[Senate Hearing 115-785]
[From the U.S. Government Publishing Office]
S. Hrg. 115-785
VENEZUELA: OPTIONS FOR U.S. POLICY
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 2, 2017
__________
Printed for the use of the Committee on Foreign Relations
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web:
http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
40-290 PDF WASHINGTON : 2020
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COMMITTEE ON FOREIGN RELATIONS
BOB CORKER, Tennessee, Chairman
JAMES E. RISCH, Idaho BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida ROBERT MENENDEZ, New Jersey
RON JOHNSON, Wisconsin JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado TOM UDALL, New Mexico
TODD YOUNG, Indiana CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio JEFF MERKLEY, Oregon
RAND PAUL, Kentucky CORY A. BOOKER, New Jersey
Todd Womack, Staff Director
Jessica Lewis, Democratic Staff Director
John Dutton, Chief Clerk
(ii)
C O N T E N T S
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Page
Corker, Hon. Bob, U.S. Senator From Tennessee.................... 1
Cardin, Hon. Ben, U.S. Senator From Maryland..................... 2
Smilde, David, Ph.D., Charles A. and Leo M. Favrot Professor of
Social Relations, Tulane University, Senior Fellow, Washington
Office on Latin America, New Orleans, Louisiana................ 4
Prepared Statement........................................... 6
Feierstein, Hon. Mark, Senior Associate, Americas Program, Center
for Strategic and International Studies, Washington, DC........ 10
Prepared Statement........................................... 12
O'Neil, Shannon, Ph.D., Nelson and David Rockefeller Senior
Fellow for Latin America and Director of the Civil Society,
Markets, and Democracy Program, Council on Foreign Relations,
New York, New York............................................. 14
Prepared Statement........................................... 16
(iii)
VENEZUELA: OPTIONS FOR U.S. POLICY
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THURSDAY, MARCH 2, 2017
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 10:45 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Bob Corker,
chairman of the committee, presiding.
Present: Senators Corker [presiding], Risch, Rubio,
Johnson, Flake, Gardner, Young, Cardin, Menendez, Shaheen,
Udall, Murphy, Kaine, and Booker.
OPENING STATEMENT OF HON. BOB CORKER,
U.S. SENATOR FROM TENNESSEE
The Chairman. The Foreign Relations Committee will come to
order. We thank our witnesses for being here today.
This morning, we will discuss U.S. policy toward Venezuela.
We will ask our witnesses to address three questions. Maybe
that is why we have three witnesses. What are our interests in
Venezuela? What policy outcomes should we seek in Venezuela?
And what policy tools will get us to that outcome?
Venezuela is a beautiful country with vast resources and
talented people, and yet the situation there is very bleak. In
2015, Caracas suffered 119 homicides per 100,000 people,
compared to 4.9 per 100,000 here in the United States the same
year.
As we will hear today, the mismanagement of Venezuela's
economy inflicts shortages, hyperinflation, and unemployment on
ordinary Venezuelans. Not only has the Venezuelan Government
protected people wanted in the U.S. for drug trafficking, but
Venezuela's President has appointed known drug traffickers to
high office, such as the current Vice President.
Venezuela's Government blocked an effort by citizens to
petition a recall referendum against President Maduro and
failed to hold regional elections in December 2016.
The government actively represses dissent. A leading
Venezuelan human rights group lists 117 people jailed for
political reasons.
This committee has twice enacted legislation authorizing
targeted sanctions. And to date, in four separate actions, the
U.S. unilaterally imposed targeted visa sanctions on more than
140 Venezuelans, including security forces, for human rights
abuses and corruption.
The U.S. has moved to punish violations of our laws. On
three occasions, the U.S. has named Venezuelan officials under
the drug kingpin statute. These designations include a former
Minister of Defense, a governor, an Army general, a National
Guard captain, a member of the National Assembly, and now the
Vice President.
The U.S. has indicted high-ranking military officials and
investigated criminal money laundering involving Venezuela by a
bank in Andorra.
In the Western Hemisphere and Europe, governments have
raised growing concern about the situation in Venezuela.
However, they have not joined the United States in applying
targeted sanctions. Given the standards we apply, our
Government has no doubt about criminal activity and corruption
in the Venezuelan Government.
Today, I hope we can also evaluate whether sanctions have
altered the Venezuelan Government's behavior and why other
governments have not joined us in this effort.
The Union of South American Governments supports a
political solution through dialogue between the government and
opposition. While this effort continues, the mediation faltered
when the Venezuelan Government failed to meet its commitments.
Recent polls show that more than 60 percent of Venezuelans
polled favor addressing the country's problems through
dialogue, and 28 percent favor ending the dialogue. There are
differing views in the opposition over this question.
The Organization of American States supported the dialogue,
but the Secretary General of the OAS, on the other hand,
released a well-documented, critical report on Venezuela and
invoked the Inter-American Democratic Charter.
It is worth noting that Ecuador, which is also a polarized
country, recently held the first round of its presidential
election with OAS observation. And by a margin of less than 1
percent of the vote, Ecuador will proceed to a runoff election,
something that is quite surprising and yet very, very positive.
With that, I will turn it over to Senator Cardin for his
opening statement.
Again, we thank you for being here and look forward to your
testimony and the questioning that will follow.
STATEMENT OF HON. BEN CARDIN,
U.S. SENATOR FROM MARYLAND
Senator Cardin. Mr. Chairman, thank you very much for
convening this hearing on Venezuela. I join you in welcoming
our distinguished panel of witnesses.
I will make the same observation that Senator Menendez made
at our last meeting, that it is wonderful to have private
sector experts. What we need to do is make sure we follow that
up with meeting with the Trump administration officials that
are responsible for these policies. Unfortunately, many have
yet to be named.
But this hearing is extremely important, and I thank you
very much for calling this hearing.
This is a manmade calamity. Venezuela is a beautiful
country, and the people should not be suffering the way they
are suffering. It is a heartbreaking humanitarian crisis--
broken-down hospitals, people starving on the streets, an
economy that is in shambles.
This is a failing state, make no mistake about it. And we
have a direct United States security interest in reversing what
is happening in Venezuela. The regional stability of countries
such as Colombia, Brazil, and our Caribbean countries all are
very much directly impacted by the current crisis in Venezuela.
There is one person who is responsible for this, and that
is President Maduro. He has become an authoritarian leader,
which is unacceptable. He is denying basic rights to its
citizens. Their electoral rights are being very much
compromised. He stripped the legislature of its constitutional
authority. He has political prisoners now ranging in the
hundreds.
And equally disturbing, he is administrating a government
that is full of corruption.
What is extremely disheartening is that Venezuela's oil
wealth is being taken for corruption. What is even more tragic,
as people are starving, the government is making money off the
food distribution, stealing food from its people in order to
fuel the corruption of its government.
That has to shock the world. So we need to take action.
Of course, there is, as the chairman pointed out,
widespread government officials involved in narcotics
trafficking, which also affects our own country.
So, Mr. Chairman, what is the appropriate role for
Congress, as we start this congressional session?
First and foremost is oversight. This hearing is an
important part of that oversight, so we can get the information
we need in order to be a partner in trying to reverse what is
happening in Venezuela.
Secondly, we should look at bipartisan legislation. And I
am working on bipartisan legislation with Republican colleagues
that would authorize humanitarian assistance, so we can be more
effective in helping the people of Venezuela.
That we engage our regional partners--a point that the
chairman made is absolutely correct. If we are going to have an
effective policy to bring about change in Venezuela, it is one
thing for the United States to act, but we have to act with our
regional partners, and we have to use multilateral diplomacy,
including the OAS. The OAS has to be more effective in
restoring democratic governance in Venezuela.
Under the Obama Administration, we have used sanctions. I
think the sanctions are important. I think we can strengthen
those sanctions. And we can certainly work with other countries
to make sure that the sanctions become more effective because
other countries enforce and support our use of those sanctions.
So I look forward to hearing from our witnesses as we
determine how we can try to change the course in Venezuela. The
current course is unacceptable.
The Chairman. Thank you very much for those comments, and
for the rest of the members for being here.
And with that, I would like to introduce our first witness,
Dr. David Smilde, currently a professor of social relations at
Tulane University who has researched and written extensively
about Venezuela.
Thank you for being here today. Did I pronounce your name
properly? Thank you so much.
Our second witness today is the Honorable Mark Feierstein,
who served as senior director for Western Hemisphere at the NSC
under President Obama.
Thank you so much for being here, sir.
Our third witness is Dr. Shannon O'Neil, a senior fellow
for Latin American studies and director of the Civil Society
Markets and Democracy Program at the Council Foreign on
Relations.
We thank you for being here.
If you could each give your testimony in a summarized form
in about 5 minutes or so, without objection, your written
testimony will be entered in the record. If you would just
proceed in the order you were introduced, we would appreciate
it.
And if you would begin, Doctor, thank you.
STATEMENT OF DAVID SMILDE, PH.D., CHARLES A. AND LEO M. FAVROT
PROFESSOR OF SOCIAL RELATIONS, TULANE UNIVERSITY, SENIOR
FELLOW, WASHINGTON OFFICE ON LATIN AMERICA, NEW ORLEANS,
LOUISIANA
Dr. Smilde. Chairman Corker, members of the committee,
thank you very much for this opportunity to testify about the
Venezuelan crisis and options for U.S. policy.
Venezuela has been a subject of my professional activity
for the past 25 years. I first went to Venezuela in 1992 to do
dissertation research, and I have been writing about it ever
since.
It is also an issue of intense personal interest. In
Venezuela, I formed my family, raised my children, and spent 14
of the last 25 years. Many of my closest friends and most
valued colleagues are in Venezuela.
With great dismay, I have watched them suffer from a
government that has radically mismanaged their economy and
society, and is blocking democratic and constitutional efforts
at change.
The United States policy towards Venezuela should focus on
facilitating the reestablishment of a democracy in which human
rights are fully respected, including citizens' rights to
decide what kind of government they want and who they want to
lead it.
In my view, the program of targeted sanctions rolled out in
March 2015 is not the right policy for this goal. While these
sanctions definitely provide a signal that the U.S. is against
human rights violations, they also fit nicely in the Maduro
government's international conspiracy theories, and thereby
strengthen its interpretation of events.
Furthermore, rather than being developed in concert with
regional partners, the U.S. sanctions have been conceived and
imposed unilaterally. Far from spurring regional allies to
action, this unilateral character makes it more difficult for
them to act with reference to Venezuela.
Finally, while these sanctions have clear targets and can
be attributed to concrete behaviors, there is no obvious path
for easing or lifting them in response to changes. Thus, they
effectively increase the exit costs for these officials and
thereby increase their loyalty to the Maduro government.
It might be argued that even if sanctions raise the exit
costs of sanctioned officials, this will be outweighed by the
deterrent effect on nonsanctioned officials. But the evidence
suggests this is not the case. To the contrary, conditions of
human rights and corruption have only gotten worse in the past
2 years.
This failure is not because sanctions went unnoticed in
Venezuela. In fact, their rollout in March 2015 was news in
Venezuela for weeks and months. And it is not because only
seven officials were sanctioned. Deterrence is supposed to work
through a social observation effect, and that should be
effective whether 7 or 70 officials were sanctioned.
Fortunately, there are policy alternatives.
First, given the marked deterioration of Venezuelan
democracy and the diversification of the political tendencies
in the region, it is likely that work through multilateral
institutions could come together in a way it has not in recent
years. OAS Secretary General Luis Almagro's invocation of the
Democratic Charter in June 2016 was discussed but put off by
OAS member states to see if progress can be made through a
dialogue.
Over 6 months has passed, and it is clear that the
Venezuelan Government has used the dialogue process to buy time
and deflect change. It is time for the Democratic Charter to be
taken up again.
The United Nations also has considerable potential to act
with reference to Venezuela. A peace-building initiative like
the one that was carried out in El Salvador in the late 1980s
could be effective. Alternately, the U.N. Secretary General
could name a special representative to Venezuela.
There are regional institutions that United States is not
part of but which could be supported. Venezuela is on the rocks
with Mercosur, but remains a member. Mercosur has a democratic
clause aimed at protecting human rights that could still be
invoked.
There is also considerable space for bilateral and
multilateral diplomacy. I have been encouraged by President
Trump's discussions of the Venezuelan case with the Presidents
of Argentina, Panama, and Peru. Consulting with regional
partners needs to have a central place in the formation of
U.S.-Venezuela policy.
A potential group of friends of Venezuela containing
diverse countries could be organized to develop common criteria
and approaches. Such a group could emerge in the region without
U.S. involvement, like the Contadora Group in Central America
in the 1980s. If it does, the U.S. would be wise to support it.
Finally, continued efforts at dialogue should be supported.
While the October-November dialogue was unfruitful, and the
Venezuelan opposition is right to have refused to return to the
table under current conditions, it is an option that should
remain alive. In an economic or political crisis, having
international facilitators with established relationships close
by could be vital.
Compared to unilateral actions, the path to diplomacy I am
recommending is slow and frustrating. It requires a lot of
energy and does not offer flashy optics. But in the long run,
it is more likely to succeed and less likely to lead to the
unintended consequences of unilateral policies.
Thank you.
[The prepared statement of Dr. Smilde follows:]
Prepared Statement of Dr. David Smilde
Chairman Corker and Members of the Committee, thank you very much
for the opportunity to testify about the Venezuela crisis and options
for U.S. policy. Venezuela has been the central subject of my research
over the past 25 years. I first went to Venezuela in 1992 to do
dissertation research, and I have never stopped investigating and
writing about it.
It is also an issue of intense personal interest. In Venezuela I
formed my family, raised my children and spent 14 of the last 25 years.
Many of my closest friends and most valued colleagues are still in
Venezuela.
For today's purposes, an extensive description of Venezuela's
downward spiral in recent years is probably unnecessary. Suffice it to
say that in the face of declining oil prices and disastrous
mismanagement, the country's economy is all but imploding. Imports in
2016 dropped more than 60 percent from their 2012 levels, leading to
dramatic economic contraction, triple digit inflation and widespread
scarcity of food and medicine.
