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Post Did US Sanctions on Venezuela Lead to U$350 Billion of Lost GDP?
Created by John Eipper on 03/04/19 4:01 AM

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Did US Sanctions on Venezuela Lead to U$350 Billion of Lost GDP? (John Eipper, USA, 03/04/19 4:01 am)

[JE:  The author's identity is withheld by request]:

Eugenio Battaglia's post on the Venezuela crisis (March 2) is misdirected and confusing.

Eugenio asked a what-if question: "Suppose that the Empire did not impose terrorist sanctions on Venezuela, also blocking its money.  Would Venezuela be in the present tragic situation?" He quotes an article from the CELAG (Centro Estratégico Latinoamericano de Geopolítica) to support the argument that the US "empire's" sanctions supposedly caused the loss of US$350 billion to the country between 2013-2017.

Before I comment on the study and its manipulated content, the ideological character and origins of CELAG should be addressed. This institution was created in 2014 by Alfredo Serrano Mancilla, a Spanish economist, who was considered once by Chávez the "Jesus Christ of Economics" because of his resemblance to the historic Jesus and his sympathies with Chavismo.  Serrano also was an active economic advisor to Chávez and continues to be for Maduro, as well as a member of Podemos, the Spanish Marxist party.

All its members, directors and researchers are of the same ideological tendency. Its staff includes for instance people such as Rafael Correa, the leftist ex-president of Ecuador; Atilio Borón, an Argentine Marxist; José Manuel Canela, a Bolivian socialist; Juan Carlos Monedero, a Spanish Marxist and another founder of the Podemos party; just to mention a few. These examples amply demonstrate the ideologically biased character of the institution.

As a result, it should be logical to suspect that all its studies and reports are contrary to any political ideology other than Marxist or socialist-communist ideas.

I have in fact read the study and I believe it is full of false hypotheses and conclusions.  The main conclusion of the study is that the US "terrorist" economic and financial sanctions caused the loss of US$350 billion to the country between 2013-2017 in terms of the GDP or in the country's total production of goods and services.

Let's take a look at these supposedly "terrorist" imperialist sanctions. In fact the US sanctions started only in 2015, during the Obama administration, when US-housed assets of some high-ranking Venezuelan politicians and military were frozen and their visas to the country suspended. I will not detail the specific reasons for these sanctions but they include corruption, money laundering and other evident crimes.

In 2016 and 2017 similar sanctions were enacted against other high-ranking members of the Maduro regime. It was not until August 2017 that Mr Trump banned the trading of Venezuelan bonds in the US. This financial blockade did not apply to the sale of Venezuelan crude oil to the US or to the expatriation of dividends of Venezuelan businesses (CITGO). In fact, the US was, and always has been, the main source of cash currency for the country, chiefly from oil. Only in February of this year were the latest and strictest sanctions applied, the embargo of all Venezuelan assets in the US on behalf of the interim president Guaidó and the blockade of oil exports to the US.

Following the chronological order of the sanctions, it is difficult to believe that they might be the cause of the 2013-2017 losses mentioned in the study, because during that period the sanctions applied only to specific people and not the country's overall oil business. Furthermore, the blockade of bonds prevented the country only from using US financial sources. They continued to use Russia and China as a source for financing of more than $60 billion.

In fact, Venezuela's GDP did not substantially decline in the period after 2013. It actually increased in 2015 and 2016.

It is hard to believe that an economy of this size would have lost $350 billion during the period mentioned, if sanctions to some particular individuals were the only cause.

Looking to oil export income, it should also be crystal clear that the sanctions had little effect in the quoted period, because US continued to import Venezuelan oil and pay in cash; the decreasing tendency was caused mainly by a decrease in oil production and less importantly to price fluctuations.

The decrease in production was due to the industry's politicization, the lack of technical skills (incompetence if you will) as well as corruption and a lack of proper maintenance of wells, infrastructure and installations. In 1999 the oil production was 3.8 million barrels/day, in 2013 it was 1.8 MB/day, today is is 800 thousand barrels/day.

The CELAG study's conclusions merely repeat the government´s official propaganda about the US "guerra económica" (economic war) to disguise that the real root causes of the economic crisis were its disastrous and erroneous socialist policies, not to mention corruption, which deserves a longer analysis in itself.

Some might recall parallels between Venezuela's current crisis and the old Cuban justification for its "Período Especial" in 1991-1994, when the Russians withdrew from the island, stopped their economic support, and the Cuban government repeatedly blamed, with dubious reasons, the US blockade for its crisis.

JE comments:  I trust WAISers will understand that discretion is the better part of valor when it comes to Venezuela's current crisis.

Had to include a photo of Alfredo Serrano.  Christ-like?  You be the judge.

