Venezuela elections and their implications

On 28 July 2024 presidential elections in Venezuela saw incumbent President, Nicolas Maduro, re-elected, there have been significant demonstrations over the result due to over the varsity of Maduro’s win. The US-based Carter Center deployed 17 experts and observers to Venezuela after being asked to monitor the election by the National Electoral Council (CNE). The renowned NGO, which was invited by Venezuelan officials to monitor Sunday's presidential poll stated that the election was neither free nor fair and cannot be considered democratic. Following on from this on Monday 29 July, the Biden administration announced that electoral manipulation had stripped Venezuelan President Nicolas Maduro's re-election victory of any credibility, leaving the door open to fresh sanctions on the country. Senior US officials, briefing reporters on Sunday’s election, intensified Washington’s response to the disputed vote, in which Venezuela’s electoral authority declared Maduro had won a third term, extending 25 years of socialist party rule. Independent exit polls indicated a significant opposition win. The US, UK, EU and other governments have cast doubt on the result, while Maduro’s opposition rival, Edmundo Gonzalez, claimed he was the true winner.

US officials demanded that Maduro publish a detailed vote tabulation, warning that failure to do so would result in the international community rejecting the announced outcome. Although no new punitive measures have been introduced, officials in Washington were clear that they would review US sanctions policy based on Maduro’s actions moving forward. Washington, which rejected Maduro’s 2018 re-election as fraudulent, had eased sanctions on Venezuela's oil industry last October following a deal between Maduro and opposition parties. However, in April, the US reimposed sanctions, accusing Maduro of breaking electoral promises. The administration highlighted that Maduro’s repression and manipulation of the election, along with declaring a winner without detailed polling results, stripped the election results of credibility. 

The European Union joined the call for greater transparency in Venezuela to determine the legitimate winner of the presidential elections, which it deemed marred by numerous flaws and irregularities. However, the EU stated that calls for new sanctions are premature and emphasised the need to find a way out of the political crisis. Discussions among EU Member States and with international partners continue to assess the entire electoral process and decide potential next steps. The National Electoral Council (CNE), controlled by government allies, declared Maduro the winner with 51.2% of votes, followed by opposition candidate Edmundo González with 44.2%.

González and his alliance, the Unitary Platform, disputed the results, arguing that the CNE's numbers did not match opinion polls and statistical estimates. The opposition claimed 73% of tally sheets showed González had 3.5 million more votes than Maduro, demonstrating their categorical victory. Opposition supporters saw this election as a crucial chance to end 25 years of single-party rule, however, Maduro accused the US of attempting to impose a coup d'état in Venezuela.

Analysts suggest Maduro’s re-election, ongoing disruption and more potential sanctions could lead another wave of Venezuelans seeking to migrate to surrounding countries and even as far-afield as the US -Mexico border. Such a move would complicate immigration issues during the US presidential campaign. Given the political climate and international responses, the situation regarding sanctions remains fluid. The US has left open the possibility of new sanctions based on Maduro’s actions, an initial wave of new US sanctions would likely be individual sanctions or travel bans on Venezuelan officials connected to the election, with the possibility of escalating to broader sanctions if needed. The US, EU, and other international partners are actively coordinating to evaluate the electoral process and decide on the best course of action, emphasizing the crucial role that sanctions will play in addressing Venezuela's continuing political crisis. A sanctions response is also probable from others, such as Canada and the UK. Whilst currently the EU considers new sanctions premature. All are seeking to coordinate activity with international partners to evaluate the electoral process and decide on potential next steps.

Background to when and why sanctions were applied to Venezuela? 