Even worse, Venezuelan citizens' desires and efforts to change the
country's direction through democratic means have repeatedly been
thwarted by the government of President Nicolas Maduro. A landslide
opposition win of the National Assembly in December 2015 has largely
been negated by a government-controlled Supreme Court that has annulled
almost all of the National Assembly's legislative projects and
progressively stripped the legislature of its functions. And the
opposition's push for a recall referendum on Maduro's presidency--after
being forced to jump through the absurd hoops placed in their path by
the National Electoral Council--was ultimately suspended indefinitely
on the most spurious of grounds. Currently, the country's regional
elections have also been indefinitely postponed, and a process underway
to revalidate political parties seems destined to abolish most of them.
In other words, Venezuelans are suffering from a government that
has radically mismanaged their economy and society, and is blocking all
democratic and constitutional efforts at change. In these dire
circumstances, the United States' policy towards Venezuela should focus
on facilitating the reestablishment of a democracy in which human
rights are fully respected, including citizens' right to decide what
kind of government they want and who they want to lead it.
The question, of course, is exactly how U.S. policy could help to
achieve this outcome, and how to avoid approaches that would be
ineffectual or even counterproductive. In weighing this question and
considering the options available, it is important to take into account
not just the intentions, but also the consequences of U.S. actions and
policies. Even policies that are pursued for the best of intentions may
prove to be ineffective, or even deleterious to the ultimate goal.
In December 2014 the ``Venezuela Defense of Human Rights and Civil
Society Extension Act'' was signed and in March 2015 it was rolled out
with an Executive Order targeting seven Venezuelan officials for
sanctions. In my view, this was not the right policy and is not helping
the situation of Venezuela.
For good reasons, sanctions have become one of the most important
policy instruments in international relations. They represent a tool
that is stronger than words but does not resort to violence. Applying
sanctions can give a powerful message from one country to another about
what kinds of things it finds unacceptable. In the best cases,
sanctions can even generate change in the actions of sanctioned actors
without armed struggle. All of this is good.
However, the ample research on the matter is quite clear in its
findings that sanctions,\1\ whether general or targeted, do not work
most of the time.\2\ Sanctions can serve to signal displeasure or the
highlight values of the sanctioning country. But only in some cases do
they actually generate a change in behavior. Researchers argue that
there are three important factors that impact the effectiveness of
sanctions.
First, while sanctions definitely have a signal moral resolve and
disapproval, this works both ways. Sanctions can function to change
behavior in contexts that care a lot about the country wielding the
sanctions thinks.\3\ For example, in both South Africa and Serbia,
sanctions meant a lot because these countries--including ruling
elites--saw the West as an important ally.
But in cases in which there is an existing anti-American ideology,
U.S. sanctions can have a ``Battle of Britain'' effect, whereby those
targeted do not relent but instead hunker down and fight against the
odds, even converting their resistance into a potent political theme to
shore up their domestic support.\4\ An instructive case in point is the
50 years of U.S. sanctions on Cuba, an approach which, far from
dislodging the Castro brothers, has facilitated their permanence in
power.
Second, sanctions are weaker when they are unilateral.\5\ The more
international support and participation sanctions enjoy, the more
legitimacy and effectiveness they are likely to have, and the harder
they are to portray as imperialist conspiracies.\6\ The international
consensus around sanctions in South Africa, Serbia, and Iran, for
example, has been important.
Third, for sanctions to achieve their purposes, they have to have
clear and attainable goals,\7\ and the imposing party needs to be able
to ease or lift the sanctions if and when the behavior that is the
focus of the sanctions changes.\8\ If the sanctions are ends in
themselves, with no remedy based on the behavior of those being
targeted, then the incentives for cooperation dwindle. On the other
hand, if it is clear that those imposing sanctions are prepared to ease
or lift them as behavior warrants, then incentives for changed behavior
can be strengthened, and the original purposes for imposing sanctions
are more likely to be met.
Unfortunately, the current regime of targeted sanctions on
Venezuelan officials, is on the wrong side of all three of these
factors.
First, these sanctions definitely provide a signal that the U.S. is
against what is happening in Venezuela. But they also fit very nicely
in Venezuela's anti-imperialist, international conspiracy theories,
which seek to explain all of Venezuela's current problems as the result
of the United States trying to undermine the country's sovereignty.
This line of response was certainly more important 2 years ago when the
sanctions were first rolled out and Nicolas Maduro still had the
ability to win elections. But rallying around the flag in defiance of
U.S. aggression is still important theme in maintaining Maduro's core
of support. Indeed, Maduro still has a 20 percent approval rating,
which is remarkably high in light of the severe social and economic
crises the population is experiencing.
Second, rather than being applied in concert with other partners
and enjoying wide international support, the U.S. sanctions have (to
date) been conceived and imposed unilaterally. Moreover, their initial
implementation through an Executive Order that labeled Venezuela a
threat to U.S. national security generated region-wide rejection. Far
from spurring allies to action on Venezuela, this framing put them on
their heels and made it more difficult and less likely for them to act.
Third, while these sanctions have clear targets and can be
attributed to concrete behaviors, which is good, there is no obvious
path for easing or lifting them in the response to changed behavior.
Moreover, even if the sanctions themselves were to be formally lifted
for whatever reason, the underlying accusations of human rights
violations and illegal drug trafficking activities would remain and
make the person sanctioned assume that, once out of power, they could
face extradition to the United States.
This last characteristic is perhaps the most important problem.
Instead of creating an incentive to change the behavior of officials
who engage in human rights violations or acts of corruption, these
sanctions impose a penalty that will carry its heaviest weight if and
when the government itself changes. They therefore increase the exit
costs of these officials, and increase their loyalty to the Maduro
government, to whose survival their own fates are bound more tightly
than ever.
The logic of this can be seen in the way President Maduro has made
a point of promoting officials who have been put on some sort of U.S.
blacklist.
The seven officials sanction were not sidelined or ostracized.
Rather, they were each rewarded either with lucrative positions in
state industries, or as in the following four cases, with positions in
the security apparatus.
General Antonio Benavides Torres was named Chief Commander
of the National Guard (Venezuela's branch of the Armed Forces
dedicated to domestic security.)
General Gustavo Gonzalez Lopez was designated head of the
Ministry of Interior and Justice and the head of the
intelligence service SEBIN.
Katherine Harrington was named, a month after being
sanctioned, as Vice Minister of Citizen Security and
Prevention, serving in that post for 18 months before being
removed.
Manuel Eduardo Perez Urdaneta is also a Vice Minister of
Citizen Security and Prevention.
This is part of a logic whereby Nicolas Maduro builds a core of
officials whose loyalty he is sure of because of their high exit costs.
It extends beyond these particular sanctions to include others on some
kind of U.S. blacklist. In August 2016, General Nestor Reverol was
named Minister of Interior and Justice a day after U.S. prosecutors
unsealed his indictment on charges of drug trafficking.
We can ask how this logic of sanctions-induced loyalty will play
out with Vice President Tareck El Aissami who has been put on the
Treasury Department's Kingpin list, leading to similar sanctions. From
El Aissami's perspective, a return of fair elections to Venezuela would
surely put the opposition in power and likely see him extradited to the
United States. One should assume that he will use all the levers of
power to prevent that from happening.
It might be argued that, even if sanctions raise the exist costs of
sanctioned officials and tie their fates to the government's
maintenance of power, this will be outweighed by the deterrent effect
on non-sanctioned officials who might consider human rights violations
or acts of corruption.
What is the evidence? In the past 2 years since sanctions were
rolled out, the Maduro government has:
Cracked down on NGOs,\9\
Convicted and sentenced political prisoner Leopoldo
Lopez,\10\
Instituted a violent citizen security initiative accused of
over 500 deaths,\11\
Used the Supreme Court to neutralize the opposition National
Assembly,\12\
Taken more political prisoners,\13\
Suspended the recall referendum process,\14\
Failed to fulfill the commitments made in a Vatican-Unasur
dialogue process,\15\ and
Put food distribution under military command generating far-
reaching corruption.\16\
By any standard these are not the consequences the sanctions
program was supposed to generate.
This failure is not because only seven officials were sanctioned,
and it is not because the sanctions went unnoticed in Venezuela. In
fact, their rollout in March 2015 was international news for days and
weeks, and news in Venezuela for weeks and months. Nicolas Maduro made
sure everyone knew, especially Venezuelan citizens. I suspect that it
would be hard to find even a peasant in the Venezuelan countryside who
did not know about the U.S. sanctions. Deterrence is supposed to work
through a social observation effect, and that should be effective
whether 7 or 70 officials were sanctioned.
All of this points the fact that the idea of ``pressure'' is too
simple as our leading metaphor for understanding foreign policy.
Pressure can have quite different and contradictory effects, depending
on the context.
Of course, I am focusing here on the consequences of sanctions. One
entirely legitimate response is that sanctioning human rights abusers
and corrupt officials is simply a value position, a moral stance in
favor of human rights and against corruption, and should be taken
whatever the consequences. This is understandable and indeed taking a
stand on values and letting the chips fall where they may is part of
what it means to be human.
But when this is the logic behind a policy, it should be
represented as such. A policy that is undertaken in the name of values,
without regard for the consequences, should not be portrayed as aiming
to benefit the people. More to the point of today's discussion, while
the United States' program of targeted sanctions in Venezuela may
represent an admirable expression of our devotion to protecting human
rights, it is actually having negative outcomes for Venezuelan
democracy and human rights. The responsibility for these negative
outcomes rest squarely on the shoulders of Nicolas Maduro and other
Venezuelan officials. But U.S. policy is facilitating them.
Of course doing nothing is not an option; the Venezuela crisis is
too grave. From my perspective, policymakers should strive to identify
the policy options that express fundamental values and that increase
the likelihood of achieving the goal in question, which is the
reestablishment of electoral democracy and protection of human rights
in Venezuela.
Fortunately, there are alternatives, although none of them are easy
or promise instant results. First, given the marked deterioration of
Venezuelan democracy, it is likely that work through multilateral
institutions could come together in a way it has not in recent years.
There are three areas for concerted political action: work through
multi-country bodies like the Organization of American States (OAS),
the United Nations (U.N.) and Union of South American Nations (UNASUR),
work to support governments in the region who can also engage the
Venezuelan government, and work to support a meaningful process of
dialogue.
OAS Secretary General Luis Almagro's invocation of the Democratic
Charter in June 2016 was discussed but put off by OAS member states to
see if progress could be made through a dialogue process promoted by
UNASUR and later joined by the Vatican. Over 6 months has passed and it
is clear that the Venezuelan government has used that dialogue process
to buy time and deflect change. I agree with many others that it is
time for the Democratic Charter to be taken up again. This time around,
with the Maduro government reneging on electoral democracy, one should
expect more consensus to develop among OAS member states on the gravity
of the situation in Venezuela. The United States could have an
important role in supporting this process. Whether or not the OAS
member states come to a consensus, the debate in the OAS will shine a
spotlight on the Maduro government and generate important international
pressure that extends well beyond U.S. government sanctions.
Furthermore, the United States and other countries could work to
strengthen the InterAmerican Council for Human Rights (IACHR) which is
the preeminent institution for the defense of human rights in the
region.
The United Nations also has considerable potential to act with
reference to Venezuela. A peacebuilding initiative like that which was
carried out in El Salvador in the late 1980s could be effective.
Alternatively, the U.N. Secretary General could name a Special
Representative to Venezuela. These initiatives would not be feasible in
the short term as the first would require the consent of the permanent
members of the Security Council and both would require the consent of
Venezuela. But in the likely case that the Venezuela crisis worsens,
that could change. U.S. government advocacy would be key to making them
happen.
The United Nations Human Rights Council is more cautious than IACHR
given that it consists of member states. However, Venezuela is actually
a member of the council and that makes it more difficult for it to
dismiss its statements as imperialist conspiracies.
There are regional institutions that the United States is not part
of but which could be supported. Venezuela is already on the rocks with
trade block Mercosur. It has effectively been marginalized, while still
remaining a member. Mercosur has a Democratic Clause aimed at
protecting human rights that could still be invoked. Thus far UNASUR
has shown more interest in protecting the interests of incumbent
governments than the interests of its countries' citizens. But a more
diverse set of leaders in the region could promote the development of
institutions and mechanisms to provide proper protections for human
rights
There is also considerable space for bilateral and multilateral
diplomacy. I have been encouraged by President Trump's discussions of
the Venezuelan case with the presidents of Argentina, Panama, and Peru.
Regional partners need to have a lead role in U.S.-Venezuela policy. A
group of ``Friends of Venezuela'' containing diverse countries could be
organized to develop common criteria and approaches. Such a group could
emerge in the region without U.S. involvement, like the Contadora Group
in Central America in the 1980s. If it does, the U.S. would do well to
support it.
Finally, continued efforts at dialogue should be supported. While
the October-November dialogue was unfruitful, and the Venezuelan
opposition is right to refuse to return to the table under current
conditions, it is an option that should remain alive. In an economic or
political crisis, having international facilitators with established
relationships close by could be vital.
It is worth noting that the bad press the Vatican has received for
the failed dialogue in October and November is unfair and uninformed.
Vatican representatives came to Venezuela a month after both the
government and the opposition formally invited it, not because of
pressure from the U.S. When agreements were made and the government
then failed to follow through on its part, Vatican Secretary of State
Monsignor Pietro Parolin sent a strong letter putting forward four
conditions to continue in the dialogue. When those conditions were not
met by January, Vatican representative, Monsignor Claudio Maria Celli
returned to Rome.
Dialogue should not be seen as solitary option to be unperturbed by
parallel initiatives. If pressure is not exerted from multinational
institutions and from domestic political dynamics, the Maduro
government will never take dialogue seriously. Other options for
addressing the Venezuela crisis should not be put on hold to simply see
if dialogue works out.
Furthermore, dialogue should focus primarily on basic issues of
democracy, for example recognition of elected officials, release of
political prisoners, and most of all an electoral calendar. It should
not be used to address basic issues of governance that should be left
to democratically elected officials. If democratic freedoms and
elections can be secured, Venezuelans can fix the rest for themselves.
Compared to unilateral actions, the path of diplomacy I am
recommending is slow and frustrating. It requires a lot of energy, and
does not offer flashy optics or dramatic sound-bites. But in the long
run it is more likely to succeed and less likely to lead to the
unintended negative consequences of so many failed U.S. policies in the
past.