Spanish economist Alfredo Serrano Mancilla

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  • Latin America's Dictators (Eugenio Battaglia, Italy 03/04/19 3:09 PM)
    I wish to thank the anonymous author of the post on Venezuela (March 4th).

    For sure the author clearly demonstrates the background of CELAG and the bias of its members, mostly Marxists and/or members of the Spanish Podemos party. However just to be fair, why is a Marxist or Podemos ideology biased but a liberal ideology not so?

    I'm confident that nobody will accuse me of liking the "Rojos," as I had the misfortune of knowing their actions first hand. At the same time I do not like the meddling in the internal affairs of another country and the use of sanctions. I have made my position on them clear, and I remember that someone said:

    "Sanctions are a form of genocide carried out by hypocrites."

    About South American dictators, yesterday I read an interesting but rather biased article in La República of Lima. The article lists the various dictators from South America after WWII and how badly they ended.

    Manuel Antonio Noriega: Panama 1983 - 1989

    Augusto Pinochet: Chile 1973 - 1990 (La República erroneously indicates 1974)

    Jorge Rafael Videla: Argentina 1976 - 1981

    Alberto Fujimori: Peru 1990 - 2000

    Alfredo Stroessner: Paraguay 1954 - 1989

    Fulgencio Batista: Cuba 1952 - 1959

    Juan María Bordaberry: Uruguay 1973 - 1976

    Francois Duvalier: Haiti 1957 - 1971

    The Somoza family: Nicaragua 1937 - 1979

    Marcos Pérez Jiménez: Venezuela 1953 - 1958

    It's not easy to remember all of them.

    It would be, however, an interesting historical exercise to see if and who was behind them or helped them to stay in power and what were their motivations.

    In my opinion Pinochet and Videla (and perhaps Fujimori) were mostly motivated by the necessity to repel the "Terror Rojo" of the Communist insurgence.

    On top of this, Pinochet left his dictatorship when he lost a free popular referendum. May I say that makes him a rather poor dictator?

    On 11 September 1973, the day of the Pinochet coup, I was on board the Amoco tanker Conqueror at anchor in front of Texas City. When I heard the news with the lamentations of the "Reds/Democrats," I drank a nice cool beer to the health of some friends who suffered under the Rojo Government of Allende and his thugs in the streets.

    I assume that Anonymous will do the same when Maduro goes, but do not forget some others too have faults. But, be honest, to be without bias is almost impossible.

    JE comments: I'm not going to raise a glass to him, but Pinochet did have the virtue of leaving office more or less democratically. How many other dictators have done this? Might Chile's good fortune today be due to the peaceful end of its dictatorship?

    Why did La República leave out Maduro and the biggest gorillas in the room, the Castros?

    (As chance would have it, we're off to Chile on the morrow, through Sunday the 10th.)

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    • We Left Out Some Latin American Dictators (Nigel Jones, UK 03/05/19 2:51 AM)
      Surely the big Latin American dictator that Eugenio Battaglia leaves off his list (the "goat" opposed to the elephant in the room) is Trujillo of the Dominican Republic?

      There were several others--eg. Hugo Banzer in Bolivia, the Generals who ruled Brazil after the deposition of Jango Goulart in 1964, and indeed Getúlio Vargas in 1950s Brazil, and what about Perón in Argentina? The Castros in Cuba?

      Indeed dictatorship, whether of Left, Right, populist or military, was the Latin American norm until recently.

      Eugenio's hatred of the US blinds him to the hideous suffering of Venezuela under the Marxist Maduro. I am also puzzled: He denounces US attempts to depose this monster, but was happy to toast the US-backed Pinochet coup against the Marxist Allende.

      JE comments:  Eugenio did say it's impossible to remember them all!  I also had the question about the Chilean coup of 1973.  If Eugenio applauds the overthrow of Allende, which had ample support from the US, why is he opposed to similar (probably lesser) US meddling in Venezuela?

      (To Eugenio's defense, he reserves his criticism for US bullying and imperialism abroad, not the country per se or especially its people.)

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    • Latin American Dictators, and Atrocities Overlooked (John Heelan, UK 03/05/19 3:49 AM)

      Given his antipathy to "the Empire," Eugenio Battaglia (4 March) is remarkably quiet about the impact of the "Chicago Boys" on Chile, "Operation Condor" supporting the Latin American dictators, Henry Kissinger's travels, "The School of the Americas," a finishing school for dictators, the Videla Junta's impact on Argentina, the "desaparecidos," the tortures that took place in La Escuela Superior de Mecánica de la Armada, the American Secretary of State Henry Kissinger's meetings with Argentinian military leaders after the coup, urging them to destroy their opponents quickly before outcry over human rights abuses grew in the United States.