Sanctions were applied to Venezuela primarily in response to a series of actions by first the government of Hugo Chavéz and following his death the subsequent actions of his successors government. These included criminal activities, antidemocratic actions, corruption, and human rights abuses. The United States began imposing targeted sanctions on Venezuelan individuals and entities in 2005, focusing on those involved in such activities. As the government of Nicolás Maduro, in power since 2013, intensified its repressive measures, the Trump Administration expanded these sanctions to include broader financial sanctions, sectoral sanctions, and sanctions directly targeting the government. In 2018 as the situation got worse a number of countries and grouping came together to put sanctions in place on Venezuela, these included the EU and UK.

The increasing human rights abuses and corruption under Maduro's regime prompted extensive sanctions put in place with the aim of pressuring the government into a change of behaviour. Despite sanctions and other international pressures, Maduro has remained in power, although the country has experienced a severe economic and humanitarian crisis. These crises have been exacerbated by government mismanagement and corruption, which has led to the displacement of 7.7 million Venezuelans.

The United States' approach to sanctions has evolved over time, whilst in both the UK and the EU there has been little change to the sanctions applied. Initially, and until quite recently, the Biden Administration has offered sanctions relief to incentivise the Maduro government to conduct free and fair elections in 2024. This included providing a General Licence to allow the export of some oil from October 2023, which lasted until April 2024. However this period ended as the Maduro regime began to renege on their commitments under the Barbados Agreement. Specifically the antidemocratic actions by Maduro's officials, saw the Biden Administration repel the General Licence and roll back most of the sanctions relief by April 2024.

What Happened in 2018?

In 2018, Venezuela was at the centre of a severe political crisis following the re-election of President Nicolás Maduro. The election, which was marred by allegations of fraud and widespread human rights abuses, saw significant international condemnation. During this period, the Venezuelan government dissolved key parliamentary bodies, further consolidating its power and undermining democratic institutions. This led to the imposition of international sanctions as a response to the government's actions, which were seen as undermining democratic processes and committing human rights violations. The consolidation of power and the suppression of political opposition, including human rights abuses, prompted the international community to impose sanctions on Venezuela.

Lima Group

Lima Group, an international coalition of Latin American and Caribbean countries along with Canada, established in 2017, formed to address the crisis in Venezuela. The group focused on diplomatic and humanitarian efforts, rather than escalating sanctions, due to concerns about exacerbating the humanitarian crisis. Although agreement was eventually reached for the members of the group to adopt sanctions, it was left to individual members to create and implement sanctions and very few did. Subsequently a number of these countries, such as Mexico, have repelled the sanctions they did put in place. As a result, it is unlikely the Lima Group will impose additional sanctions on Venezuela in response to this latest election. The group's focus has been on advocating for democratic reforms, supporting human rights, and promoting a peaceful resolution to Venezuela's political turmoil. While the Lima Group has historically supported measures to pressure the Venezuelan government, such as endorsing sanctions by other entities and calling for international support for Venezuelan democracy, it has not itself taken direct action in terms of imposing new sanctions.

The group's approach is largely centred around diplomatic engagement and offering support for humanitarian efforts rather than enforcing additional punitive measures. This is reflected in their ongoing efforts to address the Venezuelan crisis through dialogue and advocacy, rather than through direct economic or political sanctions. Thus, despite the severity of the situation in Venezuela, including ongoing struggles with access to food and medicine, the Barbados Agreement, and the arrest of opposition figures, the Lima Group's role remains focused on fostering international consensus and supporting diplomatic and humanitarian interventions rather than introducing new sanctions.

US, EU and UK sanctions on Venezuela

Sanctions against Venezuela were introduced as seen by the US, UK, and the EU in response to the government’s actions, including corruption, human rights abuses, and electoral fraud. These sanctions primarily targeted Venezuelan officials, financial transactions, and the oil industry to pressure the regime into adhering to democratic norms. Despite these sanctions, the situation in Venezuela continued to deteriorate, contributing to a severe humanitarian crisis marked by limited access to food and medicine.  

United States

The US began imposing targeted sanctions on Venezuela in 2005, focusing on individuals and entities involved in criminal, antidemocratic, or corrupt activities. These sanctions were significantly expanded under the Trump Administration in response to the increasing human rights abuses and corruption under President Nicolás Maduro, who has been in power since 2013.

