The US Department of the Treasury's Office of Foreign Assets Control (OFAC) enables the imperial blockades against Venezuela and several other nations. File photo.
The Venezuelan Deputy Minister for Anti-Blockade Policies William Castillo said that the Venezuelan economy is in a gradual process of recovery from the damage caused by 11 years of US unilateral coercive measures—the so-called sanctions—which continue to negatively impact the population. He clarified, however, that these sanctions have not been lifted; rather, some of their effects have been mitigated through a series of licenses issued by the US Office of Foreign Assets Control (OFAC).
“The sanctions caused a 98% drop in the country’s income between 2015 and 2020, meaning that for every $100 that came into this country, we lost $98. The impact on the real economy, productive activities, and the public budget, of course, generated a multidimensional crisis,” he said in an interview on Saturday, May 16.
Similarly, the Gross Domestic Product (GDP), an indicator that records the total production of goods and services in a country, fell drastically
“Between 2015 and 2020, the Gross Domestic Product fell to a quarter of its value; that is, we lost three-quarters of the economy,” he explained. “This affected economic transactions, contracts, services, and salaries … An unprecedented migratory phenomenon in our history was triggered, the public budget collapsed, public services deteriorated, and all of this happened in a period of seven or eight years. In less than a decade, the economic strangulation of Venezuela, PDVSA, oil production, and public finances—alongside the theft of our assets abroad—generated this crisis.”
Castillo presented his arguments using figures from the Venezuelan Anti-Blockade Observatory, a technical body that he directs that is part of the International Center for Productive Investment. The observatory is dedicated to the research, systematization, and monitoring of economic and social processes related to the application of unilateral coercive measures or sanctions.
What are sanctions?
The observatory’s website states that sanctions are the use of economic, commercial, or other measures adopted unilaterally by a state, group of states, or international organizations to force another state to change its policy. These measures are outside the purview of the United Nations Security Council. In other words, they are illegal and violate the UN Charter and international law.
The minister commented that this system of coercion is applied to various nations around the world whose main offense is attempting to maintain independence in their policies and national models.
“Today, there are 31 countries in the world under unilateral coercive measures. These countries represent 28% of the world’s population and occupy 72% of the earth’s landmass,” Castillo stated. “This means that a third of the world’s population lives in countries subjected to coercive measures, collective punishment, economic strangulation, asset freezes, and sanctions against their authorities.”
In this unjust scenario, Russia ranks first with nearly 40,000 sanctions applied against ut. Venezuela ranks fourth with 1,088 sanctions, of which 1,040 remain active.
He pointed out that Venezuela has been experiencing this blockade for 11 years, beginning in 2014, though its official starting point was the 2015 decree by former US President Barack Obama, which described the country as an “unusual and extraordinary threat.”
This illegal sanctions system has drastically affected the social welfare state built through the policies implemented by former President Hugo Chávez.
“During Hugo Chávez’s last two years, the economy grew. After his death, the aggression against Venezuela began immediately, and the economy started to decline,” he remarked. “The year-on-year drop reached as high as 33% in a single year. The GDP fell, businesses closed, people lost jobs, professionals left, wages deteriorated, and hyperinflation ensued—everything built under Hugo Chávez was destroyed. This cost the country $642 billion over seven years.”
He commented on an analysis carried out by the Anti-Blockade Observatory, based on figures from the Central Bank of Venezuela (BCV), reflecting the severe contraction suffered by the Venezuelan economy as a result of the sanctions.
“If we take 2012 as the baseline year, by 2020 the economy had shrunk by three-quarters, meaning its size was reduced to 25% of what it was seven years prior. But even today, with the economy recovering, it is only 36% of what it was in 2012. This gives you an idea of the scale of the damage and explains the devastating impacts on health and food security,” he stated. He emphasized that sanctions are the primary cause of the crisis that Venezuela experienced between 2015 and 2020.
“The sanctions is the main factor behind this situation—without denying that there were administrative problems and inefficiencies, which all countries have, but they do not explain the magnitude of that decline—and this affected people’s finances and their food supply,” Castillo explained. “Today we have overcome shortages and scarcity, but remember that there were times you could not even get cleaning products, vaccines, or medicine to relieve headaches. Children died because there was no alcohol in the hospitals, medical tests were not there, the kits for medical tests were not available, the reagents were not there, so people could not even get a medical exam.”
