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On #sanctions, time for Europe to chart its own course

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At a time when the two sides are fighting bitterly over the Iran nuclear agreement, the underpinnings of global trade, and just about any bilateral topic, the European Union and the United States have responded in rather surprising fashion to Venezuela’s re-election of incumbent Nicolas Maduro: rolling out together a new round of economic sanctions. Indeed, on May 29th, the EU has announced its intention to emulate the US and pass new measures aimed at prominent Venezuelan officials.

 

Venezuela may be the only part of the world where American and European policies work more or less in lockstep. After Nicolas Maduro’s re-election, both the United States and the European Union threatened the country with further economic sanctions – although the European Union’s refusal to send election monitors should be seen as a missed opportunity to engage the country’s political crisis directly instead of pressuring it from afar.

 

With the divide between American and European foreign policy deepening on so many other fronts, it’s fair to ask why the EU is so quick to follow Washington’s lead in its dealings with Maduro and Venezuela. On both Iran and Russia, President Trump has so far adopted hard line positions which put US foreign policy at odds with European interests. The current US administration has resorted to applying sanctions liberally and indiscriminately as a tool of economic warfare, hurting European firms and economies as much – if not more – than their supposed targets.

 

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The two sides have already abandoned the pretence of working in unison on critical issues such as Russia’s “malign activity” and Iran’s nuclear program. What makes Venezuela different?

 

A cynic would argue that Europe sees Venezuela as a bargaining trip, a horse it can trade to manage fraying relations with the Trump administration while disputing US measures on trade tariffs and the Joint Comprehensive Plan of Action (JCPOA). But if the EU sees pressuring Venezuela as a means of smoothing edges with Washington, Trump clearly has no interest in smoothing edges with Europe. His unwillingness to negotiate over steel and aluminium tariffs, which would have devastating repercussions across the continent, has enraged European officials and diplomats. Jean-Claude Juncker has threatened retaliatory tariffs in response. President of the European Council Donald Tusk famously denounced the "capricious assertiveness" of the American president.

 

The answer certainly does not lie in any shared objectives. Historically, the EU has favoured political compromise and de-escalation, explicitly stating it does not wish to harm the general populace and insisting its punitive actions towards the Venezuelan state are meant to encourage political compromise. The US, on the other hand, is going for the jugular with less regard for collateral damage. American thinking on Venezuela takes its cue from Washington’s approach to other adversaries: inflict widespread economic pain to stoke discontent and oust anti-American leaders (of which Nicolas Maduro may be the most provocative). Former Secretary of State Rex Tillerson advocated regime change in the country before his dismissal, while Florida’s outspoken Senator Marco Rubio has openly called for a coup.

 

The trouble for Europe (and, indeed, for Venezuelans themselves) is that the sanctions regime typically only manages to inflict pain on the general population without actually changing the circumstances of those in power. Average Venezuelans are paying the costs of Washington’s manoeuvres to prevent Venezuela from restructuring its debts. Leaning on their control over the levers of the global financial system, US sanctions have created a climate of fear for any global financial institution who would dare help the Venezuelan government get its finances in order.

 

It is a strategy that ignores both empirical research on the effectiveness of sanctions and the public mood in Venezuela itself. A clear majority of Venezuelans oppose the sanctions regime, even if Maduro himself only has the support of a quarter of the electorate. And yet, Vice President Mike Pence has already made clear via tweet that US policy would not be changing anytime soon. His message that “sanctions (will) continue until democracy returns to Venezuela” is the diplomatic equivalent of “the beatings will continue until morale improves.”

 

The Trump administration is clearly planning on taking sanctions even further. Will Europe continue to make itself complicit in a measure that needlessly hurts the country’s population?  In Iran, unlike in Venezuela, Europe has already decided the answer to that question is no. The EU responded to Trump’s recent withdrawal from the Iran nuclear deal by placating Iran, pledging its commitment to the deal afresh and announcing its intention to issue a blocking regulation. This measure would theoretically shield any European countries from US sanctions for continuing to do business with Iran, as well as impose its own penalties on those who choose to drop the Middle Eastern country as a trade partner.

 

Unfortunately for European companies, this discord leaves them caught between a rock and a hard place. If they comply with US instructions, they’ll be in breach of the EU’s blocking regulations; if they continue with their business commitments in Iran, they risk American penalization. Given that such penalization could include the loss of access to the American financial market, it’s clear the EU has limited room in which to work. Several prominent European firms, including French energy giant Total, German insurance company Allianz and Italian steel producers Danieli have all but acquiesced to Trump’s demands.

 

Europe’s sanctions on Venezuela may, more than anything else, be intended to mollify the United States. If so, the European Commission needs to apply the same lesson it has learned the hard way from the multiple ongoing EU-US showdowns: there is no reward or concession to be had in return for solidarity with Donald Trump’s White House.

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