Thank you.
----------------
Notes
\1\ Daniel Wagner, ``Do Sanctions Work?'' The World Post, February
27, 2017, http://www.huffingtonpost.com/daniel-wagner/do-sanctions-
work_b_7191464.html.
\2\ One exhaustive review of 200 sanctions programs in the
Twentieth Century showed that there was evidence of success in 35% of
cases. Gary Clyde Hufbauer, Jeffrey J. Schott, Kimberly Ann Elliott and
Barbara Oegg. 2009. Economic Sanctions Reconsidered. Peterson Institute
for International Economics.
\3\ Kenneth Rogoff, ``Opinion: Do economic sanctions work?'' Market
Watch, January 6, 2015, http://www.marketwatch.com/story/do-economic-
sanctions-work-2015-01-06?mod=mw_share_twitter.
\4\ Jonathan Marcus, ``Analysis: Do economic sanctions work?'' BBC
News, July 26, 2010, http://www.bbc.com/news/world-middle-east-
10742109.
\5\ Francesco Giumelli. 2013. The Success of Sanctions: Lessons
Learned from the EU Experience . Burlington, Vermont: Ashgate
Publishing Company. Zarate, Juan C. 2013. Treasury's War: The Unleasing
of a New Era of Financial Warfare. New York, New York: Public Affairs.
\6\ Mark Malloch Brown and Harry Gibson, ``Do Sanctions Work?''
Newsweek, December 22, 2014, http://www.newsweek.com/do-sanctions-work-
293957.
\7\ Carla Anne Robbins, ``Why Economic Sanctions Rarely Work,''
Bloomberg, May 24, 2013, https://www.bloomberg.com/news/articles/2013-
05-23/why-economic-sanctions-rarely-work. Jonathan Masters, ``What are
Economic Sanctions,'' Council on Foreign Relations, February 8, 2017,
http://www.cfr.org/sanctions/economic-sanctions/p36259.
\8\ Mark Malloch Brown and Harry Gibson, ``Do Sanctions Work?''
Newsweek. Dursun Peksen. 2009. ``Better or Worse? The Effect of
Economic Sanctions on Human Rights.'' Journal of Peace Research (Sage
Publications, Ltd.) 46 (1): 59-77.
\9\ Hugo Perez Hernaiz and David Smilde. June 15, 2015.
``Venezuela's Human Rights NGOs Under Fire Again.'' Venezuelan Politics
and Human Rights. Venezuelablog.tumblr.com.
\10\ ``WOLA Deplores Venezuelan Court's Conviction and Sentencing
of Leopoldo Lopez.'' September 11, 2015. Venezuelan Politics and Human
Rights. Venezuelablog.tumblr.com.
\11\ Rebecca Hanson. April 18, 2016. ``Human Rights Watch and
Provea Release Devastating Report on Venezuelan Citizen Security
Initiative.'' Venezuelan Politics and Human Rights.
Venezuelablog.tumblr.com.
\12\ Hugo Perez Hernaiz. December 28, 2015. ``Conflict of Powers
Looms as Venezuela's New Assembly Prepares to Convene.'' Venezuelan
Politics and Human Rights. Venezuelablog.tumblr.com.
\13\ Hugo Perez Hernaiz and David Smilde. September 11, 2016.
``Mobilized Opposition Faces Arrests and Detentions.'' Venezuelan
Politics and Human Rights. Venezuelablog.tumblr.com.
\14\ ``Venezuela's Suspension of Signature Collection is a
Dangerous Setback.'' October 21, 2016. Venezuelan Politics and Human
Rights. Venezuelablog.tumblr.com.
\15\ Hugo Perez Hernaiz. January 9, 2017. ``Is Venezuela's Dialogue
Dead?'' Venezuelan Politics and Human Rights. Venezuelablog.tumblr.com.
\16\ Hannah Dreier and Joshua Goodman. December 28, 2016.
``Venezuela Military Trafficking Food as Country Goes Hungry.''
Associated Press.
The Chairman. Go ahead, sir. Thank you.
STATEMENT OF HON. MARK FEIERSTEIN, SENIOR ASSOCIATE, AMERICAS
PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES,
WASHINGTON, DC
Mr. Feierstein. Chairman Corker, Ranking Member Cardin, and
members of the committee, I want to thank you for the
opportunity to testify today. Let me begin by commending the
committee for holding this hearing.
In a hemisphere otherwise full of opportunities for the
United States, there is one glaring crisis that demands action
by our government and other countries in the region, and that
is the autocratic rule and economic collapse in Venezuela.
The Venezuelan people have been victimized by their
government's incompetence and malfeasance. The country with the
world's highest oil reserves suffers from the world's highest
inflation and deepest decline of GDP. At the same time,
military and civilian officials are plundering the country and
enriching themselves, siphoning scarce resources and
trafficking in illegal drugs.
Venezuelans are already fleeing to Colombia, Brazil, and
Caribbean neighbors, and a larger refugee crisis is
increasingly likely.
President Nicolas Maduro has compounded his economic
misrule with political repression. Scores of political
prisoners sit in jail for exercising their fundamental rights
to express themselves freely and assemble peaceably.
The opposition-controlled National Assembly has been
stripped of its authority, and electoral authorities quashed a
presidential recall referendum and arbitrarily postponed
regional elections.
While Maduro denies the existence of an economic crisis and
human suffering, the Venezuelan people continue their
courageous struggle to restore democracy. In December 2015,
voters overcame a skewed electoral process and voted
overwhelmingly for opposition candidates for the National
Assembly.
Venezuelans have participated in large-scale protests
against the government. Millions were prepared to participate
in a referendum to unseat Maduro, and the political opposition
agreed to participate in a dialogue with the government.
The solution to Venezuela's economic and political crises
will largely come from inside Venezuela. An outcome cannot and
should not be imposed from the outside. That said, there are
important steps the United States should take, in concert with
other countries, to help end the suffering of the Venezuelan
people and restore respect for democratic norms.
First, the administration should publicly and privately
insist that any political transition be peaceful and
constitutional. A democratic transition could be achieved by a
variety of legitimate means, including by reviving the recall
referendum process and moving up next year's presidential
elections.
Second, the United States should be clear that the
opposition should not be compelled to suspend protests to
participate in a dialogue with the government, as other
international actors have insisted. The administration should
mobilize like-minded countries to warn Venezuelan authorities
that anyone who orders or participates in violence against
demonstrators will be held accountable by the international
community.
Third, the administration should signal it will consider
supporting opposition proposals to offer guarantees to
government figures who facilitate a democratic transition.
Fourth, the administration should continue to refine the
plans ordered by President Obama to deal with a range of
contingencies in Venezuela, including a worsening of the
humanitarian situation, an increased flow of refugees into
neighboring countries, and a transition to a government
committed to democracy and economic reform.
Fifth, the Trump administration should encourage other
countries to join the United States in imposing sanctions on
Venezuelan officials for engaging in massive corruption,
abusing human rights, and dismantling democracy.
Finally, the Trump administration should continue Obama
administration efforts to build support at the Organization of
American States to invoke the American Democratic Charter,
which offers tools to defend democracy. OAS member states
should impose consequences on the Venezuelan Government for
continuing to hold political prisoners, canceling the recall
referendum, and shackling the National Assembly.
Such external pressure, combined with domestic mobilization
within Venezuela, is essential for any internal dialogue or
international mediation to succeed in bringing about a
democratic transition and meaningful economic reform.
Although patience with the Maduro government in the region
has been exhausted, invoking the charter will not be easy. Most
of the region has preferred to delay action while the Vatican-
mediated dialogue between the government and opposition
sputters along.
Unfortunately, the Trump administration is poorly
positioned to marshal regional efforts to defend democracy. The
President's attacks on the American press, judiciary, and
critics of his administration have eroded the moral authority
of the United States. And the administration's alienation of
some of our closest allies, including Mexico, has undermined
our ability to organize international efforts in Venezuela.
As noted, there are steps the Trump administration should
take to have a positive impact in Venezuela. But unless the
President alters his posture domestically and internationally,
the United States will sideline itself diplomatically, and
advocates for democracy and human rights might have to look to
other countries to champion the cause of the embattled
Venezuelan people.
Thank you, Mr. Chairman. I look forward to your questions.
[The prepared statement of Mr. Feierstein follows:]
Prepared Statement of Mark Feierstein
Chairman Corker, Ranking Member Cardin, Members of the Committee:
Thank you for the opportunity to testify today. Let me begin by
commending the Committee for holding this hearing. In a hemisphere full
of opportunities for the United States, there is one glaring crisis
that demands action by the United States and other countries in the
region--the autocratic rule and economic collapse in Venezuela.
As necessary as this hearing is, I think we can all agree it is a
shame that Venezuela is overshadowing the many positive developments in
Latin America. When Donald Trump took office, relations between the
United States and Latin America were better than they had ever been.
Mexico and the United States were partners in controlling migration,
combating drug trafficking and expanding economic opportunity for
Americans and Mexicans alike; more than a decade of bipartisan support
for Colombia had positioned its government to end the longest armed
conflict in the hemisphere; increased assistance to Central America was
beginning to address the factors driving illegal migration to the
United States; and steps to normalize relations with Cuba and improve
the lives of its people had removed an irritant in hemispheric
relations.
Venezuela was the notable exception to the general trend toward
more democratic governance and amicable U.S. relations in the region.
Rather than address the severe economic and social problems crippling
Venezuela, President Nicolas Maduro opted to scapegoat the United
States and invent accusations of American political and economic
interference. Well before fake news stained the U.S. presidential
election, the Venezuelan regime, like other authoritarian governments,
made a practice of circulating falsehoods.
The principal victims of the Venezuelan government's incompetence
and malfeasance are of course the Venezuelan people. By doubling down
on the failed economic policies imposed by the late President Hugo
Chavez, Maduro has produced a social cataclysm. The country with the
world's highest oil reserves suffers from the world's highest inflation
and deepest decline of GDP. Venezuelans spend their days in search of
food and medicine. At the same time, military and civilian officials
are plundering the country and enriching themselves, siphoning scarce
resources and trafficking in illegal drugs. The street of Venezuela are
notoriously dangerous, with the country's murder rate the highest in
the world. Venezuelans are already fleeing to Colombia, Brazil and
Caribbean neighbors, and a larger refugee crisis is increasingly
likely.
Maduro has compounded his economic misrule with political
repression. Scores of political prisoners sit in jail for exercising
their fundamental rights to express themselves freely and assemble
peaceably. The opposition-controlled National Assembly has been
stripped of its
authority by a pliant Supreme Court. The co-opted electoral
authorities quashed a presidential recall referendum and have
arbitrarily postponed regional elections that would almost certainly
have unseated governors from the ruling socialist movement. Such
practices, once common in Latin America, should not be acceptable in a
region that is now nearly fully democratic with formal procedures to
defend and promote democracy.
While Maduro denies the existence of an economic crisis and human
suffering, the Venezuelan people continue their courageous struggle to
restore democracy. In December 2015, voters overcame a skewed electoral
process and voted overwhelmingly for opposition candidates for the
National Assembly. Despite fears of violence and government reprisals,
Venezuelans have participated in large-scale protests against the
government. Millions were prepared to participate in a referendum to
unseat Maduro, despite expected reprisals from the government. And the
political opposition, committed to a peaceful transition, agreed to
participate in a dialogue with the government, though the regime merely
used the process to defuse domestic protests and hold the international
community at bay, while buying time to consolidate its stranglehold on
power.
The solution to Venezuela's economic and political crises will
largely come from inside Venezuela, from the continued mobilization of
citizens there and by the actions of those who represent them. A
favorable outcome cannot and should not be imposed from the outside.
That said, there are important steps the United States should take, in
concert with other countries in the region, to help end the suffering
of the Venezuelan people and restore respect for democratic norms. The
Trump Administration should immediately follow the sanctions it levied
against Venezuelan Vice President Tarek El Aissami and an associate for
international drug trafficking with the following actions:
First, the Administration should publicly and privately insist that
any political transition be peaceful and constitutional. American
officials must heed the lessons of the short-lived coup in 2002, when
Bush Administration support for Chavez's ouster undermined America's
standing in the region and damaged our credibility as a defender of
democracy. A democratic transition could be achieved in Venezuela by a
variety of legitimate means, including by reviving the presidential
recall referendum process or moving up next year's presidential
elections.
Second, the United States should be clear that the opposition
should not be compelled to suspend protests to participate in a
dialogue with the government, as other international actors have
insisted. Absent elections, an independent judiciary and a functioning
legislature, protests are the only mechanism for Venezuelans to
demonstrate their rejection of the government and its policies. The
Administration should mobilize likeminded countries to warn Venezuelan
authorities that anyone who orders or participates in violence against
demonstrators will be held accountable by the international community.
Third, the Administration should signal it would consider
supporting opposition proposals to offer guarantees to government
figures who facilitate a democratic transition. It is never satisfying
when individuals are not held accountable for misdeeds. But such
compromises can be necessary to dislodge an authoritarian regime
without bloodshed and chaos.
Fourth, the Administration should continue to refine the plans
ordered by President Obama to deal with a range of contingencies in
Venezuela, including a worsening of the humanitarian situation, an
increased flow of refugees into neighboring countries, and a transition
to a government committed to democracy and economic reform. Even as
pressure is ramped up on the regime, the United States should be poised
to provide humanitarian assistance to the Venezuelan people, support
U.N. agencies and countries like Colombia to care for refugees, and
support the Inter-American Development Bank and other international
bodies to promote sound economic policies that restore economic growth,
reduce poverty and crime, and help rebuild Venezuela's collapsed health
system.
Fifth, the Trump Administration should encourage other countries,
and the European Union, to join the United States in imposing sanctions
on Venezuelan officials for engaging in massive corruption, abusing
human rights and dismantling democracy. Multilateral sanctions are more
effective in blocking an individual's assets and travel, and they
convey global opprobrium and deprive wrongdoers of the opportunity to
portray themselves as martyrs in an anti-imperialist struggle against
the United States. When the Obama Administration appropriately
sanctioned seven Venezuelan security officials in April 2015, the
legislative requirement to find that Venezuela ``constitutes an unusual
and extraordinary threat to the national security and foreign policy of
the United States'' led governments in the region to denounce the
sanctions and some in the opposition to distance themselves from the
U.S. action.