He spoke about the drop in oil production. “Venezuela was producing 2.3 million barrels of oil per day in January 2015, and by July 2020, at the height of the pandemic, oil production had fallen to 500,000 barrels,” he pointed out. “That is, oil production fell by more than 87% in seven years due to the blockade against PDVSA. Of all the sanctions against Venezuela, 16% were against the PDVSA; 171 unilateral coercive measures weigh on the country’s main industry.”
He also mentioned how this drop in oil revenues affected workers, noting that Venezuela went from having the highest wages in Latin America in 2008 to having to redefine the concept of workers’ income.
“That is the main reason for the wage deterioration and the inflation, because there were two attacks: the destruction of the real value of wages, pensions, and social benefits through hyperinflation, and then the shortage of foreign currency that prevented the state from financing public sector spending,” he explained. “We have a country with 4 million public employees. That sector suffered the most, alongside the poorest sectors. The acting president uses an expression that I really like, which is very graphic: she says that the wage system was drilled and devastated by the US sanctions, and that is the truth. And it is the responsibility of those who, being Venezuelans, called for sanctions, those who endorsed and applauded this entire attack on the economy in order to seize political power. Because the sanctions were used as a springboard to destroy the economy, plunge the country into a crisis, and then try to take power by unconstitutional and violent means.”
In this scenario, he highlighted shifts within the private sector. “Most Venezuelan business owners understood that they too were harmed, that their businesses were damaged, that they had to close, that they lost jobs,” the minister said. “They have recovered a vision of national productive unity, and today they are working for economic recovery, setting aside the political diatribe for a while. They decided to let the politicians define the political course through their debates in the National Assembly and in elections, and let the economy, which belongs to all Venezuelans and affects us all, continue to function independently of political turmoil. We must not use the economy as a tool to divide and harm the country.”
The solution is lifting the sanctions
Castillo stressed the need to end all sanctions, praising the national pilgrimage against sanctions that has now entered a second phase “with a call and a demand from Venezuela as a nation, not just as a government, that all sanctions against the country be lifted. That will be the true solution.”
He explained that while a series of licenses have been issued by the OFAC that have eased some of the effects, the sanctions themselves still persist against the country.
“This year, 23 licenses have been issued, 15 of which are currently active,” he said. “These licenses now allow for oil production and the return of companies from the United States, Europe, and other countries to the oil sector, just as Chávez envisioned. He had said that the Orinoco Oil Belt should host companies from all over the world. Chávez never used oil as a political or economic tool against the United States or any other power. Rather, what he wanted was for the Orinoco Oil Belt to be a melting pot of countries producing oil in the world’s largest reserve, for the benefit of the people of the world, not just for corporations.”
He highlighted the licenses to the BCV and public banks, which allows them to have international clients and provides an operational base for investments in Venezuela.
However, he insisted that a country cannot rely solely on licenses because they do not offer legal certainty for large-scale investments. “Licenses do not create long-term legal certainty because they are discretionary, dependent on the OFAC and bureaucrats in the United States,” the minister pointed out. “Imagine a company that invests money to drill in Venezuela and then its license is revoked. To create true legal certainty and solidify long-term investment in Venezuela, what is required is the total lifting of the blockade. These licenses will revitalize, above all, the oil and mining sectors, allowing US companies to contract. They will pay taxes, they will pay oil royalties, and they will generate employment in Venezuela through service companies. It is a gain for the Venezuelan economy.”
The deputy minister stated that Venezuela is currently engaged in a delicate negotiation process: “We should remember that President Nicolás Maduro is being held hostage, as is his wife, Cilia Flores, a member of the National Assembly. Both are subjected to an illegal trial, and in these complex circumstances, we are trying to navigate this process of aggression and move it toward negotiation, from confrontation to diplomacy, and normalize political, consular, diplomatic, and economic relations within this complex framework. Delcy Rodríguez, as the acting president of Nicolás Maduro’s government, has been tasked with leading the country because the president was kidnapped.”
