A new report published by the Washington Office on Latin America (WOLA) finds that, while Venezuela’s economic crisis began before the first U.S. sectoral sanctions were imposed in 2017, these measures “directly contributed to its deep decline, and to the further deterioration of the quality of life of Venezuelans.” The 53-page report, authored by Venezuelan economist Luis Oliveros, examines the impact that increasingly broad U.S. sanctions have had across various sectors in the country, including on its beleaguered oil industry, on imports of food, medicine, fuel, and other essential goods, and on the work of humanitarian and non-governmental organizations.

The full report by Oliveros, an economist at the Central University of Venezuela in Caracas, makes use of private assessments, unofficial data, and publicly-available figures in order to review the impact of U.S. sanctions in Venezuela since 2017. The full report is available here in Spanish, with condensed versions also available in English and Spanish. Key findings include:

  • Declining oil production in Venezuela has its roots in years of mismanagement and corruption, worsening under the authoritarian government of Nicolás Maduro. But even assuming that the pre-2017 sanctions rate of decline in production had continued apace or doubled, U.S. sanctions have caused the Venezuelan state to lose between $17 billion to $31 billion in revenue.
  • The sanctions-related decline in oil revenue is roughly in line with the estimates of former U.S. National Security Advisor John Bolton, who in 2019 claimed that U.S. sanctions would cause the Venezuelan state to lose over $11 billion annually.
  • The report details how U.S. sanctions are affecting the most vulnerable in Venezuela. While U.S. sanctions don’t explicitly restrict food and medicine imports, Venezuela’s economy is heavily dependent on oil revenue as a source of hard currency so that private and public businesses can import needed goods. U.S. sanctions have contributed to a steep drop in Venezuelan imports. The report finds that the value of average monthly public imports dropped by 46 percent (to $500 million) in 2019 and another 50 percent (to $250 million) in 2020.
  • A tendency towards risk aversion has led banks and financial institutions operating in Venezuela or with Venezuelan institutions to over-comply with U.S. sanctions. This has had an impact across Venezuelan society. As a result, human rights groups, humanitarian organizations, and private companies have had their bank accounts closed, and seen legitimate transactions denied or frozen for long periods of time.
  • While it is common for proponents of U.S. sectoral sanctions to claim that the measures have no broader impact because all of the pre-sanctions oil revenue was stolen by Venezuela’s ruling elite, this is inaccurate. While the public sector is rife with corruption, it is simply false that none of Venezuela’s oil revenue in the years prior to U.S. sanctions was used to facilitate imports. In fact, an analysis of the percentage variation in imports and oil exports in Venezuela from 1998 to 2018 shows a close association—meaning revenue from oil exports has long been used to cover imports of everything from food, fuel, medicine and other basic goods. 

The report concludes that U.S. policymakers need to rethink U.S. sanctions, and to limit their impact on Venezuela’s worsening humanitarian emergency. While economic, political, and military elites propping up Venezuela’s authoritarian government seem to be insulated from the effects of these sanctions, they are taking an increasing toll on the country’s population.