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CEPR co-director Mark Weisbrot responds to Guaidó economic advisors’ dismissal of the U.S. sanctions’ effects on Venezuela

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GREG WILPERT It’s The Real News Network and I’m Greg Wilpert in Baltimore. An analysis of the effects of US sanctions on Venezuela has attracted some debate recently. The original analysis was co-written by Mark Weisbrot of the Center for Economic and Policy Research together with Jeffrey Sachs of the Center for Sustainable Development at Columbia University. It was titled, Economic Sanctions as Collective Punishment: The Case of Venezuela. One of its central arguments was that as many as 40,000 people may have died as a result of the US sanctions on Venezuela since August 2017. Three other economists— Ricardo Hausmann, Miguel Angel Santos, and Frank Muci— all of them of Harvard University’s Center for International Development, countered Weisbrot and Sachs’s paper. Two of them even published a critique of it on the website of Americas Quarterly. We should also add that Hausmann is also an advisor and representative to the Inter-American Development Bank for Venezuelan parallel president, Juan Guaido. Joining me now to discuss the original paper and the rebuttal is Mark Weisbrot, o-director of the Center for Economic and Policy Research. Thanks, Mark, for joining us today.

MARK WEISBROT Thanks for inviting me, Greg.

GREG WILPERT So, as I said, your original paper, together with Jeffrey Sachs, focuses on the economic effects of the Trump administration’s sanctions on Venezuela. Now, the rebuttal makes three main arguments, I would say. Let’s take them one at a time. First, they argue that the August 2017 sanctions on Venezuela did not significantly worsen Venezuela’s economic crisis because the crisis began well before August 2017. That is, the sanctions prohibited US institutions and citizens from trading in Venezuelan debt. But Hausmann and colleagues say basically that the Maduro government already could not restructure its debt well before 2017, since the oil price collapse of 2014, and that the government restricted imports of food and medicine already way back then. So, what’s your response to this basic argument?

MARK WEISBROT Well I think it’s obvious in what happened to oil production right after 2018. You can see it in that graph that we had. It was declining at the same rate as the oil production in Colombia was declining and then right after the sanctions, it declined at a rate that was three times as fast. They don’t really have any plausible explanation for that and it is what you would actually expect from those kinds of cutting off of credit and the ability of the government and the state oil company to even borrow or refinance. There were actually serious debt restructuring negotiations going on, and you just wouldn’t expect this. You know, recessions don’t go on forever either. That’s the other thing. And even hyperinflation— the median hyperinflation for Latin America since World War II lasted four months. These sanctions really make it impossible for not only debt restructuring, but for the government to take the measures that it would take in order to get out of the recession or even the economy to recover by itself. You know, economies actually do usually recover. The Great Depression, for example, in the US was a result of a long series of mistakes. It wasn’t just something that continues indefinitely by itself.

GREG WILPERT I think that’s a very important point, what you’ve made here and other programs, that the Trump administration introduced these sanctions just at a moment when the economy of Venezuela was very vulnerable and, like you said, it probably extended the economic crisis, but—

MARK WEISBROT And they’re trying to destroy it. I mean, that’s what they’re doing. They’re trying to destroy the economy and that’s what sanctions do.

GREG WILPERT Now, turning to the second point, which has to do with the mortality rates. Your original report says that mortality rates increased significantly after the August 2017 sanctions, and that based on this, one can calculate approximately 40,000 additional deaths due to the mortality increase and the sanctions. Now, Hausmann and his colleagues say that you cannot rule out that the mortality rates would not have increased anyway without sanctions, given the deterioration of the country’s health infrastructure. What’s your response to this?

MARK WEISBROT Well they’re just pointing out the basic problem you have in social science. You don’t have an experiment where you’re manipulating the independent variable, but yeah, that’s true everywhere. But if something happens and there’s an obvious causal mechanism— you can see the imports are being cut off. These are imports that are used to import medicine and medical supplies and infrastructure for water, health, and sanitation. And so yeah, I mean, it’s exactly what you would expect, and you saw the increase in mortality. So this is something that—And of course, it could very easily be an underestimate because first of all, the economy could recover, in which case the mortality rate would have gone down, instead of up. It could be underestimated for any number of other reasons as well; for example, it doesn’t count the last few months of 2017 and it doesn’t count— of course, it’s not going past the end of 2018, and the January sanctions were much worse. So they really don’t have an argument here at all.

GREG WILPERT Now the third argument they make is that the March 2019 power outage actually contributed more to the decline in oil production than the January 2019 sanctions, which according to them, wouldn’t have taken effect until April of this year anyway. What’s your response to this? I mean, how do we know that these January sanctions actually had as much of an impact as you argued in your paper?

MARK WEISBROT Yeah, I think this is kind of the craziest part of their argument. I don’t think any economist would even consider this. You just look at the numbers. I mean, 419,000 barrels of oil per day were lost in just two months. That’s seven times the rate of decline that you had after the August sanctions and you had, you know, ships piling up full of oil with nowhere to go because of the sanctions. And you had, you know—It’s just so obvious. You can look at graphs for Iran and for Iraq under sanctions, oil sanctions. Yeah sure, there was— I’m sure the March power outages contributed something, but the collapse already started in February.

They just don’t have any argument that anybody really—I think it’s, you know, I would call it sanctions denial, like climate deniers. It’s something that’s obvious, and it’s kind of similar in some ways. You’ve had these decades where everybody knew, all the scientists knew what was happening, and the media treated it as though it were some kind of debate. The media is actually not treating it as a debate now. They’re just trying to ignore it, and this is a problem because the media—Most of the journalists know that this is what’s going on because it’s so obvious and yet, they’ve barely reported it over the past couple of years. And so, it’s hard for them to change their reporting.

