing more undemocratic than a coup d’etat. A UN Human Rights Council Rapporteur, Alfred de Zayas, pointed out that America’s aim in Venezuela is to “crush this government and bring in a neoliberal government that is going to privatise everything and is going to sell out, a lot of transitional corporations stand to gain enormous profits and the United States is driven by the transnational corporations.”
Ever since 1980, the United States has steadily devolved from the status of the world’s top creditor country to the world’s most indebted country. But thanks to the petrodollar system’s huge global artificial demand for US dollars, America can continue exponential military expansion, record breaking deficits and unrestrained spending.
America’s largest export used to be manufactured goods made proudly in America. Today, America’s largest export is the US dollar. Any nation like Venezuela that threatens that export is met with America’s second largest export: weapons, chief amongst which are sanctions of mass destruction.
Garikai Chengu is an Ancient African historian. He has been a scholar at Harvard, Stanford and Columbia University. Contact him on garikai.chengu@gmail.com
The original source of this article is Global Research
Copyright Garikai Chengu, Global Research, 2019
What’s the Deal with Sanctions in Venezuela,
And Why’s It So Hard for Media to Understand?
Alexander Campbell / Global Research & the Center for Economic and Policy Research
(February 7, 2019) — Last week, the US formally adopted sanctions on Venezuelan national oil company PDVSA, as well as on CITGO, its US-based distribution arm, as part of its press for regime change in Caracas. National Security Advisor John Bolton estimated the actions would affect some $7 billion in assets and would block $11 billion in revenue to the Venezuelan government over the next year. The State Department was quick to add:
“These new sanctions do not target the innocent people of Venezuela . . . “
But of course they do. The Wall Street Journal reported:
The sanctions could create deeper gasoline shortages in Venezuela. The country’s refineries are already operating at a fraction of their capacity, crippled by a lack of spare parts and crude. Venezuela only produced a third of the 190,000 barrels of gasoline it consumed a day as of November, according to Ivan Freites, a leader of the country’s oil union.
“Immediately, it’s going to hurt the average Venezuelan,” Mr. Freites said.
Meanwhile, The New York Times noted:
But just across the street, a group of senior citizens waiting in line to collect their pensions worried that the Trump administration’s actions would further bankrupt their country and deepen the humanitarian crisis that has left so many starving, sick and without basic services.
“The United States has no business meddling in this,” said Aura Ramos, 59, a retiree who can barely afford blood pressure medicine. “It’s the regular people who will be affected.”
The Washington Office on Latin America released a statement criticizing the announced sanctions, writing:
However, we are deeply concerned at the potential for the recently announced US sanctions to intensify the severe hardships and suffering that millions of Venezuelans are enduring. Venezuelans are already facing widespread scarcities of essential medicines and basic goods. Venezuela’s oil exports represent the main source of hard currency used to pay for imports.
Without this revenue, it is clear that the importation of food and medicine could be put at risk. In turn, this will further accelerate a migration and refugee crisis that has strained neighboring countries and put many of the over 3 million Venezuelan migrants and refugees at risk.
It appears as though there is increasing acceptance of the basic fact that the US sanctions on Venezuela will have a negative impact on the people of Venezuela, but all this analysis misses two important points. First, the Trump administration had already imposed broad economic sanctions in 2017, though apparently both The Wall Street Journal and New York Times were unaware of this development.
From the same WSJ article:
. . . this week’s sanctions mark the first targeting of Venezuela’s lifeblood industry, which accounts for nearly all of the country’s hard currency income. Until now, US sanctions were largely limited to individuals in Venezuela’s regime.
Another example from a NYT article a few days earlier:
The oil sanctions amount to the first punitive action taken by the United States against Mr. Maduro since the power struggle in Caracas erupted last week, and it is intended to starve the government of Mr. Maduro of cash and foreign currency. Oil production in Venezuela has already plummeted because of mismanagement and poor policies, and the country’s economy is in shambles.
These examples are certainly not alone in their misunderstanding of the sanctions — and their impact on the oil industry. But it’s not terribly difficult to find information on the impact of the 2017 sanctions. Venezuelan economist Francisco Rodriguez provided a useful analysis last year explaining just this — and it is even in English.
Rodriguez’s basic story: the oil industry is critical to the Venezuelan government; underinvestment and the rapid decline in oil prices caused a significant drop in revenue; then, as oil prices began increasing, Trump imposed sanctions making any international financial transaction extremely difficult and potentially “toxic.”
The positive economic impacts of “Chavismo” in Venezuela.
