There are myths about the economic sanctions to Venezuela

It is difficult to understand the implications of the sanctions of the United States Department of the Treasury through the headlines of the media. Although all decisions against the government headed by Nicolás Maduro have been fully collected, the application of the sanctions has had very different consequences for the Venezuelan market, says Juan Carlos Apitz A.

In conversation with the manager of alternative markets at Intelinvest, he proposes to briefly discuss some of the myths that have been created based on the international attention that the US Treasury sanctions program has received.

“First of all, it is important to highlight that the sanctions program, in no case, has meant a blockade of the economic activities of Venezuelans. So far, there are 29 general licenses with full exceptions to the securities, agricultural, banking and telecommunications markets. Also, the same text of the executive orders includes multiple exceptions to the application of the sanctions, which in practice has resulted in non-observance in the rigorous application of what is established in the text of the legal pieces,” he says.

Apitz informs that the Treasury Department, in addition, has provided a virtual space on its website for users to ask questions regarding the content of executive orders. “This has allowed for greater clarity in the application of the instruments and, subsequently, a more defined range of areas of limitation of economic activities. As it has been reiterated on several occasions, the sanctions are not aimed at limiting the economic activities of Venezuelans, but specifically, at protecting the assets belonging to all citizens of the nation.”

The member of the staff of advisers and specialists from Intelinvest Casa de Valores explains that in second place – and in addition to what has been stated above – “the use of economic sanctions as an instruments of foreign policy has been misunderstood”. Far from carrying a “punishment” for a past event, the sanctions program is intended to change the behavior of the government or a State official.

In the case of Venezuela, the program aims to limit the action of the government of Nicolás Maduro and the formal accusations in US organizations of their actions against treaties and general regulations for the protection of human rights. However, even when the sanctions program limits the scope of action of a government, an exaggerated perception of risk in the market can be generated, constituting situations such as over-compliance, which can harm local customers,  as the specialist concludes.

“Finally, it is illusory to think that you cannot counterattack a sanctions program. As has been fully demonstrated, sanctioned governments tend to find other support in the geopolitical spectrum to circumvent – even if they commit illegal acts – the effect of the sanctions program,”adds Juan Carlos Apitz A.

The expert recommends to propose various mechanisms for adapting business within the framework of a sanctions program. “In the case of the Venezuelan market, for example, it is essential to adapt the financial policies of management with the guidelines requested by the OFAC. In the same way, it is imperative to obtain sufficient legal and financial support to fully understand the content of the legal instruments, since, to a large extent, errors and bad executions usually arise from the superficial interpretation of the text of executive orders.”

He concluded by expressing his conviction that “it is worth analyzing the program of economic sanctions for Venezuela in the present and in the future, ruling out that it is a fixed or immovable reality.”

M.Pino