Why the US is sanctioning Venezuela
- Venezuela is suffering a humanitarian crisis after its economy crashed and was rocked by hyperinflation.
- Juan Guaidó claimed the interim presidency in an attempt to oust the sitting President Nicolás Maduro.
- The US is showing support for Guaidó by imposing financial sanctions against Maduro's government.
- Visit Business Insider's homepage for more stories.
Following is a transcript of the video.
Narrator: Venezuela has been suffering a humanitarian crisis for years. The situation is so dire that an estimated 3 million Venezuelans have fled their homeland. After the country's economy collapsed in 2014, it's been plagued by hyperinflation as well as food and medicine shortages and power outages.Venezuelan Student (translation): We are experiencing a critical situation in Venezuela right now, and honestly it is really hard to live here or, well, to survive, because here no one really lives. What one has to do here to survive is to earn money to be able to eat.Advertisement
Narrator: And at the heart of it all are two men, Venezuela's president Nicolás Maduro and the leader of his opposition, Juan Guaidó. For years, Maduro denied the country's issues and blocked aid deliveries coming from most countries. Guaidó set up a parallel government and pledged to deliver aid. Other countries got involved and pushed the UN to intervene.
Mike Pence: It's time for the United Nations to act.Narrator: In April, Maduro finally acknowledged the country's crisis and allowed the Red Cross to deliver aid. Things haven't always been this way in Venezuela. In fact, its large oil reserves once made it one of the richest countries in Latin America. So what happened?
It starts with Hugo Chávez. He was elected as president of Venezuela in 1998, in large part thanks to his 21 st century-socialism message that promised to clean up corruption and balance economic inequality. As it happens, fortune was on his side.Will Martin: So Hugo Chávez came to power in Venezuela in 1999, and that coincided with a really big spike in oil prices in 2000. So effectively what happened is that overnight, Venezuela managed to have pretty much double the oil revenues that it had previously, which allowed Chávez to fund a lot of the spending that he'd pledged in his election campaigns.Narrator: The country was booming, but it was spending money faster than it was coming in.Advertisement
Martin: The issue with Venezuela is that they spent so quickly that the tax revenues weren't able to keep up with government spending, which created this big gap.
Narrator: Then on March 5, 2013, Chávez passed away. It was his fourth term in office. Nicolás Maduro was voted into office a month later when the country's luck was drying up.Martin: What had happened in the intervening years is that the Chávez presidency had nationalized a lot of the country's businesses, manufacturing plants, that sort of thing, and was therefore relying very heavily on oil to bring in revenue for the government.Advertisement
Beatrice Christofaro: So when oil prices plunged, suddenly the government didn't have money to pay for the social programs that were so popular amongst the lower classes. But also, it didn't even have the money to import all the things that it needed. Venezuela really imports almost all of its basic necessities, from food to medicine, cars, all of that. So when suddenly all this oil revenue wasn't coming in anymore, the country was faced with severe shortages.
Venezuelan Student (translation): The supermarkets here are completely empty. What you buy, you buy for an extremely high price, in terms of food.Narrator: The shortages were so severe that a national survey found that between 2015 and 2016, 74% of respondents lost an average of 19 pounds.Advertisement
At the same time, Maduro's opposition was swiftly gaining strength. In 2015, they gained a two-thirds majority in the National Assembly, threatening Maduro's position as president. In response, Maduro stacked the Supreme Court with justices on his side. Then in 2017, Maduro created the National Constituent Assembly that would rewrite the constitution and effectively bypass the opposition-controlled National Assembly.
And to make things worse, hyperinflation set in. It's basically like inflation on steroids. Prices increase more and at a faster rate. For example, in August of 2018, a roll of toilet paper in Caracas cost 2.6 million bolívars, the equivalent of 40 American cents. The bolívar is so devalued that Venezuelans need large sums of cash to buy small amounts of items.Martin: And so basically, that's the issue is that Venezuelans can't afford the goods and services they need to live basic, normal, happy lives.Advertisement
Narrator: In January of 2019, tensions grew even more when the opposition leader, Juan Guaidó, claimed the presidency, citing emergency powers in the constitution. The US quickly backed Guaidó, and Maduro responded by ordering all US diplomats out of the country.Christofaro: About 50 countries, including the US, the UK, a lot of Latin American countries, have recognized Juan Guaidó as the legitimate leader of Venezuela, which is significant in the sense that it shows that he has international support, that his government is considered legitimate by a lot of people.Narrator: But there's another problem. Maduro still controls the military. And beyond the military's strength, its officers hold influential positions in the government. In February, Maduro blocked aid coming from the Colombian border. Later in the month, he closed the southeastern border, again blocking aid from entering the country because the government thought admitting aid would basically mean admitting defeat.Advertisement
Christofaro: The government has also said that if they were to accept US aid or from any other imperialist country, they would be acknowledging that Guaidó's government is legitimate.
Narrator: There was backlash against Maduro's leadership. Hugo Carvajal, Venezuela's former intelligence chief, called out Maduro, making accusations that his inner circle is corrupt.Christofaro: All the high-ranking officers, which Guaidó actually needs on his side, feel very comfortable in this position of power that they've had. Of course, under Maduro, they have a lot of power, but they've also been implicated in a lot of problematic things such as corruption and are just afraid that if they go to the other side, they might be reprimanded for that.Advertisement
Narrator: In a New York Times op-ed, Guaidó said he has been secretly meeting with members of the armed forces and has offered amnesty to defectors who have not committed crimes against humanity.
Christofaro: Right now, he is trying to oust Maduro, and they've been in this political tug of war for the past few months where he has been meeting with international leaders, where he has been appointing opposition ambassadors around the world and has been calling for mass protests, and his goal right now is to get the military on his side and to call for new elections.Narrator: The US is Venezuela's largest oil customer and is supporting Guaidó by imposing financial sanctions, directing US companies to withhold payment from Maduro's state-owned oil company.Advertisement
Steven Mnuchin: We will continue to use all of our diplomatic and economic tools to support interim President Guaidó, the National Assembly, and the Venezuelan people's efforts to restore their democracy.
Narrator: In April, the US enacted another round of sanctions, trying to prevent Maduro's government from trading oil for Cuban intelligence services, and Vice President Mike Pence lobbied the UN to back Guaidó.Pence: And so the United States is calling on the United Nations to live up to its very purpose, reject the failed leadership of Nicolas Maduro, stand with us, stand with nations across the world, across this hemisphere, to help the people of Venezuela forge a brighter future.Advertisement
Narrator: A week later, with 7 million Venezuelans living in need of humanitarian aid, Maduro reversed his aid policy, allowing the Red Cross to start a large-scale effort to feed and provide medical attention throughout the country. However, Venezuela is still in one of the worst economic depressions in modern history. The International Monetary Fund has predicted the country's economy will shrink by 25% this year.Venezuelan Student (translation): The situation here is very grave and very hard. Here in Venezuela, I honestly don't know how my parents are supporting us, giving us food. I admire them. Those of us who live in Venezuela should be admired. We are still alive.Narrator: This crisis is far from over. The country's infrastructure and economy need repair. But the Red Cross intends to fight malnutrition and disease in what it estimates will be one of its largest humanitarian efforts since the beginning of the Syrian Civil War.Advertisement