President Nicolás Maduro addresses Petroleum of Venezuela (PDVSA, per its Spanish acronym) workers. Source: DW.
Anthony Eterno is a 20-year career diplomat who served as Senior Advisor to the Special Representative for Venezuela from 2019 to 2020. He previously served as Economic Counselor and Deputy Economic Counselor at the U.S. Embassy in Caracas before he was expelled from Venezuela by Nicolás Maduro. The views expressed in this article are his own and do not necessarily represent those of the U.S. Government, the Biden-Harris Administration, the former Trump Administration, or Global Americans.
The recent decision by the Biden administration to authorize Chevron to resume limited natural resource extraction operations in Venezuela offered proof to those of us who originally designed U.S. sanctions policy between 2017-2020 that it was not as an abject failure as some critics would lead you to believe. In fact, sanctions continue to be some of the best tools to get the Maduro regime to the negotiating table and to hold the regime and its enablers accountable. While a more nuanced understanding of our sanctions is overdue, so is a more nuanced understanding of where we could have done better.
To Start With, Less Bark and More Bite
Unfortunately, our more pragmatic proposals under the Trump administration gave way to what was at many times a chest-thumping exercise by those who wanted to punish the Maduro regime with anything they could—regardless of strategic value. As a result, they were often rushed, poorly timed, or sporadic, giving the regime opportunities to adapt. The moments when more strategic targets were identified, they were unfortunately rolled out months after being placed on hold—the result of trying to manage expectations in an impatient White House that prioritized quantity over quality.
There are key strategic ways we could have barked less and bitten more. In addition to following and targeting more of the regime’s—and their enablers’—money, we could have also persuaded our allies to do so more robustly. We also could have more closely followed the money regardless of which side of the political spectrum it led to. Finally, “maximum pressure” should have been truly maximum—in a more comprehensive and simultaneous manner, which is key to creating the kind of game-changing disruption and chaos within a regime that we and others assessed was led not by ideology, but rather self-enrichment. It would have produced better results and more importantly, made life better for the Venezuelan people.
Follow the Regime’s Money
U.S.-Venezuela sanctions policy under the Trump administration often focused on the oil and gold industry, which was the principal source of regime self-enrichment. What could have been more powerful and impactful, however, would have been to complement these sectoral sanctions by targeting the self-enrichment process itself—more specifically, the regime’s most trusted financial facilitators, or “testaferros.” Journalists, bloggers, and other sources, including our own partners, have bravely identified illicit financial flows and a finite number of those who manage them that deserved much more attention from us. They are bankers, oil traders and brokers, accountants, financiers, and even family members who have operated with impunity for the last two decades. While they may have different tactics, they all help the regime plunder Venezuela’s resources, bribe its supporters and protectors, pay off senior military and loyalists, and ensure luxurious lifestyles for their families, which combined, achieve the regime’s ultimate goal of staying in power.
To be fair, important testaferros have been targeted successfully. They include Alex Saab, Raul Gorrin, Gustavo Pedromo, Alejandro Andrade, and others. These sanctions and arrests have been particularly gratifying because they have been visible and tangible—including freezing corrupt bank accounts, confiscating private jets, luxury homes, and cars as well as corruption convictions in the United States. Less visible or tangible are whether this instills enough anxiety among the regime, its enablers, and their families, to move the needle. That is often hard to measure. However, having sat across from a high-profile testaferro as he pleaded to have his own sanctions removed and assets unfrozen, I was convinced that taking away a man’s private jet and yachts produces significant cracks in the regime’s circle of trust. The regime’s herculean efforts to free Alex Saab also clearly demonstrated that there is no better way to influence regime insiders and enablers whose support for Maduro is purely transactional. If the net were cast wide enough to ensnare more family members and testaferros simultaneously, it would cause great personal financial loss and chaos for the regime.