He noted that these direct negotiations with the US have enabled the establishment of financial mechanisms to recover the country’s main source of foreign currency.
“Venezuela has already received $300 million, which was used to pay the bonus to 10 million families through the Patria system,” he stated. “Today, benefits are being distributed, and the monthly income of Venezuelan families is progressively increasing because the state continues to receive resources from these negotiations. But the entire blockade must be dismantled. If the blockade is lifted, there will be no more excuses; resources will flow, and people will be able to go to the bank without worry to buy foreign currency when they need it.”
Castillo pointed out that there is a license authorizing the sale of diluents for gasoline production and another for airport and port logistics, “so that companies can pay the state the taxes and fees for using airports and ports.” Similarly, there are licenses for oil, mining, and gas production, as well as for the petrochemical industry. “Everything is fragmented into different licenses, which is why the key is to eliminate the sanctions. The licenses constitute a system that works for the moment, but strategically, what would benefit the United States, Venezuelan companies, and the Venezuelan state is the complete dismantling of the blockade so that there can be a free economy like any other country in the world,” he stated.
He emphasized that the country is recovering from the damaging effects of the sanctions on the health sector. “Venezuela was a measles-free nation until the blockade, but in 2016 and 2017 we were prevented from importing vaccines, and measles cases increased,” he said. “Not being able to vaccinate for two years had a significant impact and caused deaths. Today we have once again been recognized as a measles-free country because we have recovered the vaccination system, thanks to the efforts of the National Health System … There are 300,000 surgeries that could not be performed, surgeries that should have been carried out between 2017 and 2020; this is called the surgical backlog.”
“Today we are performing eye surgeries and fracture repairs; we are paying off a debt that was generated by the blockade,” he added. “This is what must be understood—the resistance and resilience of this country in enduring that aggression, and today being the fastest growing, most dynamic, and most stable economy.”
The sanctions in figures
• Total damage: The country lost more than $642 billion in seven years.
• Sanctions: Venezuela has 1,088 sanctions against it, of which 1,040 are active.
• Licenses: 23 licenses have been issued, of which 15 are active, providing some relief to the harmful effects of the illegal US sanctions.
• Economic growth: The economy is recovering, but it currently represents 36% of what it was in 2012.
• Damage to GDP: The GDP fell to a quarter of its value between 2015 and 2020; that is, the country lost three-quarters of the economy.
• Income: The sanctions produced a 98% drop in the country’s income between 2015 and 2020; that is, of every $100 that used to enter the country, $98 was lost.
• Oil: Production was 2.3 million barrels per day in January 2015. In July 2020, it fell to 500,000, meaning it fell by more than 87%.
• Hydrocarbons: 16% of the unilateral coercive measures, that is, 171 sanctions, are applied against PDVSA.
Venezuela’s Economy VP: US Sanctions Responsible for Foreign Debt Default
Assets abroad to be salvaged
CITGO, PDVSA’s subsidiary in the US, has been embroiled in legal proceedings in the US country since 2018, resulting in liquidation attempts for “less than half its value, an absurd and brutal legal outcome.” This process is currently suspended due to an executive order from the US government.
In England, there are 32 tons of gold in safekeeping of the Bank of England. “It was worth $2 billion when it was frozen. Today it is worth $4 billion due to the appreciation of gold,” Castillo said.
There is also the issue of Novo Banco in Portugal: “More than $1.5 billion was in that bank, a bank that was said to have gone bankrupt. The whereabouts of that money are unknown, it must be found and recovered,” the deputy minister listed.
Moreover, there are the resources that Venezuela has in the International Monetary Fund (IMF). “Now, with the normalization process, we hope that the IMF will fulfill its responsibility and release that money to Venezuela for infrastructure projects, the electrical system, water, roads, and other projects for national development.”
Castillo emphasized that these issues represent delicate negotiations. “These are high-level national political and economic issues that are being handled by the acting president,” he said.
(Ultimas Noticias) by Julio Pereira
Translation: Orinoco Tribune
OT/JRE/SC