Finally, the Trump Administration should continue Obama
Administration efforts to build support at the Organization of American
States to invoke the Inter-American Democratic Charter, which offers
tools to defend democracy, including Venezuela's potential suspension
from the OAS. International approval matters greatly to Venezuela, and
the government works mightily to beat back efforts to criticize or
isolate it in international fora. In December, after Mercosur, a
regional customs union, expelled Venezuela, Foreign Minister Delcy
Rodriguez suffered physical injuries when she sought to overpower
security guards excluding her from a Mercosur summit.
OAS member states should follow Mercosur's lead, and the bold and
principled leadership of Secretary General Luis Almagro, and impose
consequences on the Venezuelan government for continuing to hold
political prisoners, cancelling the presidential recall referendum, and
shackling the National Assembly. Such external pressure, combined with
the domestic mobilization of the Venezuelan opposition, is essential
for any internal dialogue or international mediation to succeed in
bringing about a democratic transition and meaningful economic reform.
Although patience with the Maduro government in the region has been
exhausted, invoking the Charter will not be easy. New governments in
influential countries like Argentina, Brazil and Peru have been
critical of Maduro, but most of the region has preferred to delay
action while the Vatican-mediated dialogue between the government and
opposition sputters along. Countries in the Americas are also generally
disinclined to weigh in on the internal affairs of their neighbors, and
Venezuela has silenced many Caribbean governments with its provision of
discounted petroleum.
Unfortunately, the Trump Administration is poorly positioned to
marshal regional efforts to defend democracy. Notwithstanding the
President's meeting with the wife of Leopoldo Lopez and his call to
release the prominent political prisoner, Trump and his team have
evinced little interest in human rights and democratic norms overseas.
Moreover, the President's attacks on the American press, judiciary and
critics of his Administration have eroded the moral authority of the
United States. As former President George W. Bush said this week,
``It's hard to tell others to have independent press when we're not
willing to have one ourselves.''
The Trump's administration's alienation of some of our closest
allies has also undermined our ability to organize international
efforts on Venezuela. Mexico, an important actor in the region and in
the OAS, is less inclined to collaborate with Washington after Trump's
bullying and denigration of the country. The lack of respect accorded
Mexico has also made it more difficult for other countries in the
region to team up with the United States to confront another Latin
American country. Trump even created an opening for Maduro to express
solidarity with Mexico and try to isolate the United States in the
region. EU members, meanwhile, are bristling at Trump's disparagement
of the organization and see the President himself as a threat to
democratic values.
As noted, there are steps the Trump Administration should take to
have a positive impact in Venezuela. But unless the President alters
his posture domestically and internationally, the United States will
sideline itself diplomatically, and advocates for democracy and human
rights might need to look to other countries to champion the cause of
the embattled Venezuelan people.
The Chairman. Dr. O'Neil.
STATEMENT OF SHANNON O'NEIL, PH.D., NELSON AND DAVID
ROCKEFELLER SENIOR FELLOW FOR LATIN AMERICA AND DIRECTOR OF THE
CIVIL SOCIETY, MARKETS, AND DEMOCRACY PROGRAM, COUNCIL ON
FOREIGN RELATIONS, NEW YORK, NEW YORK
Dr. O'Neil. Good morning. Mr. Chairman, ranking member, and
other members of the committee, thank you very much for the
invitation to testify today.
As has already been noted, Venezuelan is facing
unprecedented economic, political, social, and humanitarian
crises. Once the wealthiest country in South America, today the
majority of the population lives in extreme penury, unable to
find basic food and medicines or to keep themselves and their
families safe. One of the region's longest standing
democracies, it has fallen into authoritarianism.
Now, this economic and political decline matters for the
United States, challenging the prosperity, the security, and
the democracy in the Western Hemisphere.
Venezuela remains an important oil supplier linked to U.S.
refineries. The government's openness and, in some cases,
active collaboration with drug traffickers, organized crime
networks, and other nefarious actors undermines U.S. regional
security efforts.
Venezuela's humanitarian crisis is spurring the exodus of
tens of thousands of refugees, straining the resources and the
potential stability of Venezuela's neighbors. Its repressive
politics are an affront to and in contradiction with the
longstanding democratic norms within the region.
Now while change will likely have to come from within the
nation, there are things the United States can do to support
reformers and to prepare to alleviate the suffering of the
Venezuelan people, if and when a shift happens. So let me lay
out briefly these policy options.
The first are sets of unilateral measures. And here, these
include sanctions as well as a CFIUS investigation here in the
United States.
On sanctions, the United States should use targeted
individual sanctions against government wrongdoers. Through the
State Department and Treasury Department, the U.S. can ban
human rights abusers and corrupt officials from entering the
country and from using our financial system.
And as opposed to blanket sanctions, which would hurt the
larger population, these targeted efforts are more effective in
circumscribing the lives and livelihoods of the guilty. And
they are the right thing to do, upholding our domestic and
international laws.
The United States can and should also delve into
Venezuela's recent financial transactions and, specifically,
its use of U.S.-based Citgo assets to collateralize its loans.
CFIUS should investigate bond purchases by the Russian
state-controlled oil company Rosneft, who may, in the case of
default, actually gain majority control of this critical
refinery infrastructure here in the United States.
Multilateral initiatives are perhaps more important and
potentially more fruitful as a means to influence Venezuela.
Now this will mean working behind the scenes to galvanize
opposition and condemnation for the Maduro regime. This will be
more effective than U.S. efforts alone, as it will be much
harder for the Venezuelan Government to dismiss the criticisms
and the actions of its South American neighbors as imperialist
overreach.
And such a coalition is much more possible today than in
any time in the recent past, due both to the accelerating
repression and the breaking of the last democratic norms in
Venezuela, and due to the very different stances of South
America's recently elected leaders, particularly in Peru, in
Brazil, and in Argentina.
The OAS remains a venue and an instrument to focus these
efforts. The U.S. should call on the organization to again
invoke the Inter-American charter, and to evaluate Venezuela's
democratic credentials and its compliance with them. And this
could lead potentially to sanctions and suspension of Venezuela
from this multilateral body.
And then finally, the United States should begin preparing
for change. If the Maduro regime is forced out or it collapses,
the country will likely face humanitarian, economic, and
financial chaos. And there are two particular things the United
States can start preparing for.
The first is a wave of refugees. This will hit Venezuela's
neighbors the hardest, Brazil, Colombia, Guyana, nearby
Caribbean nations. It is important to help them with money,
with supplies, potentially with personnel, and to back
international NGOs and multilateral efforts to ease the
suffering of these people.
The second aspect to prepare for is a restructuring of
Venezuela's finances and its economy. A new government will
need to renegotiate $140 billion worth of external debt,
whether or not the government has already defaulted upon it or
not. And this massive undertaking will likely require an IMF
rescue package and the backing of the international community
and creditors.
The U.S. will be vital in facilitating this as well as in
helping a new government make the tough economic policy choices
to turn the economy around. These will include freeing the
exchange rate, reintroducing market prices, creating
sustainable policies for the poor, and rooting out corruption.
And though this is complicated, the faster it occurs, the
faster Venezuela's economy will grow again.
For those who care about Venezuela and its people, it can
seem that the United States' hands are tied. Nevertheless, and
despite the lack of immediate results, it is important to put
in the time-consuming and quite delicate work of diplomacy,
building a regional coalition to pressure and to condemn the
actions of the current Venezuelan regime.
It is also important to prepare for change, however, that
may come. And at the current juncture, these efforts are vital
for both helping Venezuela's reformers in the country today and
for bettering the lives of its citizens in the future.
Thank you.
[The prepared statement of Dr. O'Neil follows:]
Prepared Statement of Shannon K. O'Neil
Chairman Corker, Ranking Member Cardin, and Members of the
Committee: Thank you for the invitation to testify today. I am grateful
for the Committee's interest in Latin America and am pleased to have
this opportunity to discuss U.S. policy options in Venezuela. As
always, I am eager to hear your advice and counsel.
Today Venezuela and its people face economic, political, and
humanitarian crises. The economy has shrunk by nearly 30 percent over
the last 4 years, declines often seen only in wartime. The value of the
bolivar, the official currency, erodes daily, undercut by some of the
highest inflation rates in the world. Poverty, which fell during the
2000s, has now surpassed pre-Chavez levels, with over 3 out of every 4
Venezuelans living in dire straits, and half of the nation suffering in
extreme penury. A recent study by three prominent Venezuelan
universities found that most Venezuelans can no longer meet the
recommended 2,000 calories a day; 75 percent of the population reported
significant weight loss in the last year alone.\1\ Once South America's
richest nation, the majority now live in conditions on par or worse
than citizens in Bangladesh, the Democratic Republic of Congo, or
Mozambique.
Every day there are too many stories of the sick going without
care, of hospitals without basic medicines and equipment, of treatable
diseases becoming death sentences. The few statistics and surveys
available show that infant mortality, deaths during childbirth, and
malnutrition have skyrocketed.
This economic devastation results from steep declines both in oil
prices and in production, as world markets and local mismanagement have
undermined Venezuela's traditional cash cow. With prices more than
halving since 2014 and output down over one million barrels from 2000
production highs, government income has fallen precipitously.
It also reflects over a decade of broader economic interventions,
undercutting the private sector through exchange rate and monetary
controls, bureaucratic rules, and outright expropriations. Non-oil
exports have fallen from roughly a quarter of products sold abroad in
the 1990s to less than 4 percent today. Venezuela increasingly no
longer makes the basic products its citizens need to survive.
Added to these costs for economic growth and prosperity is
widespread corruption. Independent estimates suggest over $60 billion
has been stolen since 2003. Whether arbitraging the official and
unofficial exchange rates for personal gain, selling government
purchased foodstuffs on the black market, or straightforward theft,
this systemic graft has impoverished Venezuela's people and its
economy.
chances of default
Many economists and investors don't believe the current economic
status quo can last. The government owes $140 billion in external
debt--roughly equivalent to its dollar denominated GDP. 2017 interest
and principal obligations of ten billion equal current reserves.
Venezuela's state-controlled oil company Petroleos de Venezuela, S.A.
(PDVSA) was late last November making payments on $404 million in
coupons--signaling the extreme cash crunch it faces.
So far the government has been able to meet its external financial
promises despite the dire financial circumstances. The government has
consistently chosen debt repayment over other obligations, including
the provision of basic goods. Imports of food and medicines have fallen
by 50 percent and 67 percent respectively over the last year; total
imports are now less than $20 billion, roughly a third of the nation's
2012 bill. The government has resorted to a mix of blaming the private
sector, lifting price controls on specific goods, and systematically
repressing dissent to deal with the public desperation and outcry.
The government has also relied on asset sales and financial
reengineering to stay on good terms with its creditors. It negotiated
new and extended terms on oil payments due to the Chinese, its largest
outside creditor. In the final quarter of 2016 it swapped nearly $3
billion in PDVSA bonds for longer maturities, and raised an additional
$1.5 billion from Russia's oil company Rosneft. It also placed another
$5 billion in long term debt with undisclosed buyers. If oil prices
rise in 2017--as most expect--the government's hard currency, and
subsequent capacity to pay, will increase.
Taken together, while it will be quite difficult, there is a good
chance the government can financially muddle through the coming year's
payments, lessening this potential trigger for political change.
u.s. national interests in venezuela
Venezuela's fate matters for the United States as it affects
economics, security, and democracy in the Western Hemisphere.
Economically, instability in Venezuela's oil production has risks
for the U.S. refining industry and for global prices. For decades
Venezuela's crude oil came north, mostly destined for Southeastern and
Texan refineries. These flows have lessened in recent years as the
nation's output has fallen and as more is sent to China and India.
Still, it represents some $15 billion of business annually.\2\ And
Venezuela remains the third largest oil producer in the hemisphere;
disruptions could hike prices.
In terms of security, Venezuela's willingness to permit drug
traffickers, organized crime networks, potential terrorists, and other
nefarious actors within its borders affects U.S. national security as
well. Reports show that Colombia's Bandas Criminales (BACRIM),
Revolutionary Armed Forces of Colombia (FARC), and National Liberation
Army (ELN) all operate in the country, as do Mexico's Sinaloa and Zeta
cartels. The nation has become a preferred drug smuggling route out of
South America, with cocaine heading to the United States through
Central America and the Eastern Caribbean, and to Europe through West
Africa. The Venezuelan government effectively ended anti-narcotics
cooperation a decade ago; since then Drug Enforcement Administration
(DEA) and Department of Justice (DOJ) investigations point to active
collusion and collaboration between prominent government officials and
drug traffickers.
Venezuela matters importantly for regional stability. Its economic
and authoritarian slide has the potential to undermine its neighbors.
Both Brazil and Colombia are already dealing with escalating migrant
and refugee flows, as tens of thousands of Venezuelans make their way
across the borders in search of food, medicine, and a new start.
Colombia in particular could face a quick escalation in displaced
persons, given the roughly five million people of Colombian origin that
reside in Venezuela. Most were refugees from Colombia's historic
violence, now they may return to escape that permeating their new
country. A flood of individuals could undermine one of the United
States' strongest regional allies as it works to implement its historic
peace process. And Venezuela is threatening the very sovereignty of its
neighbor Guyana, reigniting long standing claims to its Essequibo
region, roughly 40 percent of its current territory, and its newfound
offshore oil.
Finally, Venezuela's authoritarian turn contradicts long held U.S.
ideals and foreign policy goals. The crackdown on basic political and
civil rights run directly counter to U.S. policy objectives to uphold
and promote democracy, both a good in and of itself as well as for the
salutary effects for stability, peace, and development. It also flouts
the will of the Venezuelan people, witnessed in the overwhelming
support for the opposition in the December 2015 legislative elections.
policy options
Despite this worrisome state of democratic erosion and humanitarian
trauma, and the negative ramifications for the United States and its
regional partners, U.S. policy levers to change the current status quo
are limited. A significant shift, if it occurs, will likely come from
within. Nevertheless, the United States should continue to investigate
and to reveal the criminal behavior of Venezuelan officials, work to
increase pressure on and condemnation of the regime in multilateral
venues, and prepare to constructively aid a receptive future
government.