The Trump Administration introduced broader financial sanctions, sectoral sanctions, and direct sanctions on the Venezuelan government. For instance, Executive Orders such as E.O. 13692 signed in 2015 targeted individuals responsible for undermining democratic processes, while E.O. 13808 in 2017 restricted access to US financial markets for the Venezuelan government and its state-owned oil company. Amongst the restrictions introduced under the sanctions were embargoes on military-rated goods, communication and surveillance equipment and equipment and materials related to the oil sector, such as pipelines, valves and other specialist items. As mentioned above the Biden Administration oversaw a period of sanctions relief for Venezuela for a time, but this position has been reversed.

United Kingdom

The UK was at the forefront of EU adoption of sanctions on Venezuela along with Spain and has continued to broadly align its sanctions policies on Venezuela with the EU, despite its departure from the EU. The UK’s autonomous sanctions regime on Venezuela is through the Venezuela (Sanctions) (EU Exit) Regulations 2019, which came into effect in January 2021. These sanctions target individuals and entities involved in serious human rights violations, repression of civil society and democratic opposition, and corruption. The UK's sanctions include asset freezes and travel bans, focusing on key figures within the Maduro regime and those linked to human rights abuses. The sanctions regime also includes a wide-ranging arms embargo and trade restrictions on communication and surveillance equipment.

European Union

The EU's sanctions on Venezuela began in 2017 in response to the deteriorating political and human rights situation in the country. The EU's measures include asset freezes and travel bans on individuals responsible for human rights violations and undermining democracy. The EU has consistently emphasised the need for a peaceful and democratic solution to the crisis in Venezuela and has coordinated its sanctions with the United Nations and other international partners to maximise their impact. The EU's sanctions are part of a broader strategy to promote peace, security, and the rule of law, targeting violations such as human rights abuses, terrorism, and corruption. The sanctions are designed to pressure the Maduro regime to respect democratic principles and human rights. The sanctions also include a targeted arms embargo, and trade restrictions on communication and surveillance equipment. There are some exceptions allowed under the EU sanctions regime, which should be examined carefully before being relied on.

While the US, UK, and EU have implemented sanctions at different times, their focus remains aligned on key issues: promoting human rights, democracy, and combating corruption in Venezuela. The sanctions aim to isolate key figures within the Maduro regime, restrict their financial and travel capabilities, and pressure the government to adhere to democratic norms and respect human rights. Despite differences in their legal frameworks and geopolitical strategies, the US, UK, and EU have often coordinated their sanctions policies to increase their effectiveness. For example, all three have targeted top officials in the Maduro regime, including President Maduro himself, and entities crucial to the regime's economic base, such as the state oil company PDVSA.

Recent developments

Sanctions against Venezuela began to take shape in response to the government's increasingly repressive actions and the undermining of democratic processes. Initially, sanctions focused on individual Venezuelan officials, targeting those directly involved in human rights abuses and corruption. Over time, the scope of sanctions expanded to include broader economic measures, particularly targeting the oil sector, which is crucial to Venezuela's economy.

In recent years, the situation has worsened, with a severe humanitarian crisis emerging from economic mismanagement and political instability. Venezuela has been grappling with severe shortages of food and medicine, exacerbating a deepening humanitarian crisis. Economic mismanagement, corruption, and political instability have led to a collapsed healthcare system and an inability to import essential goods. The scarcity has driven widespread suffering among the population, with millions facing extreme hunger and inadequate medical care. The lack of basic necessities has significantly contributed to the mass emigration of Venezuelans seeking better conditions abroad, increasing the international community’s focus on Venezuela.

