[Senate Hearing 115-785]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-785

                  VENEZUELA: OPTIONS FOR U.S. POLICY

=======================================================================

                                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

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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

                              ----------                              


                        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.]

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