Targeted Sanctions
The United States has and should continue to use targeted sanctions
against human rights abusers, drug traffickers, and corrupt officials.
Over the last 10 years the State Department has revoked the visa of
over 60 officials for human rights abuses or support of terrorist and
drug trafficking organizations; the Office of Foreign Assets Control
(OFAC) has sanctioned seven Venezuelans, mostly military officers, for
human rights abuses and undemocratic practices, and recently another 15
individuals for drug trafficking and colluding with terrorists--among
them Venezuela's Vice President Tareck El Aissami. These are important
actions as they deny these individuals access to the United States and
the benefits of its financial system. These sanctions also send an
important message--reaffirming that the United States can and will
uphold international norms and rules. Targeting individuals avoids the
humanitarian costs of country sanctions, which intensify the hardships
facing the broader population while leaving its leaders relatively
unscathed.
Expanding the use of targeted sanctions, while the right thing to
do in terms of justice, is unlikely to bring any real change to
Venezuela's political or economic status quo. If anything, it will lead
the individuals to refuse to negotiate or compromise, given that a
change of government could affect their own personal freedom.
CFIUS Review of Recent Financial Transactions Concerning CITGO
The late 2016 bond offering to Rosneft, giving them 49.9 percent of
PDVSA subsidiary Citgo holdings in the case of default, coincides with
ongoing speculation that Rosneft holds a material amount of other
recently restructured PDVSA bonds also collateralized by Citgo assets.
If the latter is true, then in the event of a comprehensive default,
Rosneft looks in position to take over a majority controlling stake in
the U.S. based subsidiary. The Committee on Foreign Investment in the
United States (CFIUS) should begin a review concerning the potential
acquisition (through a debt default) of these critical infrastructure
assets by the state controlled Russian oil company.
Rally Other Nations To Pressure the Nicolas Maduro Regime
A second potentially fruitful policy approach is encouraging other
nations to join together and take the lead in condemning Venezuela's
authoritarianism. South America's democracies in particular--considered
allies rather than ``yankee'' enemies--have more leverage, their
criticisms harder to dismiss.
Electoral changes over the last 18 months make such critiques more
likely. Peru's Pedro Pablo Kuczynski, Argentina's Mauricio Macri, and
Brazil's Michel Temer have all supported the recall referendum efforts
to end Maduro's mandate. They have also publicly condemned the
imprisonment of political opponents and limits on freedom of
expression. Mercosur, the South American economic bloc, voted to
suspend Venezuela for its human rights abuses and democratic failings.
Add to this Venezuela's diminishing ability to ``rent friends'' by
providing free and subsidized oil, as it has to many Caribbean and
Central American nations in the past, and it opens up the possibility
of a broader regional effort.
The United States has an opportunity, through careful and
consistent diplomacy, to unite these individual expressions of concern
and acts of censure into a more powerful opposition to the Maduro
government and its authoritarian tactics.
One of the most fruitful avenues is the Organization of American
States (OAS). Last May Secretary General Luis Almagro invoked the
organization's Inter-American Democratic Charter, calling on its member
states to review Venezuela's adherence to democracy and detailing its
transgressions in a 132-page report. At the time the United States and
others deferred in support of dialogue, including that led by the
Vatican sanctioned Jose Luis Rodriguez Zapatero and others. As these
negotiations have now failed, largely due to the Venezuelan
government's recalcitrance, the United States should adopt a harder
line within the OAS, galvanizing support for a Democratic Charter
review and building the two-thirds majority vote required for
Venezuela's suspension from the multilateral body.
As the United States works to expand a coalition for change, China
can and should play an important role. Having lent some $60 billion
over the last decade to keep the government afloat, it retains
significant sway. There are signs that China's leadership is becoming
increasingly concerned about Venezuela's stability; slowing the pace of
new lending, of rollovers of existing government obligations, and even
meeting with opposition leaders. The State and Treasury departments
should begin preliminary conversations with their Chinese counterparts,
who may become more willing to press the Venezuelan government in the
case of a debt default.
Prepare for Change
While change will likely come from the actions of Venezuelans
themselves, the United States can and should prepare to help stave off
the worst of a further deterioration and to help enable the nation to
recover its economic footing. To address the humanitarian costs, the
U.S. government should begin working with Colombia, Brazil, Guyana, and
nearby Caribbean nations that may receive hundreds of thousands if not
millions of Venezuelans fleeing repression or chaos. The United States
can help protect and care for these refugees, sending funds, civilian
personnel, and equipment to help Venezuela's neighboring governments,
U.N. organizations, and U.S. and foreign nongovernmental organizations
(NGOs) address the crisis.
The United States should also begin preparing to help a future
receptive government deal with the economic and financial chaos. A new
administration will quickly have to let the exchange rate float (given
the exhaustion of international reserves), let domestic prices rise to
reflect supply and demand, and rebuild an effective social safety net.
It will also have to restructure the $140 billion in sovereign and
PDVSA debt. The U.S. government has an important role to play in
bringing in and helping the International Monetary Fund (IMF) define
the dimensions of a rescue package, and in helping coordinate with
China, Russia, and other interested parties. The faster and more
comprehensive a deal is, the sooner Venezuela can bring back the
economic growth necessary to alleviate the worst of its citizens'
suffering.
Venezuela's economic, political, and social situation represents
both a regional problem and a global affront to democratic values. As
such it should be a priority for the current U.S. government, which
should invest in the necessarily complex, time consuming, and fragile
diplomatic processes to push for change, as well as to prepare for the
day when it in fact may come.
----------------
Notes
\1\ National Survey of Living Conditions (ENCOVI), 2016
\2\ U.S. Trade Representative, 2015
The Chairman. Thank you so much. I am going to reserve my
time for interjections and turn to our ranking member, Ben
Cardin.
Senator Cardin. Thank you, Mr. Chairman, and thank all
three of you for your testimony.
We have not heard a lot about getting humanitarian aid into
Venezuela. We have an immediate problem, and I am not sure we
have an answer for dealing with the people who are suffering in
the country because of the ineffectiveness of their government
to be concerned about this humanitarian crisis.
We look at ways in which we can change the direction here,
and it starts with the governance. When you have a corrupt
government, it is going to be very difficult to see
international organizations willing to come in to help
refinance their economy. Even though they have wealth, it is
going to be difficult to figure out how that takes place unless
they have basic changes in the way their government is doing
business. We do not see any indication that that is taking
place.
You have made a couple suggestions. One is that we need to
work with our regional partners, which I fully agree, so let us
start with OAS, which is the entire region, as to whether it is
realistic that the Democratic Charter provisions can, in fact,
lead to a change in Venezuela. Ultimately, it will require us
to have the threat of at least two-thirds of the countries, if
we are going to be able to invoke the charter with some teeth.
What is the likelihood that OAS could be effective as a
real force in bringing about change by the President Maduro
government?
Mr. Feierstein.
Mr. Feierstein. Well, thank you very much for that
question. Actually, I can hit on your two other points as well.
First, with regard to humanitarian assistance, under the
Obama administration, USAID, in fact, did put together a
contingency plan to provide assistance, if and when the
Venezuelan Government is willing to receive it. USAID has a
warehouse in Miami that is prepared to provide assistance. I
know international organizations are prepared as well.
There has been some dialogue between the government and the
American Development Bank with regard to reform, though,
frankly, at fairly lower levels. There is no indication at
senior levels that they are inclined at serious attempts of
economic reform.
With regard to the OAS, I think that we are much better
positioned now than we were a couple years ago, and that is
because of some changes in some key governments in the region--
Argentina, Peru, Brazil. There was a reference to Ecuador, a
potential change there as well.
I think that patience has clearly run out with Maduro. I
think countries are more inclined now to take action. There has
been a hesitation to do so as long as the dialogue was alive,
and as long as the Vatican was engaged.
One of the challenges has been with regard to the Caribbean
countries, which receive significant petroleum assistance from
Venezuela, and that has somewhat silenced them, and there have
been some divisions within the Caribbean.
That said, I am hopeful in the coming months that, as the
situation deteriorates in Venezuela, and as it becomes clear
that the dialogue cannot be successful unless there is more
pressure--I think there needs to be three forms of pressure.
There needs to be domestic mobilization within Venezuela in the
form of protest. I think there need to be additional sanctions
applied by the United States and other countries. I think there
needs to be action within the OAS, including a threat of
suspension of Venezuela from the organization, if it does not
comply with the Inter-American Democratic Charter.
Senator Cardin. Dr. O'Neil, what countries in the region do
you think are most likely to join in a strong effort, including
the OAS invoking the Democratic Charter, or joining us in
sanctions? Which countries should we be looking to?
Dr. O'Neil. Sure. We have heard from the leadership of
Peru. Pedro Pablo Kuczynski, the new President, has come out
forcefully condemning the regime. We have heard from Mauricio
Macri in Argentina as well, statements particularly opposing
political prisoners and the lack of freedom of expression
there.
We have heard from others, and there have been agreements
that have been signed. We have seen Mercosur actually suspend
Venezuela from the Mercosur bloc, especially led by Paraguay as
the most vocal opponent of what was happening in Venezuela.
So I do think there are strong voices there. We have also
seen several foreign ministers, including Mexico, Colombia, and
others, sign a memorandum, again condemning the limits on
political freedom in Venezuela.
Senator Cardin. Will they join us in sanctions?
Dr. O'Neil. I think some of them will, if we build this
diplomatic coalition. And that will take a lot of hard work.
I would say that the current tensions, particularly with
Mexico, between the United States and Mexico, and the language
going back and forth, is hurting our cause to build this
coalition. I think Latin American countries, on the one side,
they see us as unreliable partners, turning on one of our
closest allies, just here in the last couple months.
So there is a challenge there. Do you step up and introduce
sanctions or agree to sanctions when you are worried about
where the United States might turn the next day?
And the other thing that is happening in Mexico I want to
put on the table is actually much of the hostility or the
tensions that are happening in the relationship has been
strengthening the leftist candidate there in the upcoming 2018
presidential elections, Lopez Obrador. And he and many of his
advisers actually have been on the record in the last few weeks
supporting the Maduro regime.
So it is possible that some of our--we may lose a potential
ally in this situation with Venezuela.
Senator Cardin. Thank you, Mr. Chairman.
The Chairman. Yes, sir.
Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
I want to concentrate on the national security concerns as
it relates to the United States here.
Dr. O'Neil, in your testimony, you said Venezuela is
willing to permit drug traffickers, organized crime networks,
and potential terrorists. But I want to start with the current
and potential refugee flow.
What is the current refugee flow out of Venezuela? And if
we anticipate a collapse in the Maduro government, that it
would increase, why is it not increasing now?
Dr. O'Neil. We have seen tens of thousands of individuals
leaving Venezuela. Some are going into Brazil. Many are going
into Colombia. We have seen them fleeing to nearby Caribbean
islands, so fleeing by boat as well. So many people are
leaving.
There is, I think, a potential for a much larger refugee
crisis. And partly, the borders have been closed at various
times by the Venezuelan Government, by the military, so it is
difficult to leave. In part, they do not have the resources to
leave. You actually need resources often to leave countries.
But I think there is a pending crisis. One is if we see a
further deterioration on the economic side of things or we see
a further increase in violence, a sort of collapse of the
state.
One of the populations I think is most vulnerable or most
likely to move is a large population in Venezuela, roughly 5
million Venezuelans who are actually of Colombian origin. Those
Colombians came actually to flee violence in their own country
from the FARC and from the challenges there. Many were made
citizens, actually, by Hugo Chavez in 2008-2009, when he was
holding a referendum and they voted for him, supporting him in
the referendum.
But now you can imagine those populations with strong ties
back to Colombia might leave, if given the ability and chance,
and if things deteriorate more fully. And that creates problems
for stability for Colombia, particularly when Colombia is in a
very fragile place.
When they are trying to implement their new peace process,
when they are trying to bring back the FARC and others into the
fold, imagine dealing with this humanitarian crisis.
Senator Johnson. So who are the bad actors outside the
hemisphere and within the hemisphere that also represent a
security problem for us? The drug traffickers, transnational
criminal organizations, potential terrorists, I mean, who is
setting up shop there? Who is utilizing the failed state that
could threaten our homeland?
Dr. O'Neil. Most of them are drug trafficking networks.
They are drug trafficking networks that bring cocaine or coca
out of Colombia, out of other Andean countries there that are
now using Venezuela as a transit point, a transit point that
comes up through Central America and the Caribbean to the
United States, a transit point that sends cocaine to West
Africa and then up into Europe.
Those are the main elements that are using this brown
state, as you might say, the ungoverned spaces for their
advantage.
Senator Johnson. Again, those who would be the bad actors
within the hemisphere, the drug cartels. What about outside the
hemisphere? I mean, are we seeing potential terrorist
organizations, any ties, for example, to Islamist terrorists?
Dr. O'Neil. I have seen a few reports that there are some
elements, but I have not seen a more systematic entrance of
those groups into Venezuela.
Senator Johnson. Would any of the other witnesses care to
comment on my questions?
Dr. Smilde. I have seen a number of reports in the press
about these terrorist groups, and this has been going on for a
long time, this type of information.
All serious investigations I have seen have not found
substantive substance to that. I mean, I think there is an
issue of the possibility of people being trained in the Middle
East, being trained and coming back, and then trying to enter
the United States. But as far as actual terrorist groups
setting up shop in Latin America, I have not seen credible
reports of that.
Senator Johnson. So, again, let me go back to the refugee
flow. To summarize I think what Dr. O'Neil is saying, so the
Venezuelan Government is doing a pretty good job of keeping its
citizens there, preventing them from leaving, and/or it just
has not gotten bad enough? I mean, it is pretty bad, right?
Mr. Feierstein, would you like to comment on that?
Mr. Feierstein. Sure. What we have seen so far is most
Venezuelans who have left tend to leave to pick up some basic
goods, food and medicine, principally in Colombia, and then
they return home.
That said, as Shannon noted, we have seen an increasing
flow of refugees to other countries. I think we do need to be
prepared to support Colombia in the event of a significant
flow.
Senator Johnson. What would a significant flow be? I mean,
what are you concerned about? Are you talking about hundreds of
thousands? Tens of thousands?