Barbados Agreement

The dire situation in Venezuela prompted the initiation of dialogue between the Maduro regime, opposition parties and key international stakeholders in 2023. This eventually led to the Barbados Agreement, signed in October 2023, which represents a pivotal effort to address Venezuela's political and economic crisis. The agreement, facilitated by international mediators, aimed to create a framework for free and fair elections and to resolve ongoing political tensions. By facilitating a more transparent and inclusive electoral environment, the agreement hopes to pave the way for democratic restoration. It outlined steps for electoral reforms and negotiations between the Maduro government and opposition parties, with the goal of stabilising the country and addressing humanitarian needs. The implementation of this agreement was and is seen as crucial for restoring democratic processes and potentially easing some of the international sanctions imposed on Venezuela.

Opposition arrests

Recently, Venezuela has witnessed a troubling surge in the arrest and detention of opposition figures and activists. This crackdown, spearheaded by the Maduro regime, underscores the increasing authoritarianism and repression faced by political dissidents and critics. The Venezuelan government has targeted individuals and groups who have vocally opposed its policies or participated in anti-government demonstrations, further entrenching its grip on power and suppressing democratic engagement. The recent arrests have included prominent opposition leaders, activists, and human rights advocates. This aggressive stance not only highlights the government's intolerance for dissent but also exacerbates the ongoing human rights crisis in Venezuela. These actions contribute to an environment where political opposition is not only marginalised but criminalised, stifling any attempts to voice dissent or challenge the status quo.

This escalation of repression has significant implications for both domestic and international efforts to resolve Venezuela's political crisis. On a domestic level, the suppression of opposition figures undermines the prospects for a peaceful resolution by removing key voices from the political dialogue. It creates an atmosphere of fear and discourages political participation. Internationally, the crackdown complicates the work of observers and negotiators who are striving to mediate a solution to Venezuela's crisis. The increased arrests of opposition figures make it more challenging for international bodies and diplomatic efforts to engage with all relevant parties. It raises questions about the viability of negotiations and peace processes, as the Maduro regime's actions suggest a reluctance to genuinely engage in meaningful dialogue or reform.

The international community, including human rights organisations and foreign governments, have condemned these actions and called for the immediate release of detained opposition members. However, the regime's ongoing repression continues to cast a shadow over efforts to stabilise the country and restore democratic norms. This situation also puts additional pressure on groupings like the Lima Group and other international actors, who must navigate an increasingly complex and hostile environment in their efforts to support Venezuela’s path to democratic recovery and address the humanitarian crisis exacerbated by political repression.

What does this all mean for those in sanctions compliance currently? 

For those involved in sanctions compliance, these recent developments mean that they must navigate a complex and evolving landscape. Compliance professionals need to stay informed about existing sanctions and any changes resulting from new agreements or political developments, such as the Barbados Agreement. Compliance professionals need to stay updated on any shifts in the international community's stance and adjust their practices accordingly. This may involve monitoring new sanctions measures or updates to existing ones, particularly those affecting financial transactions, trade, and political entities. They must also consider any humanitarian exemptions that may be applicable to current sanctions and ensure adherence to legal requirements.

Compliance efforts must balance legal obligations with the need to respond to rapidly changing political and humanitarian circumstances. The dynamic nature of Venezuela’s crisis and international response requires ongoing vigilance and adaptability in sanctions compliance to effectively manage risks and meet legal requirements. The arrests of opposition leaders, and the election result could lead to additional sanctions or modifications to existing ones. It is possible that across the US, UK and EU further sanctions measures may go beyond additional designations. Indeed, it is likely that options for the UK and EU may include restrictions on the Venezuelan oil sector. In the US it is possible that further trade restrictions may be utilised. Compliance officers should be aware of potential updates to sanctions lists and ensure that their operations do not inadvertently involve sanctioned individuals or entities. Overall, those managing sanctions compliance must remain vigilant and adaptable to these dynamic and evolving circumstances to ensure adherence to legal requirements and to effectively respond to the shifting political and humanitarian landscape in Venezuela.