INoticias.CL | «Humanitarian Crisis Trumps Politics»: Economists Urge U.S. to Lift Sanctions on Venezuela Following Earthquakes

Arguing that «humanitarian needs come before political concerns,» over a hundred economists and scholars have signed a letter addressed to the U.S. government and the International Monetary Fund (IMF), demanding the immediate lifting of economic sanctions imposed on Venezuela in the wake of the devastating earthquakes that struck the country on June 24.

The 7.2 and 7.5 magnitude tremors that hit the northern region of the Caribbean nation have left a trail of unprecedented destruction. The latest official report indicates over 3,600 fatalities and 16,700 injuries, predominantly in La Guaira state, the area most devastated by this natural disaster. Hundreds of buildings, schools, hospitals, and other facilities have been affected in a country already grappling with a severe economic crisis exacerbated by coercive measures imposed by Washington.

The appeal, which includes signatures from 113 experts, such as American economist Jeffrey Sachs and Isabella Weber, is based on a compelling premise: «At this moment of emergency, sanctions are not only counterproductive but also hinder the flow of necessary resources to those who need them most.»

The Burden of Financial Restrictions

The signatories of the manifesto specifically request that the U.S. Department of the Treasury lift restrictions affecting the Central Bank of Venezuela (BCV), the state-owned oil company PDVSA, and other governmental institutions. They argue that sanctions are far from being effective political tools in this emergency context, where «every hour of delay turns a natural disaster into an avoidable social catastrophe.»

The letter emphasizes that «rescue efforts, shelters, hospitals, water, energy, transportation, food, and medicines cannot wait for diplomatic negotiations, creditor committees, or sanction documentation.»

Appeal to the IMF and International Community

The document also urges the International Monetary Fund to facilitate Venezuela’s access to the Fund’s financial mechanisms, particularly the approximately $5 billion in Special Drawing Rights (SDRs) the country could use to manage the catastrophe.

They also requested the immediate approval of a $4 billion disbursement from the Rapid Financing Instrument (RFI), citing emergency and natural disaster status without conditions. Economists further called on the United Kingdom and Portugal to unfreeze Venezuela’s gold reserves and funds from the Development Bank (Bandes), valued in the billions, which represent one-third of the central bank’s assets.

U.S. Sanctions Devastated the Venezuelan Economy

Mark Weisbrot, president of the Center for Economic and Policy Research (CEPR), one of the platforms behind the manifesto, pointed out that “it is often overlooked that U.S. sanctions destroyed the Venezuelan economy.” The statistics are alarming: the Caribbean nation experienced the deepest recession in history during peacetime between 2012 and 2020, losing 74% of its GDP, a record figure exceeding more than three times the magnitude of the Great Depression in the United States during the 1930s. Weisbrot emphasized that 88% of this loss occurred after sanctions were imposed starting in 2017, which increasingly and drastically isolated the country from international financial markets.

“It is often overlooked that U.S. sanctions destroyed the Venezuelan economy,” he stated in remarks noted by El País.

Impact of the Earthquakes on Venezuela’s GDP

Andrés Arauz, a researcher at CEPR and former minister of Ecuador, who experienced the 2016 Manabí earthquake that resulted in nearly 700 deaths, described the origins of the manifesto from direct experience. “When I saw the earthquake in Venezuela, aware that the situation in the country due to sanctions was hindering responsiveness, we contacted a group of colleagues to propose an initiative calling for the elimination of sanctions,” recounted the economist, while estimating that the economic impact on Venezuela will be around 10% of its GDP, requiring immense reconstruction efforts and the import of machinery and technology.

Debt Moratorium and Reconstruction

The academics also called on international lenders to grant a moratorium on Venezuelan debt, cancelling or suspending debt service, interest, sanctions, and arrears.

“The Venezuelan people should not have to pay twice: first through disasters, and then through sanctions, frozen reserves, and an unsustainable debt service,” the signatories highlighted.

Washington’s Support is Insufficient

Although Washington offered financial assistance of $300 million, sent specialized teams to assist with rescue efforts, and issued a temporary license for humanitarian transfers, economists consider these measures insufficient.

For this reason, they asserted that the sooner reconstruction occurs, the more damage can be prevented and more lives can be saved from the economic impact following the disaster.

The appeal gains particular significance following the recent announcement by the IMF to resume its contacts with Caracas, although the State Department maintains restrictions on the BCV that impede access to the Fund’s financial instruments.

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