Mr. Feierstein. Potentially, if you had a social implosion
in Colombia--I am sorry, in Venezuela, if the economy
deteriorated enough, if you did have violence and civil
conflict, you could potentially get those sorts of numbers.
The Colombian Government has been preparing for that. In
the Obama administration, we did put together some contingency
plans to support Colombia. We worked with a number of U.N.
agencies as well to but those efforts in place to prepare for
that. We are certainly hoping it does not come to that, but
that is something we certainly need to prepare for.
Senator Johnson. How much worse could it get? At what point
does that trigger a refugee flow?
Mr. Feierstein. Look, we are already talking about----
Senator Johnson. It is pretty bad, right?
Mr. Feierstein. I mean, we are already talking about a
country with, as I noted, the highest inflation rate in the
world, the deepest economic recession, and the highest murder
rate in the world.
There is a concern that the country will default on its
debt later this year. They have made a number of debt payments
over the last couple years, thanks in large part to significant
loans from China and from Russia.
If they were to default, that would deepen the economic
crisis. So far, they have been prioritizing paying their debts
over importing food and medicine, but it is not clear how much
longer they can go on.
A lot will depend on the price of petroleum, frankly. It
has risen a bit, and that has given them some breathing space.
Senator Johnson. But again, we are primarily concerned
about refugee flow into Colombia.
Mr. Feierstein. Yes.
Senator Johnson. Okay.
Thank you, Mr. Chairman.
The Chairman. Thank you, sir.
Senator Menendez.
Senator Menendez. Mr. Chairman, thank you for holding a
timely hearing. I am particularly pleased to see that the full
committee is engaged in Western Hemisphere issues, because
sometimes, in the midst of all of our global challenges, we
lose sight of our neighbors to the south, which has immediate
national security and national interest questions. I appreciate
you calling for a full hearing on a timely topic.
Along with a few others on this committee, I have been
intimately involved and paying close attention to Venezuela for
some time, and watching with alarm as Nicolas Maduro has
followed in the repressive and brutal steps of previous
dictatorships.
I want to take the opportunity of this hearing to call out
names of individuals who suffer every day inside of Venezuela.
They are the Vaclav Havels, the Lech Walesas, the Aleksandr
Solzhenitsyns of their time in Venezuela. Over 100 political
prisoners: Leopoldo Lopez, a leading opposition leader whose
only crime is peaceful protests, now 3 years in jail in a sham
process; Antonio Ledezma, the mayor of Caracas; Daniel
Ceballos, the former mayor of Caracas; Joshua Holt, an American
citizen, a former missionary who married a Venezuelan woman, is
accused of being a spy.
These are just some of the examples of those who are
languishing under an authoritarian regime. And I think we must
be clear in naming the regime, which once had the faint promise
of democratization, a dictatorship, because that is what it is.
We have long talked about one exception to a region of
democracies in the hemisphere, but tragically, Maduro has
changed that.
I get real concern when I see Cuba's influence in
Venezuela. If you go to the airport in Venezuela, most of the
agents who will shake you down are Cuban agents. Cuban
intelligence has permeated every part of Venezuela's
Government. And so it is not benign what they do in the
hemisphere beyond their own country.
Unfortunately, while well-intentioned, the Vatican-brokered
peace talks have failed. They succeeded, in my view--I think
they were well-intentioned. But they only gave Maduro more time
to dismantle democratic institutions, to jail more political
opponents, and to drive Venezuela's economy further into the
ground.
I appreciate that the new Secretary General of the OAS, Mr.
Almagro, has acknowledged as much and called for elections now
instead of waiting until 2018, which will only give Maduro more
time to consolidate his grip on power.
But the humanitarian situation is dire. Children are dying
of completely preventable diseases. Shelves are empty of basic
food and medicine. It is past time not only for the Democratic
Charter to have been called into play but to actually be put
into action.
If Venezuela is not a place where the Democratic Charter is
going to be invoked and actually pursued by the countries of
the hemisphere, then the charter is really of no consequence
whatsoever.
For anyone questioning whether there are significant
implications for the United States of Venezuela's dictatorship
or potential economic collapse, I think we have heard several
of them here, there are more asylum-seekers to the United
States from Venezuela than any other country in the world right
now. A breakdown of democratic institutions, including the
separation of powers and independent judiciary, has increased
corruption. It has made it easier for drug and human
traffickers, something I know the chairman cares about, to
operate through the country. And, as we all know, the
administration, which I applaud, has named the Vice President
as a foreign narcotics kingpin.
Now I am pleased to have led a bipartisan and bicameral
letter with my colleagues urging the administration to take
actions against the administration, and I look forward for a
continuing engagement. But I hope we can work together to hold
human rights violators and drug traffickers, send a clear
message, if you are going to violate the rights of others
inside of Venezuela, know that you are next. Know that you are
next.
And while the Maduro regime may have sanctioned me and
forbidden my entry into Venezuela, it will not stop me from
pursuing this issue.
So I have one question, a question I posed to both
Secretaries Tillerson and Mnuchin, and I would like to get your
take on it.
Venezuela's state-owned oil company, PDVSA, and its
subsidiary Citgo, which has energy infrastructure in the United
States, are under extreme financial pressure and may not be
able to pay their bills in the near future. Under a recent
deal, 49.9 percent of Citgo was mortgaged to Rosneft, the
Russian government-owned oil company run by Vladimir Putin's
crony, Igor Sechin.
It is also possible that Rosneft acquired other PDVSA bonds
on the open market that could bring their ownership potential
to over 50 percent.
If Citgo defaults on its debts, Rosneft, an entity
currently under American sanctions because of Russia's
belligerent behavior, could come to own a majority stake in
strategic U.S. energy infrastructure, including three
refineries and several pipelines.
Given the close ties between Rosneft and Putin, Putin's
interest in undermining the United States, and Putin's
willingness to use energy as a weapon, does this potential deal
concern you? Should a sanctioned Russian company have control
over critical U.S. energy infrastructure? I would hate to see
Rosneft be the sign hanging over Fenway Park.
Senator Shaheen. Me too.
Senator Menendez. There we go.
Dr. O'Neil. Well, I concur with your reading, and I
actually think this is an area where the Committee on Foreign
Investment in the United States, CFIUS, should actually step
forward and proactively begin to investigate this. It usually
happens in cases of potential acquisitions, as we have seen in
many other cases. But here, given the stipulations and these
various bonds which you lay out well, it seems there is a
potential acquisition through default. Particularly since many
economists, many investors, believe that there will be a
default sometime in the relevant future, this is something that
I think would be important for the United States Government
through CFIUS to begin investigating.
Senator Menendez. Any of you have a view on that? Do you
have any disagreement with it?
So, for the record, you are both shaking your head no.
The Chairman. I think you laid the case out so well, no one
can disagree.
Senator Menendez. Since, Mr. Chairman, we have to rely on
private panels for now, at least I want to get the benefit of
an understanding of those private panel views.
So I thank the chairman for his courtesy.
The Chairman. We set aside a good portion of this work
period to deal with confirmations. And it is unfortunate we
have only one Ambassador, and we are waiting for Johnny Isakson
to get back to vote on him, and we have none others to process.
I do not think there are even any waiting, after the batch
we have now on the floor. So we do need to move on and,
hopefully----
Senator Menendez. Mr. Chairman, my comments are not
directed to you.
The Chairman. No, I did not take it that way.
Senator Menendez. They are just to the administration,
because I think we can chew and walk gum. I know that my dear
colleague Senator Young had a comment for me last week. I wish
he was here.
We can chew gum and walk at the same time, which means, as
we are going through cabinet officials, it does not mean we
could not get nominations that this committee, on a bipartisan
basis, has generally processed very quickly.
The Chairman. I could not agree more, and, hopefully, those
will be forthcoming.
Senator Rubio.
Senator Rubio. I want to thank you for holding this
hearing. I think this might be the first time the full
committee has done a hearing on Venezuela in a long time, and
this is an issue I have talked about for a long time. It
affects South Florida where I live. As you can imagine, there
is a significant--I want to just touch on a couple points made
here, and they will probably lead to some questions or further
commentary.
On the sanctions piece, just know I listened to your
testimony, and I understand the argument. I do. It is kind of
one of the arguments that is often made about unilateral
sanctions. I would just encourage you to think about it a
little bit differently.
The sanctions, the purpose of the sanctions, are not
necessarily to influence a change in government. Here is the
dynamic that is different when it comes to Venezuela.
Many of these individuals, to just speak in the plainest
terms, they are stealing money, or having access to ill-gotten
gain because of their access to the government. And then they
invest it, for example, in South Florida.
I mean, I see them every weekend. You go to the fancy mall,
they are walking up and down. They are laughing at us.
So the problem really is about protecting the assets of the
people of Venezuela that have been stolen and invested into the
United States for the profit of these individuals. We just want
to make sure that those assets that, quite frankly, should
belong to the Venezuelan people are available when Venezuela is
free, and so that they can be held accountable by Venezuelan
justice or whatever it may be.
It is important because there are a bunch of cronies that
surround the current government who have taken their role in
government or their access to powerful people in government and
used it to get access to funds. Then they buy these mansions,
horses, jets. I mean, it is outrageous.
And I just think it is important for that to be available
to the Venezuelan people, because it is their money. It does
not belong to these people.
I do think there is value in the stigma. I can tell you
that for a lot of the people in the opposition in Venezuela to
know that these people that laugh at them every day and are on
television every night attacking them on the state-run stations
that are being called out by the United States is powerful.
So I would ask you to consider that as part of it.
The exit thing is real. I mean, it is true that these
people are now figuring to themselves, we might as well stay
here until the end, because there is nowhere else for us to go.
I think that was going to be a problem anyway, one way or the
other. There are not that many countries they can go to,
probably, except for Cuba, at this point, and that is not
necessarily a great place to live, given the current
government, especially.
Mr. Feierstein, you talked about the OAS. I agree. And I
actually think that Peru, Mexico, Brazil, Argentina, have all
expressed concern.
I would also say, and I echo the point that Senator
Menendez made, I do not know why we have an OAS if it does not
defend democracy. That is the very purpose of it.
And I do hope it becomes a priority for this
administration, and that we use the leverage that we have. You
talk about some of the things that have happened under this
administration undermining our credibility in the region. I do
not disagree. I disagree with many of the things that have
happened, and I wish they would not have occurred.
I would also say to you, however, it was deeply
demoralizing to the opposition in Venezuela to see Tom Shannon
in Haiti taking Twitter pictures with Diosdado Cabello, who is
maybe not formally but informally the second most powerful man
in Venezuela. To see an American official of that rank taking
pictures in Haiti with his arm around him is deeply
demoralizing to some who have suffered at the hands of these
people.
Recently, Senator Menendez and I met with Lilian Tintori,
who, as you know, whose husband has been in jail for a long
time. I want people to understand what she has been subjected
to.
When she goes to prison to visit her husband who is in jail
for doing nothing--nothing other than being against the
government--they strip her naked. They force her to take all
her clothes off in front of the male prison guards who mock her
and laugh at her.
And by the way, the President received her at the Oval
Office and took a picture with her and put it up on Twitter,
which, for this President, is a pretty powerful thing, and I am
glad he did that. It was important.
And she returned to Venezuela. So Diosdado Cabello mocks
her every single day. So for people like that, it was really
demoralizing to see Tom Shannon there doing what he did, and
the administration, at that period of time. It just was
hurtful, and I think problematic on the dialogue, and that is
what I wanted to get to.
I do believe it was well-intentioned, but I think Maduro
used it to do two things. Number one, delay any sort of OAS
action until he can get past December, because of the
referendum period. Now there is a referendum, he will be
replaced by the Vice President as opposed to a new election. So
it played right into his hands.
He used it to divide the opposition, pitted them against
each other. They threatened members of the opposition. If they
did not participate in the dialogue, their relatives would be
punished. Some people would not put up with that. Some people
do not want to see their kids mistreated.
I really think it is important for the United States to
publicly announce that we think the dialogue is over,
especially as long as there are political prisoners, and really
to be aggressive on the OAS front.
On the USAID piece, there is a reason why we are not in
there. They do not let us. The Venezuelan Government does not
allow open aid because they deny that there is an emergency.
So that is the point that I wanted to get back to. Why do
we need an OAS if it is incapable? And I am in favor of the
OAS. I want there to be an OAS. But why even have one if it
cannot act in a situation where the courts, the electoral
commission, the press, all is controlled by the President or
the fake President of Venezuela, and the assembly is not even
allowed to meet and pass laws. That is not a democracy.
What is the purpose of the OAS, if it cannot act in a case
such as Venezuela?
Mr. Feierstein. Thank you for those comments, Senator.
First, with regard to sanctions, I very much agree with you
on the value of sanctions.
With regard to the OAS, I think it is important to
underscore the leadership of the Secretary General. He has
detailed extensively what is going on in Venezuela, tried to
mobilize countries in the region to take action.
As I noted before, I think we are better positioned now
than we were a couple years ago because of changes in certain
governments in the regions, as we talked about--Argentina,
Peru, Brazil, and others.
I believe that, again, in the coming months, I think that
there will be an opportunity to invoke the charter to threaten
the suspension of Venezuela from the organization.
And we need three forms of pressure for the dialogue to
succeed. I agree with you the dialogue has not succeeded. The
government has used it to buy time to diffuse domestic protest,
to keep the international community at bay.
But if the opposition is able to mobilize internally, if we
are able to apply additional sanctions, and, ideally,
multilateralize them, and if we are able to mobilize countries
in the OAS to invoke the charter to threaten the suspension of
Venezuela from the OAS, I think then there would be greater
prospects for a positive outcome in Venezuela.
The Chairman. We good? Any other comments? Any dissenting
comments?
Dr. Smilde. I would make a couple comments.
Thank you, Senator Rubio, for your comments. I strongly
sympathize and support the idea of freezing the assets. I think
that is a noble cause and has a good rationale to it. And I
agree that, any way you look at it, there is going to be an
issue of exit costs, as you suggest.
What I think is that this type of sanctions program simply
increases those exit costs and makes it that much more
difficult for there to be some sort of transition. I do not
oppose sanctions in every case, just as a matter of principle.