Many Heads are Always Better Than One: Getting Allies More Robustly
Multilateral sanctions will always work better than unilateral efforts. A unified effort—including potential new allies in Asia, Africa, and Middle East, where Venezuelan oil and gold have been uncovered—could create extraordinary leverage to negotiate a genuine political solution. Our allies can significantly move the needle in the right direction, cutting off another principal pathway the regime uses to both hide and enjoy its theft.
In Europe, for example, where many of the Maduro regime’s family and enablers hide and enjoy their ill-gotten wealth, targeting banks could play a pivotal role in creating the kind of pressure that makes a political solution much more attractive. The actions by the Portuguese and U.K. governments between 2019 to 2021 to allow Novo Banco and Bank of England to keep a combined total of more than $3 billion of regime assets was a powerful blow. In February 2021, the EU followed through with its promise of additional sanctions on regime members, as well as renewing them until 2022. These efforts were a bold model for others to emulate. Many EU officials conveyed to us that individual financial sanctions against Venezuelan regime officials were preferred over sectoral sanctions, but building a consensus within the EU has proven more challenging. However, the EU’s unanimous consent to prohibit Americans entering its territory during the height of the COVID-19 pandemic was proof that quick action is possible. Given there are over 800,000 EU-Venezuelan dual citizens—mostly from Portugal and Spain—suffering under the Maduro regime, there should be an appetite to take action, which if could have resulted in closing other financial paths for the regime and its enablers to evade sanctions.
Follow Regime Allies’ Money
Strategically targeting the regime’s ability to pay their Chinese, Russian, Iranian, and Turkish patrons has been powerful. At the very least, it has diminished optimism about the durability of their “friendship” with Maduro. For example, in a region where the Chinese government readily invests, it has denied any new infrastructure loans or investments, thanks in part to sanctions tightening the regime’s ability to pay back its debts, which further increased Beijing’s frustration with Maduro’s corruption and economic policies. Today, the China-Venezuela relationship is struggling. However, due to the sporadic and limited number of targeted measures during the Trump administration, China adapted—using Russian oil traders to transport Venezuelan crude, even as the relationship became a liability.
Had we simultaneously targeted more oil traders and brokers, insurance and licensing companies, and others who clandestinely facilitated these transactions, it would have been more powerful than interdicting tankers at sea. Agility is also key. For example, when the U.S. interagency decided to target Rosneft Trading and its board members with sanctions, Rosneft Trading’s senior executive resigned, Putin pulled Igor Sechin out of Venezuela, and tankers were ordered to cease loading Venezuelan crude in the Caribbean—proof of strain the Russia-Venezuela financial relationship. We noticed that several of Rosneft Trading executives wiped their backgrounds from the internet to avoid being targeted in the future. When the Russians continued trading Venezuelan oil under a new shell company—TNK Trading—it was sanctioned almost immediately, further debilitating support for the regime.
Follow Everyone’s Money: Sanctions Must Also be Apolitical
It is also important to not distinguish between adversaries or allies when talking about corruption. Unfortunately, some testaferros were reportedly involved with moving money for all sides of the political spectrum, likely hedging for a future change in government. Despite the fact that the Maduro regime has a monopoly on rampant and widespread corruption in Venezuela, corruption is still corruption. As one prominent Venezuelan business leader once told me, “If you don’t address opposition corruption as well, these will be the people who will spoil Venezuela’s future transition and recovery.” Such accountability also would send a clear message to the broader Chavista, military, and international community that the U.S. government is a credible broker for change, creating the confidence to help rebuild Venezuela with transparency and good governance.
Sanctions have been the most effective way to deal with one of the most brutal and corrupt dictatorships in the world. Measuring sanctions’ success based solely on regime change, however, is shortsighted. My biggest lesson from working on Venezuela sanctions in the last administration was that in order to have the best maximum effect, a more comprehensive, simultaneous, and agile effort to target regime members and enablers remains a powerful option to accelerate a political solution.