      JE comments:  It's impossible to include every atrocity in one WAIS post.  We should also mention the US-engineered coup against Guatemala's Arbenz in 1954. 

      Shall we re-focus this discussion in the direction of "what now" for Venezuela?  Should the International Community intervene, and if so, how?  The Maduro-Guaidó showdown has few precedents in world history:  two presidents, each with recognition from world and regional powers.  Historically this would mean civil war, but fortunately nothing that cataclysmic has happened yet.

      Henry Kissinger is still going strong at 95.  I wonder how he would handle Maduro.

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    • More Latin American Dictators We Overlooked (Timothy Brown, USA 03/05/19 2:23 PM)
      I applaud Eugenio Battaglia's guarded reaction (March 4th) on what was obviously an ideologically selective newspaper article since I, too, wonder why they included Batista but not Fidel Castro or his half-brother Raúl, and the entire "Somoza" family but not the Somoza's distant cousin, Daniel Ortega. After all, the FSLN's namesake, Augusto César Sandino, was Somoza's main competitor for power, not a potential savior of democracy. Can anyone think of another reason for their list being so limited?  Maybe ideological selectivity?

      Should you like to see a few alternative versions of history, may I suggest reading what some hands-on veteran revolutionaries told me, such as El Viejo, Alejandro Pérez Bustamante, who was Sandino's personal bodyguard during Sandino's efforts to oust Somoza and take power for himself and, years later, head of a clandestine Contra support cell just across from El Zungano. (Chapter 3 in my When the AK-47s Fall Silent, Stanford: 2000).

      Or maybe José Obidio "Pepe" Puente León's comments in Chapter 2. (Carlos Fonseca Amador was its second leader. Its original leader was a COMINTERN agent name Noel Guerrero Santiago (pg. 12 in my Diplomarine).  He was a Director of the Sandinista Front from when it was created in Havana to when it took power in Managua and a key link in Mexico between Central American revolutionary movements, Soviet and Cuban intelligence and, I should add, to PEMEX's money.

      But then, myths are always more convincing than facts.

      JE comments:  How did I get this far without knowing about the Ortega-Somoza kinship?  Perhaps not surprising in such a small country.  But then again, Obama and Bush are (distant) cousins, too.

      Tim, another curiosity I cannot let pass by:  What is the PEMEX connection to the Sandinistas?  And Fidel and Raúl are half-brothers?  Come to think of it, they don't look much alike. 

      This post is brief but has a lot to sink your teeth into.

      Speaking of Latin America, we will shortly board the flight to Santiago de Chile (we're now at the Toronto airport).  WAIS will be on hold until tomorrow at midday. 

      Chicago Boys, here we come!

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  • The Pemon Stand Up to Maduro's Guardia Nacional (John Eipper, USA 03/05/19 10:04 AM)

    [JE:  Once again, the author's identity is withheld by request.]

    On February 23rd, when the humanitarian aid was stopped from getting into Venezuela through the borders with Colombia and Brazil, an epic episode occurred which should be pointed out and remembered.

    On the border with Brazil in the Amazonian region, there is a small town called Santa Elena de Guairen. Near this town are several communities of Native American tribes, the Pemones. This indigenous people, numbering some 30,000, have been partially assimilated but maintain their own language, El Pemón, as well as their customs and cultural values. Their main activities are hunting, basic agriculture, trading and some minor tourist activities. They nonetheless suffer from poverty and a low standard of living.

    The day the humanitarian aid was supposed to arrive, they stood up to the armed Guardia Nacional, just bows and arrows, spears and stones against rifles and armored vehicles, to support the entrance of the aid. Of course the result was casualties, deaths and wounded among the indigenous group. But before that happened, they were able to make the army forces retreat, and also took prisoners: a full squad together with a General in charge of the operation. This sort of David vs Goliath fight resulted in the entrance of the only two trucks with humanitarian aid into the country.

    Their courage and determination to confront the regime is remarkable, and they deserve recognition and homage.

    JE comments:  News reports say there were five dead and 25 wounded among the Pemón.  What bravery:  David vs Goliath indeed.

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    • The Pemon Death Toll (from Gary Moore) (John Eipper, USA 03/06/19 6:50 AM)

      Gary Moore writes:

      Thanks to the anonymous post (March 5) for alerting of the struggle
      at the Brazil-Venezuela border pitting indigenous Pemón people against
      the Venezuelan military. A quick preliminary search in English seems to
      show the English-language media sparse on this, and in Spanish my hits
      seem not to be as thorough as what John E has found. Again after
      only a quick glance, I've found only reports from Feb 23-24 saying 2 Pemones
      killed, then another hours later, plus two days ago El Universal saying one of
      the wounded has died in hospital, seeming to make four deaths?
      Can JE enlighten me as to where he's searching that shows five deaths?