But I think if you look at, for example, Mark's testimony,
he mentions there the issue of guarantees for government
figures who facilitate a democratic transition, some sort of
escape clause, some sort of legislation that could make some
sort of provision that would make it interesting or make it
feasible for some of these figures to think, well, if I take a
different track, maybe things will be different for me.
And I think the other issue is the multilateral element of
it. I think if you can get things to be multilateral through
diplomacy with our regional partners, then I think that really
takes a lot of the edge off of sort of anti-imperialistic
rhetoric that is used against them.
On the issue of aid, I think it is a really, really
difficult issue in the Venezuelan Government. If you can think
of it from their ideological perspective, they are a government
that supposedly prioritizes the well-being of people and
providing for people. That is sort of their hook. And so to
have humanitarian aid is very difficult for them. It is a
touchy political issue.
But the dialogue agreement, it is actually part of the
dialogue agreement. They already agreed to allow the Catholic
Church in Caritas to bring in humanitarian aid. I think that
would be the place to push, push on that existing agreement and
say that this has to happen. But it is a very difficult issue.
The Chairman. We are really running over. If you have a
really salient comment, you can make it, but----
Mr. Feierstein. It is exceedingly salient, Senator.
But, no, just with regard to the antiimperialist rhetoric,
look, I think it is always preferable if we operate
multilaterally. The Venezuelan Government is always going to
use antiimperialist rhetoric, whether we act or not act.
And they are going to invent things. They are very good
with fake news. They are very good with alternative facts.
And the fact is, it does not work for them. They have 80 to
90 percent of the people in Venezuela reject the government.
And I think we need to act, ideally, in concert with other
countries, but alone, if necessary.
The Chairman. Thank you.
Senator Udall.
Senator Udall. Thank you, Chairman Corker.
I did not vote in favor of increased sanctions against
Venezuela. I thought then and I believe now they are
counterproductive and could lead to further entrenchment of the
current Venezuelan regime. And that is exactly what happened.
The Venezuelan people, many who oppose the government, are
suffering. They are going without food, without medicine,
without power, without the essentials. A truly democratic
government would be at risk from a mass protest, but that is
not what we have.
And yet the Chavez-Maduro regime is still in power,
avoiding accountability. Demagogues like Maduro need a
scapegoat, and now the U.S. sanctions are his scapegoat.
Mr. Smilde, are you clear that taking a hardline approach
to Venezuela will likely lead to a Cubanization of our policies
there?
I just visited Cuba last week with a bipartisan delegation,
Senator Cochran, Senator Leahy. And I can report to you that
not only has the embargo been a complete failure, but it
continues to give Cubans an excuse for the poor state of their
economy. However, that has begun to change with U.S.
engagement.
As to Venezuela, can you outline what role you think the
Foreign Relations Committee or others should take to encourage
a multilateral effort to ensure that elections are held in 2018
and to prevent a Cubanization of policies in Venezuela?
Dr. Smilde. I think that is a good way to put it, and I
think there are a lot of differences between Cuba and
Venezuela. There is more of a democratic tradition in Venezuela
than there was in Cuba.
The sanctions that are being proposed are targeted instead
of the whole Nation, so I think that makes it somewhat
different.
But there is clearly a threat of Cubanization in the
government, in the security apparatus, and I think in our
approach to Cuba.
I think trying to isolate Venezuela, trying to raise
barriers through sanctions, is not the right approach. I think
a better approach is to engage Venezuela. I think also working
with regional partners, whether that--I fully support pushing
for the Democratic Charter in the OAS. I also think trying to
work with regional partners, some sort of group of friends,
working with some of the other multilateral agencies in South
America, I think could also facilitate it.
What I envision--I simply do not think that sanctions are
going to be effective in facilitating a democratic transition.
What I do think would be effective is if the region comes
together, if there are coordinated efforts among these
different regional partners, these different multilateral
agencies, all to exercise pressure together and have some sort
of common criteria.
I know that is very difficult. I know that takes a lot of
work, and it takes a lot of patience. But that is the only
thing. That is only way I can imagine things taking a better
turn in Venezuela.
Senator Udall. Dr. O'Neil, would you agree that, in
Venezuela, different factions now view the situation as a zero-
sum game, making governance increasingly difficult? And, in a
way, asking the question again that I asked him, what are the
suggestions you would make in terms of having a democratic
transition and getting people to pull together?
Dr. O'Neil. I think it has been a zero-sum game for quite a
while for many of these players, both those within the
government and then some, of course, outside of the government.
My view is that actually targeted sanctions, many of the
ones that we have put in place I think are useful. We use these
kinds of sanctions against corrupt individuals, against human
rights abusers from countries all over the world, whether
Africa, Russia, or other places. And these types of things,
calling out, naming and shaming, and denying them access to the
United States or to assets here I actually think is useful.
I am not sure--to me, it does not change their
calculations. Many of these have been involved deeply in drug
trafficking rings or other illegal activities, and I am not
sure it changes their calculation in terms of staying or going.
I do not believe it does. But I appreciate the different points
of view on this issue.
I do think that blanket sanctions on the country or on
particular sectors would be counterproductive in trying to find
a transition or compromise between the various forces within
Venezuela.
Whether or not there is enough of a critical mass in the
center that is willing to compromise, to come together, I think
that is really a question that we do not know. As everyone has
said here, and I would concur with this, the dialogue, with the
best of intentions, failed to find that center, and so now we
need to find a different path.
To me, the most potentially fruitful path is this one that
is a multilateral path that, and I think it needs to be guided
by the OAS, because that is an instrument that we have to pull
this together.
I do think, as in the past historically in Latin America,
and I think today, the United States will have to play a role
in leading that. There are many countries I think could be
brought on board and have said that they have opposed aspects
of what the Maduro regime has been doing. But our leadership
will be crucial in pulling that together.
So I think we need to work with the Secretary General in
the OAS as well as other countries to try to bring that
together. Whether it will be successful or not, we will have to
see. But I do think it is our best chance in creating a
peaceful transition at this point.
Senator Udall. And, obviously, as others have said, Mr.
Chairman, we really need to take a hard look at OAS reform.
Thank you very much.
The Chairman. This is my first interjection. We were there
in July 2015. I am not sanctioned, for some reason.
And it is absolutely the most tragic situation to have a
country with such resources and people, and to be having people
lined up around stores just to get toilet paper, I mean, it is
an incredible thing to see how mismanaged the country is.
To Senator Udall's question, the targeted sanctions that
are in place, however, they are not generating the economic
issues that they are dealing with in any way. Is that fair to
say?
The flipside though is, the zero-sum game that he pointed
out, I mean, we have tremendous empathy for the political
prisoners, 117 of them, the wife who was just here recently,
what she is going through to see her husband, I mean, we have
empathy for all of that.
In fairness, it has been a zero-sum game for some time. Do
you want to expand on that a little bit?
Mr. Feierstein. Thank you for that question, Senator. That
is a very important issue.
In a previous life, I worked as a pollster, and I conducted
public opinion polls in Venezuela. And we found, this is a few
years back, we found actually that Venezuela was the most
polarized country in the world, and a lot had to do with Hugo
Chavez at the time. I imagine the same is true today with
President Maduro.
And we think our country is polarized. It is nothing
compared to Venezuela.
That said, I think there is the opportunity to build a more
moderate center there. The opposition is often branded as
right-wing extremists. That is false. But even around, if you
look at the Chavista movement, and people around Maduro, there
are people around him who have been genuinely open to dialogue.
There are people around him who have been open to economic
reform.
Now, they have been sidelined, unfortunately. But I think,
over time, the opposition has come to realize the importance of
incorporating moderate Chavistas into their movement. They need
to understand the genuine appeal that President Chavez had and
the reasons for it. And they do understand that and appreciate
that.
So I think that there is an opportunity for moderate
leaders in the opposition to build a broader coalition that
would represent more than just a rejection of the current
government and its policies, but a genuine affirmative movement
in favor of particular social and economic policies.
The Chairman. Mr. Smilde.
Dr. Smilde. Yes. Thank you for the question.
I think, in terms of polarizing on both sides, I think
there is a strong sense in which that is true. For many people,
this is the zero-sum game. But I think that gets overplayed
somewhat, I think on both sides of the spectrum.
Within the opposition, of course, there is a strong
contingent which really thinks in terms of regime change, and
they think in terms of provoking street protests that somehow
are miraculously going to get rid of the government. But I
think there is also an electoral wing, which I think actually
has been the dominant wing for the past 2 years. It really has
been quite active since 2006 already.
Those believe that elections, that this is a transition
that has to happen democratically and that can happen through
elections, I think those are actually the majority within the
opposition, and they have dominated definitely in 2015-2016.
I think on the side of Chavismo, it is a little bit more
complex, because Chavismo is very reduced now. It is
approximately, the last numbers I have seen, it is about 20
percent of the population supports Chavismo. This is basically
people who work in the government or that are somehow mobilized
in Chavista movements or somehow have a strong Chavista
identity.
And here with these people, I would say that the
antiimperialist rhetoric I think still actually provides a
strong coordinating ideology. So I think it is still actually
quite important, as unconvincing as it may seem to us.
The polls also show something quite interesting. While
Maduro has approximately 20 percent support, still about 50
percent, almost 50 percent of the population, still has a
positive view of Hugo Chavez. So that, of course, is down from
when he died when it was 70 to 80 percent, but that is still 50
percent.
So there is 30 percent of the population there that somehow
identify as Chavista but do not support the Maduro government
or somehow said, ``I do not support this.''
So I think that, actually, the people who do not see
Venezuela as a zero-sum game are actually the majority in the
middle.
The Chairman. Senator Shaheen.
Senator Shaheen. Thank you, Mr. Chairman.
And I know, Mr. Feierstein, you talked about the importance
of regional partners to move Venezuela. I think actually all of
you have done that since I got here.
What does our policy toward Mexico do? Does that have any
impact on our efforts to try to move, the policy of the new
administration toward Mexico, does that have any impact on our
ability to move other partners in the region to try to help
address what is happening in Venezuela?
Mr. Feierstein. Well, thank you, Senator. That is a
particularly important question.
And, unfortunately, it does have an impact and very much of
a negative impact. I think it makes it, one, more difficult for
Mexico to align with the United States. Mexico is a very
important actor in the region. Within the context of the OAS,
we need Mexico to help mobilize other countries.
And I think there is a political cost now within Mexico to
be seen as aligning with the United States, even on a case like
Venezuela. Mexico previously had been I think inclined to
potentially take action along with us.
I think it also has created a certain solidarity in the
region with Mexico and, unfortunately, revived this north-south
dynamic that we thought we had buried decades ago. President
Maduro even tried to take advantage of the rift between the
United States and Mexico by aligning himself with Mexico.
So I think it has made it more complicated. And in fact, I
would broaden it as well. I mean, we have talked about
multilateralizing the sanctions, additional sanctions will not
likely come within Latin America. They will come from the
European Union, for example.
And when I was in the White House, this is an issue I
raised with EU counterparts. They were not inclined at the time
to take action.
But while we are offending EU members and disparaging the
organization, it makes a lot more difficult, obviously, then to
try to get them to line up with us with regard to Venezuela.
So I think, overall, to the extent to which we are
offending allies, it is going to undercut our efforts not only
in Venezuela but more broadly as well.
Senator Shaheen. Thank you.
Do the rest of you agree with that?
Dr. Smilde. Let me just say that I think, yes, I agree with
everything Mark just said. I think if you look at it beyond
that, the interesting way to think about this is that
deteriorating relations between the United States and Mexico, I
heard one analyst say, has made Mexico Latin American again.
And I think one thing to keep an eye on in U.S.-Latin
American relations is the degree to which a more difficult
relationship with Latin America could actually spur more
integration within Latin America and could conceivably get them
to work together on some issues like Venezuela. I cannot say
that I see that happening right now, but it is definitely
something that, if you look at the different stresses and
pressures, that that could be happening in the coming years.
Senator Shaheen. Dr. O'Neil.
Dr. O'Neil. I would say I agree with the way Mark presented
it. And I think this is a challenge. If there are tensions
between the United States and Mexico, who for the last 30 years
had been cooperative and very close partners on all sorts of
things--economic issues, security issues, people, the
communities that span the border--if you start seeing rifts
there and then you are trying behind the scenes to galvanize
first a majority and then a two-thirds majority potentially to
vote in the OAS to sanction or suspend Venezuela, it is hard
when you have these other issues on the side.
So I do think it is affecting not just how Mexico might
participate in that but the way other countries will as well.
Senator Shaheen. Thank you all. I totally agree.
You talked about a couple different things that could be
done outside of sanctions. Senator Rubio talked about freezing
assets. But what other steps could we take? What would American
leadership on Venezuela look like in your opinion, and in a way
that would provide opportunities for other countries to follow
us?
Dr. O'Neil. I think a challenge for us is it would be most
effective if it is other countries that are leading out front.
As Mark has said, if it is not something that is actually
happening, Maduro and his colleagues will make it up. So it is
not as if we are just providing them fodder. But if you have
Peru or Brazil or Argentina or other trade partners, close
partners, leading, the United States can be part of it. But I
think it is quite important, as we try to form a coalition,
that others are out front rather than putting us in the front.
Sometimes, as Mark has said, you need to take unilateral
action, and that is what these targeted sanctions have been.
But I do think, as we look toward the next several months or
couple years, can we get others to step up that we would follow
them and participate rather than us being out front?
Senator Shaheen. And if the OAS is not really an option at
this point for leadership there, who do we think is? If we have
Mexico off the table, and we have the OAS off the table, now
you have talked about Argentina and Brazil and Peru having more
positive leadership now. But is there a likely candidate who
could take the lead here?
Mr. Feierstein. Yes, the most vocal, with regard to this
issue, have been Argentina and Peru. President Macri has been
very strong, President Kuczynski as well. But there are a host
of other countries that have particularly strong views with
regard to Venezuela--Paraguay, for example, Panama, and others.
So I think there is the potential for a majority coalition
within the OAS in the coming months, if we are skillful
diplomatically.
Senator Shaheen. Thank you.
The Chairman. Thank you.
Senator Kaine and then Senator Rubio.
Senator Kaine. Thank you, Mr. Chairman.
Thanks to the witnesses.
I am going to go back to the discussion about the zero-sum
game, because I think you were getting out my point, what I
wanted to ask you about, in different ways.