Rodriguez explains, using this graph of oil production in Venezuela and Colombia, how Venezuelan and Colombian oil production both declined at the same rate, until the Trump financial embargo was implemented in August 2017. Then, Venezuela’s oil production collapsed:
It is striking that the second change in trend in Venezuela’s production numbers occurs at the time at which the United States decided to impose financial sanctions on Venezuela. Executive Order 13.808, issued on August 25 of 2017, barred US persons from providing new financing to the Venezuelan government or PDVSA. Although the order carved out allowances for commercial credit of less than 90 days, it stopped the country from issuing new debt or selling previously issued debt currently in its possession.
The Executive Order is part of a broader process of what one could term the “toxification” of financial dealings with Venezuela. During 2017, it became increasingly clear that institutions who decided to enter into financial arrangements with Venezuela would have to be willing to pay high reputational and regulatory costs. This was partly the result of a strategic decision by the Venezuelan opposition, in itself a response to the growing authoritarianism of the Maduro government.
It’s not just the media’s apparent amnesia with regard to those 2017 sanctions and their impact on the oil industry that is the problem here. In fact, the impact of those sanctions was even larger.
As my colleague, Mark Weisbrot has previously explained, and as Rodriguez notes in the same article linked above, the sanctions made it virtually impossible for the Venezuela government to take the measures necessary to eliminate hyperinflation or recover from a deep depression. Such measures would include debt restructuring, and creating a new exchange rate system (Exchange Rate Bases Stabilization), in which the currency would normally be pegged to the dollar.
But it actually gets worse. When the US first announced its recognition of Juan Guaido as president of Venezuela on January 23, the decision was met largely with applause within the foreign policy establishment. It seemed like nobody bothered to think about what, practically and economically, the decision would mean.
Since Trump’s election, and his increasingly threatening rhetoric in relation to Venezuela, there has been wide agreement that a full-scale oil embargo would be terrible, both for Venezuela and the US. Yet somehow hardly anyone realized that by recognizing Guaido, the US was de facto putting an oil embargo in place.
Once again we turn to Rodriguez who, for what it’s worth, has been publicly supportive of the decision to recognize Guaido and wrote the following on January 28, [1] a day before the most recently announced sanctions:
By giving it the legal authority to invoice Venezuelan oil, the decision to recognize the Guaido administration, therefore, would have the same implications for bilateral trade of an oil embargo. Applied by the countries that provide for nearly three-fourths of Venezuela’s imports, the decisions can be expected to have a significant effect on the country’s capacity both to produce oil and import goods.
As a result, we expect Venezuela’s oil production to decline by 640tbd to 508tbd in 2019 (a fall of 55.7%), as opposed to our prior forecast of 1,070tbd. Exports will fall to USD 13.5bn (USD 12.3 billion from oil), nearly half our previous estimate of USD 23.8 billion. Imports of goods will decline to USD 7.0 billion, a 40.3% decline (we expect the entrance of some humanitarian aid as well as the default on payments of all debt to cushion the fall).
Venezuela’s economy is highly import-dependent, as illustrated by the strong empirical correlation between import and GDP growth. As a result of the additional import crunch, we expect Venezuela’s economy to contract by 26.4%, as opposed to our previous forecast of 11.7%.
The impact is clear. The decision to formally recognize Guaido will have a massive economic impact on the people of Venezuela — irrespective of sanctions, oil embargos or whatever else is announced. The Trump administration succeeded in de facto implementing an oil embargo, without taking any of the heat they would have if it were done explicitly.
And then this week, the Trump administration announced broader trade sanctions that appeared to make explicit by the recognition of a parallel government, with some specific carve outs for American oil companies already in Venezuela, like Chevron and Halliburton.
Of course, there are plenty of people who will argue that this pain and suffering is worth it in order to force Maduro from power. That’s their right, but the media should force them to make that argument openly, and honestly confront the pain and suffering these policies will inflict.
Finally, if asking for the media to get the sanctions story right is too much, maybe they can give some coverage to the fact that National Security Advisor John Bolton went on national TV and openly said the following:
It will make a big difference to the United States economically if we could have American oil companies really invest in and produce the oil capabilities in Venezuela. It would be good for the people of Venezuela. It would be good for the people of the United States. We both have a lot at stake here making this come out the right way.
A decimated oil industry in the nation with the largest proven oil reserves in the world would appear to serve some alternative interests beyond “democracy” and “human rights.”
Note
[1] Francisco Rodriguez, “Ecuador & Venezuela This Week,” Torino Economics and Torino Capital Group Company, January 28, 2019.
The original source of this article is Center for Economic and Policy Research
Copyright, Alexander Campbell, Center for Economic and Policy Research, 2019
Further Reading: Dishonesty, Omissions and Lies in Reporting on the Venezuelan Economic Crisis”
Posted in accordance with Title 17, Section 107, US Code, for noncommercial, educational purposes.
