Trump's heightened sanctions on Venezuela bar recovery, cedes influence to China

[Trotsky]

Prior to these sanctions, it was possible for the Venezuelan government to launch an economic-recovery program that could have restarted economic growth. Unlike most countries suffering from a balance-of-payments crisis, Venezuela would not necessarily have to go through a period of “structural adjustment,” as it used to be called before IMF programs gave this term a bad reputation. In this kind of adjustment, living standards typically fall, at least temporarily, because the country has to cut imports in order to balance its external accounts. Venezuela has already cut imports by about 75 percent since 2012. This is an astounding number; Greece, for comparison, has reduced imports by about 31 percent after suffering through a depression for most of the past seven years, which is twice as long as Venezuela’s current crisis.

This means that Venezuela’s economy could begin to recover fairly quickly in response to the appropriate reforms, without having to endure further declines in output or employment. Or at least that was true until Trump’s August 25 executive order.

So far, no governments other than Trump’s have expressed support for these sanctions, and, with the largest economy in the world, China is best placed to come to Venezuela’s aid.

China issued a strong statement against Trump’s latest prohibitions. China supported the latest UN Security Council sanctions against North Korea in August, which were led by the US government. But, as does most of the rest of the world, China likely understands that the sanctions against Venezuela are a transparent attempt to overthrow a sovereign government. After all, Washington has been trying to oust the Venezuelan government for more than 15 years, including supporting the 2002 military coup that briefly toppled Hugo Chávez and providing hundreds of millions of dollars to opposition groups since then.

China has over $3 trillion in reserves and has loaned tens of billions of dollars to Venezuela—most of which has been repaid with the outstanding amount to be reimbursed in oil shipments. There is no way to know what Beijing would be willing to do to help, but the Venezuelan government should approach them with an economic plan that could provide some assurances that their money would not be wasted. This proposition should include the basic reforms necessary to stabilize the exchange rate and inflation. The Chinese are famously reluctant to tell a sovereign government what their economic policies should be, and they won’t put such conditions on any loans or investment—unlike the US government or the US-dominated IMF and World Bank. But China may be more likely to assist Venezuela if it is presented with a sensible recovery plan. It would also be smart for Venezuela to approach the Chinese Communist Party, since it influences government decisions and has sometimes shown more solidarity with other leftist parties and governments.

Countering Trump’s illegal (under US as well as international law) sanctions would be beneficial for all Venezuelans. In terms of immediate effects, any aid that relieved shortages of food and medicines would be important. But Chinese loans and aid could also help lead to a negotiated solution. Although neither the Venezuelan opposition nor the government made substantial concessions during talks last fall, there is little incentive for the opposition to negotiate so long as it can count on continued economic deterioration. A recovering economy would restore that incentive for the opposition.

China has its own national interests in not wanting all of South America to be dominated by the US government again—as it was in the last century—let alone an administration that is headed by an increasingly aggressive, volatile, and disturbed president. But in this case its interests coincide with the general interest of the world, in which national sovereignty is an important, hard-won right. And as Trump looks around the world for possible military action to save his doomed presidency, the American people also have an interest in anything that can help resolve a conflict that he has already announced as a possible military target.

https://www.thenation.com/article/t...omic-recovery-in-venezuela-nearly-impossible/

 

[ripskater]

Venezuela can blame it's own socialism for it's problems. Not Trump.

With Trump, it's "America first."

 

[all caps]

Everybody is a victim

 

[HockeyBjj]

Venezuela- Royally fucks up their country

Venezuela- Blames the US for making their extreme damage irreversible

It's like a child breaking their toy and then blaming their parents for not buying a new one. Only in this case, we're not freaking responsible for Venezuela's attempt of socialism that predictably failed! Hopefully we can simply learn from it, but judging by the Bernie bros still out there we haven't

 

[Rational Poster]

Venezuela can blame it's own socialism for it's problems. Not Trump.

With Trump, it's "America first."

It's in America's interests to help Venezuela as they're in our geographic region and have shitloads of oil.

Any major crisis in Venezuela has a will affect our region whether we like it or not.

 

[Rod1]

I support Trump 100% on whatever it takes to oust Maduro.

I dont think Trump will do what needs to be done though.

 

[Trotsky]

I support Trump 100% on whatever it takes to oust Maduro.

I dont think Trump will do what needs to be done though.

Yikes.

 

[Big Nasty Edison]

Venezuela can blame it's own socialism for it's problems. Not Trump.

With Trump, it's "America first."

You mean it's Trump family bank accoubts, Israel, Saudi Arabia and Russia first.

 

[Seaside]

Venezuela can blame it's own socialism for it's problems. Not Trump.

With Trump, it's "America first."

because america using capitalist power to starve and hurt people is okay?

USA have meddle destroy so much in central and south america.

sickos want venezuelans to suffer and die cause they no have capitalist government. disgust

 

[AlexDB9]

Yikes.

I say we send in comrade sanders to fix his paradise state

 

[cincymma79]

because america using capitalist power to starve and hurt people is okay?

USA have meddle destroy so much in central and south america.

sickos want venezuelans to suffer and die cause they no have capitalist government. disgust

these people...
usa does the following:
nothing
zomg you don't care
sanctions
zomg you're killing people
war
zomg you're killing people
support the governement we don't even like
zmog they're your allies
support an uprising
zomg you're killing people
send aid
zomg you're supporting the government who's keeping all of it for their people
send aid with workers to get it out to everyone
zomg you're invading

since we are going to be the bad guy no matter what i vote fuck 'em

 

[Ling Ling]

Once The Nation is done trying to blame Trump for the unmitigated disaster that is Venezuela, they actually get around to detailing some of the things which would have to occur before the country could even be in a position to try and recover. It is at that point where the US sanctions would prevent recovery according to their thinking. The thing that they fail to mention is that none of these changes are on the horizon, with the Maduro regime doubling down on their catastrophic policies.

The adjustment that Venezuela needs is primarily of relative prices, most importantly its exchange rate.
Policy failures, not an oil shock, precipitated the country’s financial decline. But the response to the oil-price collapse, especially maintaining the economically deadly exchange-rate system, ensured prolonged catastrophe.
The only way out of this mess is to let the currency float and allow it to reach an equilibrium.
This exchange rate, however, is not the only adjustment in relative prices that the economy would need. There are many dysfunctional price controls that have not worked and should be removed. By 2015, for example, inflation was 180 percent annually, but food prices, which were subject to price controls, greatly surpassed that.
The government’s subsidies to domestic energy, including electricity and gasoline, would also have to be reduced over time. Right now these handouts are about as big a share of the economy as total income tax collection is in the United States. This money could be used to directly subsidize food for consumers.

 

[Pwent]

why would we help prop up maduro and a disastrous socialist government that hates the US?

china can influence them for a few months/years before it collapses, why would i give a fuck

maybe they should stop being socialist

 

[b-hop]

Hopes Trump fuck Venezuela, if that would benefit us. Trump only concern must be America and his allies.

 

[WiolentOne]

Why should the US help a government that hates us and who executes its citizens in the streets?

Dumb.