I was at the Vatican last week, dealing with them on a
couple things, and talked to the Foreign Minister, Archbishop
Gallagher, about the work that the Vatican has tried to do in
the dialogue, and they are very discouraged in it too.
Obviously, the blame lies heavily with the government. But
one of the comments they also made is their feeling about the
fractured nature of the opposition.
You cannot really blame an opposition. If you are under
tremendous pressure, there are going to be fractures. That is
what they try to do to you. But it would seem that one of the
ways we ought to be looking at this are what are the things
that we could do that could help create or accelerate more
cohesion among the 80 percent of the population that does not
support Maduro? What ideas would you have for us on that?
Mr. Feierstein. Thank you, Senator. That is a key issue. I
appreciate you raising that.
I do think I agree with you that it is a little unfair to
the opposition to characterize them that way. And I think it is
important to underscore how much success they have had in many
ways. I mean, they mobilized people for an election in 2015,
and they took two-thirds of the National Assembly seats.
And we are talking here not about an opposition that has
never been in power. I mean, these are people who have worked
very effectively as mayors, as governors, as members of the
National Assembly. In many ways, they have been quite skillful.
They came together in a coalition called the MUD, which in that
way have been able to operate within the context of the
dialogue as well as participate in elections.
So I think, actually, if you compare it with other
democratic movements around the world, I think, arguably, there
is less fracture within the opposition than there may have been
in other cases. And to be sure, there are differences in
tactic, differences in approach. You know the opposition
ideologically runs from center-left to center-right. But I
think that is a healthy thing. I think they should probably be
getting a lot more credit than they have gotten so far.
Dr. O'Neil. I agree that the opposition, while fractured, I
am not sure it is fractured as is somehow put out there. In
particular, you saw during the referendum drive every hurdle
that was put in front of them was surpassed, or many of them,
until the final court decision.
But one thing that has in the past in Venezuela brought the
opposition together is elections, a mechanism that you are
pushing toward a particular goal. So as we look forward for
2017, there is a party registration process that is about to
begin, and there are questions about who may or may not qualify
there, and if the national electoral committee will actually
play fair, in that sense. That is something that you could
rally together different groups, if it is seen unfair in terms
of qualifications.
And then we have pending elections that did not happen at
the end of last year, regional elections that may or may not be
put on the table.
So I think, internally, a push for elections, because that
is a constitutional mechanism for parties to participate in
democracy. And perhaps outside as well, we can be pushing for
these parts. Even though we know democracy is not existent
there anymore, but can we push for elections? And that is
something at least to galvanize those who are not in power
today.
Senator Kaine. Okay. Thanks.
Dr. Smilde.
Dr. Smilde. Thank you for your question, Senator Kaine.
I think the Venezuelan opposition has suffered from two
long-term problems. On the one hand, the problem that is most
known to everybody is the problem of coordination. It has a
problem with leadership, in the sense that it has four or five
people that all have roughly the same amount of support, all
have presidential ambitions, and have a hard time cooperating,
for the reasons we all understand. They all have ambitions, and
it often ends up with sort of a solution of noncooperation.
The other issue that is less known is a long-term deficit
in actually engaging the population and actually going out and
doing work in the communities. There are some notable
exceptions, but actually engaging people beyond their base in
the urban middle classes.
Those two problems, I think, have kind of come and gone. If
you think 2015, they did a really admirable job in overcoming
the problem of coordination. They stuck together, and they
swept the national legislature elections. That was no easy
task.
But the thing is I think they really sort of benefited from
what would be called voto de castigo, from a punishment vote,
more than actually having put forward a platform. So they still
have this problem of engaging the population, of actually going
out and figuring out what people want, listening to people.
I think if you look at the reforms that have just happened
in the MUD, they just restructured, and they put a big emphasis
on this, a big emphasis on having outreach and having social
outreach. And that, we will have to see how it plays out. But
that promise to resolve that engagement problem--but the
leadership issue is still there. It actually seems a little
worse than a new structure, the problem with coordination.
I think going back again to the polling, the opposition is
actually doing pretty well. They are above 50 percent in most
of the polling, which is good for any coalition. But on the
other side of it, Maduro only has 20 percent. So there is a 30
percent deficit there of people who are not mobilized.
I really think that if the opposition could come together
and could unify and have one leadership and have a clear
leadership with a clear message engaging the population, they
could sweep the board.
The Chairman. Thank you. I know Senator Rubio and Senator
Menendez had some follow-up questions.
Senator Rubio. A couple quick comments to set the table for
my question.
By the way, I just wanted to point this out. Since Ms.
Tintori came to the White House, Leopoldo Lopez has been cut
off from his lawyers and his family for 8 days. So that is the
way they react.
A lot of my colleagues have expressed concern about a
humanitarian collapse. I think every indication is they will
default in April, potentially, on their debt, maybe May, and
that would be catastrophic.
Now here is the thing I want to say. All this talk about
the opposition, and you have already touched on it in some of
your testimony, all three of you, so it is just important to
remind everybody, it is important we do not ascribe--there is
not a civil war. This is not Syria. The opposition we are
talking about happens to be the majority party in the National
Assembly. That is what we are talking about here.
And when we are talking about street protests and all this
sort of thing that is happening, and zero-sum games, it is
important everybody understand what they are asking for is all
within the framework of the current Constitution of Venezuela,
the Chavez Constitution.
For example, they went out and collected 10 times the
number of signatures they needed under the Constitution for a
referendum to recall the President, and that was denied them.
Imagine for a moment, we are members here and we want to
travel, and President Trump denies you a visa to travel abroad.
They are doing that to members of the National Assembly.
So the opposition is not a guerrilla group that is armed
out in the mountains attacking government troops. These are
elected individuals, the majority, despite extraordinary fraud
and state-run media. Now they kicked CNN out.
So I think it is important for everybody to understand,
this opposition that we keep talking about that is fractured,
they are fractured in Europe. They have people out of power in
Germany and France and all these other places. They have
multiple parties as well. This is a democracy. It is how it
works.
But they are the majority party in the National Assembly.
It is not an armed opposition group. It is a political movement
asking for its rights under the current and existing
Constitution, primarily a referendum and elections.
And I think that is really, really important for people to
understand. This is not the Syrian civil war, which leads me to
the question.
If the President or the Secretary of State were here right
now and they were to ask you what is the number one thing that
we need to do right now in Venezuela? What is the concrete
measure that we can focus on? Would you agree that at this
moment, because we are not going to get 10 things, one thing
would be to use all of the energy that we have and all of the
influence that we have to serve as a catalyst for action at the
Organization of American States to invoke the Democratic
Charter because of what I just outlined with regard to no
respect for the current Constitution? Is that not the single
most concrete thing we can do in the short term to provide the
pressure necessary so that elections are allowed and the
Venezuelan people can decide what kind of government they want?
Because I think we are going to get one thing, and that is
what I hope we can focus everybody on, and I would love to have
that be a bipartisan committee consensus, that that is what we
should be pushing for. Perhaps you disagree.
But is that the one recommendation? And if not, what would
it be?
Mr. Feierstein. Yes.
Dr. O'Neil. I agree. It should be that.
Dr. Smilde. Yes, that is what I mentioned first.
Senator Rubio. Well, then, great. And I would just close by
saying that among all the other things--we do not have a
representative at the OAS. That is the next--hopefully, we will
have somebody who will be there representing us. We need to
have somebody there.
And I think Menendez would be great. He does not want to do
it, but I just nominated you for the OAS, but I do not want to
lose him in the Senate.
But that really is a priority.
The Chairman. I agree 100 percent.
Senator Menendez.
Senator Menendez. Thank you.
There would be a lot of people who would be happy to see me
leave the Senate.
[Laughter.]
Senator Menendez. Dr. Smilde, I just have to pursue
something with you, because I need to understand this.
So the dialogue, was the dialogue a success?
Dr. Smilde. No, I think the dialogue was a failure.
Senator Menendez. And the dialogue was an attempt at
engagement, right?
Dr. Smilde. Yes, it was. But I think these things come and
go. I mean, I think you cannot see it as dialogue that just
ended. These things always come and go, and they have short-
term impacts.
I think, clearly, it allowed the Maduro government, it gave
it some breathing room. It allowed them to deflect change. But
it also I think brought a lot of discrediting to the Maduro
government. That has an impact in the creation of consensus in
the region.
So in that sense, these dialogue processes can have
successes even in----
Senator Menendez. So I heard my colleague talk about the
Cubanization of the policy as it relates to Venezuela, so
Europe has for decades engaged in dialogue with the Castro
regime, has it not?
Dr. Smilde. Yes.
Senator Menendez. Latin America has for decades engaged in
dialogue with the Castro regime, has it not?
Dr. Smilde. Yes.
Senator Menendez. Canada for a couple decades has engaged
in dialogue with the Castro regime, has it not?
Dr. Smilde. Yes.
Senator Menendez. And is the Castro regime any less
repressive?
Dr. Smilde. No, because I think the United States has not
engaged in dialogue.
Senator Menendez. It is amazing that the whole world----
Dr. Smilde. But its next-door neighbor----
Senator Menendez. ----except for the United States can
engage--I believe in American exceptionalism in so many ways.
But when the whole world is engaging in dialogue with a country
for decades; when there is unlimited travel by Europeans, Latin
Americans, Canadians; when there are investments by those
countries in Cuba; and yet the average Cuban cannot be hired
directly by that foreign entity--it is pretty amazing to me.
I think I am all for engagement, but I think where WOLA, I
do not quite understand it, is engagement with dictatorships
that basically own everything and do not want to give it up.
And so I do not quite understand that view, because I have not
found too many dictators that willingly, through engagement,
give up their powers.
So it bewilders me, at times. So I try to understand that
as a successful strategic view. When it comes to a
dictatorship, I do not see it. I have not seen it happen, and
it has not succeeded.
Dr. Smilde. Yes, I think WOLA has had a long-term policy on
Cuba that is very similar to the policy on Venezuela, and that
is that, on the one hand, imposing the embargo, just like we
impose sanctions in Venezuela, and on the other hand,
denouncing human rights.
And it is our view that isolation does not facilitate human
rights. Rather, engagement--of course, there are no magic
bullets. In fact, in the Venezuelan case, from the beginning, I
was opposed to the dialogue in the terms that it was
undertaken, because I thought it should have been accompanied
with continued pressure in the OAS as well as continued street
mobilization on the part of the opposition, because I think
dialogue by itself, on its own, is not going to be taken
seriously by the Venezuelan Government.
So I do not think dialogue is a magic bullet, but I think
as one part of a multilateral press, I think it----
Senator Menendez. That might be different. We might come to
an agreement on that.
But I very often hear dialogue held in and of itself in the
abstract as a way in which we get dictators to give up that
which they own 100 percent of. And that is not--in my
experience in 25 years, they do not do that easily.
Can I ask you, would you provide to the committee when WOLA
last spoke about human rights inside Cuba?
Dr. Smilde. I am sorry, I do not work on the Cuba policy.
Senator Menendez. If you could ask WOLA to submit it for
the record, I would love to see it.
Dr. Smilde. Okay.
Senator Menendez. Thank you.
[The response to Senator Menendez's question follows:]
I have consulted with my WOLA colleagues, and wanted to forward the
following:
1) WOLA program director Geoff Thale testified in both 2015 and
2016 before the subcommittee on Africa, Global Health, Global Human
Rights and International Organizations of the House Foreign Affairs
Committee, on the human rights situation in Cuba. Both testimonies are
attached. The 2016 testimony notes ``Cuba has serious human rights
problems. There is only one legal political party. Cuba falls far short
of international human rights standards on freedom of speech, freedom
of the press, and freedom of association.'' The 2015 testimony is
similar and notes that ``Regime opponents are subject to harassment and
arbitrary short term detentions . . . Cuba should end its restrictions
on political parties, freedom of speech, and freedom of assembly.''
2) This testimony reflects our general view. WOLA's publications,
commentaries, and statements on Cuba have been consistent, since the
program's inception in 1995 in expressing concern about the human
rights situation in Cuba, while arguing that U.S. sanctions on Cuba
have been counterproductive. While WOLA does not argue that engagement
is a magic bullet, we believe that engagement is more likely to create
an environment in which human rights improvements will take place. We
have made this argument--both the human rights criticism and the
critique of the embargo as an effective human rights strategy--
repeatedly, including in testimony that commented on the human rights
situation in Cuba before the House Ways and Means Committee in 2010 and
in a March 2016 commentary that discusses human rights problems in
Cuba, entitled ``Can U.S. Engagement with Cuba Encourage Improvements
in Human Rights and Political Freedoms Effective U.S. Role?''
I hope this is responsive to Senator Menendez's request. WOLA would
be happy to provide additional information about its views on Cuba and
Cuba policy.
The Chairman. Senator Cardin.
Senator Cardin. I just want to make some observations.
I do not think any of us are against dialogue. We want to
have conversations. But I remember one of my first battles on
human rights dealt, when I was a state legislator, working on
sanctions against apartheid government of South Africa.
And I just remember the conversations back then that we
need to engage, we do not need to isolate. And but for the
actions of imposing sanctions against South Africa, I think it
could have been bloodier and longer before the governments
changed.
So I am for dialogue, but I think you have to go from a
point of view of strength, and you have to be willing to act in
order to get the type of dialogue that can bring about results.
So I appreciate the fact that we have not been as effective
as we need to be. That is clear. But I would not give up on
trying to find more pressure points that we can put on the
Venezuelan Government so that dialogue can lead to real change.
And I thank our witnesses very much for their
participation.
The Chairman. I want to thank you also for being here.
There will be some additional follow-up questions, and we will
keep the record open until the close of business Monday. If you
could respond to them fairly quickly, we would appreciate it.
You know, the Western Hemisphere has had tremendous progress in
recent times, and I appreciate your focus here today and
helping us on Venezuela. And we still have the issue with Cuba.
It would be quite a breakthrough if somehow or another these
countries would return to--Venezuela would return to a full
democracy.
We thank you for your help in thinking about how we might
put the pressure on and also energize others to help us in that
regard.
And with that, the meeting is adjourned. Thank you.
[Whereupon, at 12:12 p.m., the hearing was adjourned.]
[all]