GREG WILPERT Yeah, actually I just want to point out that actually one of the few times that they did write about the sanctions was specifically right after the power outage. That is, The New York Times actually had an article that mentioned the sanctions as being a possible cause for the extended duration of the power outage because they weren’t able to kickstart or weren’t able to turn on the thermal power generation plants that Venezuela has and therefore, they didn’t have a backup. In other words, if it hadn’t been for the sanctions, the power outage would have been much shorter.

MARK WEISBROT That’s right. They can’t get diesel, for example, that they need for the backup generators. No, the sanctions are absolutely devastating. And it’s interesting too that these people don’t challenge the sanctions, that the decline in oil production does lead to deaths because they understand the mechanism, right? It’s very simple. It’s imports. You know, if there’s no dollars to import essential goods—Well, it works two ways. One is, what I already described in terms of lifesaving medicines and other essential goods, but also, it shrinks the economy because Venezuela is a very import-dependent economy. They know this connection between both the sanctions, the decline in oil production, and the increase in mortality. They’re just trying to somehow say that Venezuela is different from all other countries that have ever had these kinds of economic sanctions, and they don’t cause the oil production to decline.

GREG WILPERT Now I want to turn for a moment to how the media and government officials have been dealing with the topic of sanctions. OAS Secretary General Luis Almagro and Ricardo Hausmann are claiming that the sanctions are merely there to prevent corruption and do not really affect the people of Venezuela. Almagro even tweeted, “Today I spoke at Shenandoah University about the recent struggle against authoritarianism and dictatorship in the Americas. In Venezuela, we need more sanctions, no less. Kids are malnourished and were starving long before sanctions were applied to Nicolas Maduro’s mob.” And then, there seems to be a sort of media blackout on the effects of the sanctions, as you mentioned. Now, what’s going on here? How can it be that they are continuing to present this idea that the sanctions are not having an effect except to pressure Maduro presumably?

MARK WEISBROT Well, Almagro doesn’t care. He’s always been—I think he has supported military intervention as well. You know, I don’t know how long he’s going to last at the OAS because there’s a lot of governments, I don’t even mean just left governments there, but I mean a lot of governments at the OAS that think he’s just too crazy. It is outrageous for a Secretary General of the OAS to be saying something like that, especially when it even violates the charter of the Organization of American States, as we’ve discussed on this show. I think that, again, the media just doesn’t want to deal with it because I’ve seen this problem with a lot of things that we work on. You know, for years they were saying that Social Security was going to collapse and then, the numbers never showed that. It took the media a long time to acknowledge that there wasn’t this crisis after they’ve been saying it for 10 years. You know, all kinds of issues like that where the media just makes a mistake and the reporters make a mistake, the editors make a mistake. It took a long time for the climate news to change as well, in terms of the causality there. Hopefully, this won’t take as long because this is a really urgent situation and it’s not as big a thing.

You only have Hausmann, people who are ideologically committed to overthrowing the government of Venezuela. They’re the only people that would actually deny that the sanctions don’t have any impact. But you know, you see these reported— I mean, journalists like Nick Kristof. Here’s somebody who goes to all these places in the world where people are suffering and there’s humanitarian disasters, trafficking of women and children, and this is what he writes about. And so, he goes to the border of Venezuela, and he talks a 15-year-old girl who’s pregnant and destitute, and all these people, and shows how terrible they’re suffering, refugees from Venezuela. And then, what is his solution? He says, you’ve got to pressure Mexico to go along with the sanctions that are actually causing these people to be in this situation. This makes no sense at all. I just wish people would challenge him. You know, if anybody’s listening to this, they could write to him and say well, why are you doing this? Don’t you care about these people that you pretend, you profess to care about? You’re actually supporting something that’s making it vastly worse and actually taking people’s lives.

GREG WILPERT The lack of media coverage presumably also has an effect on Congress. At least, they don’t seem to be very attentive either to the effect that sanctions are having. I’m just wondering, is there any movement going on in Congress with regard to either sanctions or the threat of military intervention?

MARK WEISBROT Well the threat of military intervention, Congress is moving forward. The House Foreign Affairs Committee passed a bill to go to the floor, H.R. 1004. It’s the bill we talked about before that’s just a clean bill, doesn’t say anything except that the president can’t intervene militarily in Venezuela without the authorization from Congress, and that’s just stating the law. It’s got over 70 cosponsors now and now, there’s five senators cosponsoring the Senate version of the bill as well. Now in the House, it has to go, after Foreign Affairs, it has to go to Armed Services. So they’re trying to pressure the people that are organizing this and again, it’s the grassroots pressure that gets all of this done, just as it did in the case of the Yemen War. They’ve got a regional letter targeting Adam Smith. He’s the chair of Armed Services. He cosponsored the Yemen resolution, so I think there is a chance that he would sign on. They’re also trying to get more sponsors for the Senate. I think people who, if they can call their representative or call their senator on this, it could definitely make a difference. There’s these coalition letters, and there are right-wing groups that have signed on as well. So I think you will get Republicans just as you got in the case of Yemen.

GREG WILPERT You know, I think that’s an interesting point. There are more and more conservatives speaking out against US intervention in Venezuela. Tucker Carlson, perhaps being the most notable example, but we’re going to leave it there for now. I’m speaking to Mark Weisbrot, co-director of the Center for Economic and Policy Research. Thanks again, Mark, for having joined us today.

MARK WEISBROT Thank you, Gregory.

GREG WILPERT And thank you for joining The Real News Network.

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Mark Weisbrot is Co-Director of the Center for Economic and Policy Research in Washington, D.C. He is also the author of “Failed: What the ‘Experts’ Got Wrong About the Global Economy” (2015, Oxford University Press).