      Also, I'm confused by the reports I did find, saying that the Venezuelan
      military was advancing on the Pemones. Wouldn't it be the other way round,
      if the Pemones were trying to facilitate the entry of blocked aid into
      Venezuela? Perhaps our anonymous contributor can point out some websites for overview.

      Is it my choice of keywords, or something in the media--or something in Google--
      that may be obscuring this seemingly landmark clash?

      Or is it just this: the flashpoint, Kumaracupay, Venezuela, is about 40 miles from
      the Brazil-Venezuela border near Santa Elena de Uairen, but it appears to be 7 hours
      by road from the nearest city to the north (Guayana City, via highway 10) and to
      the south, via highway 174, it's 14 hours to Manaus, Brazil--which itself is way up
      the Amazon. From Caracas the drive is rated at 15 hours. And I suppose this is if
      all goes well. Not the world's most accessible battleground.

      But not for Google Streetview (see attached graphic). It's not that the cumulative world
      of cyber-archiving is now as quick as human experience. In this case, it actually runs
      far ahead of what human eyes, coming on the snail-roads, can get to.

      JE comments:  I found the reference to five deaths in an on-the-fly search, but Gary Moore seems to have done a more thorough job.  Four deaths seems to be the number most widely reported.  Gary is correct that the location is extremely remote.

      In any case, greetings from Santiago de Chile.  We arrived early this morning after a long but uneventful flight.

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      • Pemon Death Toll: The Conflicting Numbers (John Eipper, USA 03/07/19 2:06 AM)

        [JE:  Once again, the author's identity is withheld by request.]

        This is in response to Gary Moore (March 6) about the number of casualties among the Pemón people during the February 22-23 events on the Venezuela-Brazil border.

        Let's start by saying that there is no free press in the country and for that reason the "official" news from the government is the only local source available, printed or digital, true or false, though it would be fair to say that stories are more likely to be faked than truthful. So according to government sources, there were no deaths and only a few wounded.

        You could find better news accuracy in the international media or the social networks. In fact, social media is the most common source for Venezuelans to learn about events in almost real time. Regarding Gary's question on the number of casualties and injured, the figures are in the range of 5 to 25 deaths, with more than 235 injured.  Moreover, it is said that more than 2000 Pemón people ran away to Brazil and the rain forest, and they carried away many of the injured because there were not enough medical supplies in Santa Elena. In fact, we knew that another of the injured died yesterday in the hospital.

        Furthermore, the uprising continued during several days after the incidents of February 23rd, causing more unknown casualties. To satisfy Gary's curiosity, here are a few links in Spanish:




        I appreciate very much the interest that John E, Gary M, Henry L and some others have paid to Venezuela's current situation.

        JE comments: The third link above reports up to 25 Pemón deaths, many of them far removed from the border region.  Gary Moore has correctly pointed out that the victim count in massacres can fluctuate widely, according to the interests/agendas of the conflicting parties.  Add politics to the mix, and it becomes even more difficult to reach a correct figure.

        Juan Guaidó arrived in Caracas to much fanfare and (so far) no arrest.  How much longer with the standoff continue with no more than isolated incidents of violence?

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        • Pemon Killings and Media Coverage (from Gary Moore) (John Eipper, USA 03/09/19 4:08 AM)

          Gary Moore writes:

          My thanks to the anonymous Venezuela correspondent (March 7) for the very helpful
          links to media covering the remote Venezuela-Brazil border clashes, pitting
          Maduro troops against indigenous Pemón residents.

          Another of many questions can
          now be added, too, to Google's "curators" who supplement the search algorithms
          in deciding top hits on given subjects. In this case, the useful media coverage was
          seemingly buried by Google's methods, and ambiguous smoke was packed on top.

          John E, now in Chile, pointed out my previous cautions on massacre death tolls,
          but it does seem that the string of Pemón killings (not a single massacre, at least
          as thus far proven) has brought at least five deaths, as JE originally said, with
          allegations of 20 more, none of those additions named or in any way seeming
          to be verified (perceptions of massed bodies without names often exaggerate).

          Bearing in mind the anonymous poster's warning about suppressed information
          in Venezuela, it might be best not to focus on a solid fatality number and concentrate
          instead on conceptuals--like what this says about the Venezuelan military,
          whom the international community and the White House were said to be trying
          to woo away from Maduro with the aid shipments in the first place.

          JE comments:  When do "mere" killings become a massacre?  Regarding the Pemón, the question seems to be whether Maduro has declared war on them or not.  If so, what could he possibly hope to gain with such cruelty?  Acts of desperation?

          (Apologies for yesterday's near-silence on the Forum.  We were extremely busy at the literature conference.  Today is already the final day of our too-short Chilean adventure, but I'll spend part of it catching up on WAIS.)

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