Have Venezuela Sanctions Failed?

Four years after the Trump administration began intensifying Venezuela sanctions, Maduro seems to be firmly ensconced in power. many have concluded that sanctions have failed. Yet perhaps driving Maduro from power was never their primary objective.

Perhaps no question is as capable of inflaming deep passions among Venezuelans today as that of whether sanctions imposed on the Maduro regime have failed. Even the suggestion of the question is typically associated with a presumed position. Advocates of a hard line against the Maduro regime are likely to react defensively to any such suggestion, perceiving that admission of failure brings with it an acceptance of the need to lift them.  Opponents of sanctions, who have highlighted their collateral effects, tend to feel their convictions reaffirmed if it is proven that these sanctions, despite enacting high costs, have yielded few benefits.

The standard argument against sanctions is that Maduro seems more firmly entrenched in power today than at the start of sanctions several years ago.  Venezuela’s opposition is weaker, and the government is more repressive and authoritarian.  If the aim of sanctions was to drive Maduro from power, they don’t seem to have attained that objective.  Defenders of sanctions respond by noting that sanctions are the only source of the opposition’s bargaining power, and that Maduro would be even stronger if sanctions were lifted.

As with any discussion about intervention effects, this is really a discussion about counterfactuals.  The key question is what would have happened in Venezuela in the absence of sanctions.  Surely, reasonable people can construct different counterfactuals in which Venezuela would be closer – or farther from – democracy in the absence of sanctions.  The difficulty in constructing such counterfactuals is one of the main reasons why the evaluation of the success of sanctions is so difficult.

Then there is the issue of costs.  Sanctions critics may believe that the current level of democratic deterioration is not that different from what it would have been in the absence of sanctions, yet also believe that the economy has borne significant costs from these.  The higher the costs from sanctions, the more evidence you would demand to see that they have made a difference with respect to regime change in order to support them.

Much of the discussion – including a great part of my prior writing[1] – has focused on broad economic sanctions that bar the country from having access to international oil and financial markets.  These remain deeply controversial.  In contrast, there is a more significant political consensus in opposition circles around the issue of personal sanctions.  Generally speaking, both moderate and hardline opposition groups agree that individual sanctions, at least when they are appropriately targeted, have no major economic or humanitarian spillovers. For example, Progressive Advance legislator to the National Assembly elected in 2020, Luis Romero, said during a televised debate against pro-government candidates ahead of the December 6 elections that “those who open accounts in Andorra with money from our country, I’m willing to have them sanctioned.” [2]


Yet personal sanctions can also backfire. While they are intended to generate selective incentives that lead key power holders to withdraw their support of the regime, they can end up having the opposite effect if they are not well calibrated.  The key problem comes from the fact that sanctions aim to generate incentives for defection from regime loyalists. [3] Yet if the sanctions are not powerful enough to generate incentives for a sufficiently large number of defections to occur, they can have the opposite effect of strengthening the sanctioned group’s resolve to fight on.  If the sanctions end up promoting internal unity in the regime, they could strengthen Maduro’s leadership and consolidate his hold on power.

To think through these arguments, it is useful to discuss a simple model of individual sanctions.  Consider an authoritarian regime in which a subgroup of the population can determine who holds power.  In a democracy, this is known as the electorate, and the mechanism through which this determination occurs is that of periodic elections.  In a non-democratic state, this is what political scientists call the “selectorate.[4]” In order to remain in power, a leader must count with the support of a minimum winning coalition of the selectorate.

Consider a selectorate whose members differ in terms of their “proximity” to the regime.  Members with greater proximity to the regime also derive more significant benefits from the status quo.  These benefits can be economic but can also be purely political or even symbolic.  What sanctions do is impose an individual-specific cost on the selectorate members who support the regime.

Personal sanctions are typically specified as conditional punishments on an individual’s actions to support the regime. In fact, the United States usually goes out of its way to signal that sanctions are dependent on conduct and can be lifted.  Note, for example, this statement on the Treasury Department’s sanctions page on filing petitions for removal from lists of the Office of Foreign Assets Control (OFAC):

The power and integrity of the Office of Foreign Assets Control (OFAC) sanctions derive not only from its ability to designate and add persons to the Specially Designated Nationals and Blocked Persons List (SDN List) but also from its willingness to remove persons from the SDN List consistent with the law.  The ultimate goal of sanctions is not to punish but to bring about a positive change in behavior.  Each year, OFAC removes hundreds of individuals and entities from the SDN List.  (emphasis added in bold).[5]

Therefore, we can think of a sanction as a cost that is imposed on a member of the selectorate who supports the regime, and that is not imposed on a member who does not support the regime.  This conditionality of the reward on the member’s action can happen through one of two ways. Either a selectorate member who does not support the regime avoids the sanction and its associated costs, or a member of the regime who was supporting the regime changes course and gets the sanction lifted. From a theoretical standpoint, these choices are equivalent, as long as we can take at face value OFAC’s claim that sanctions are conditional on actions. In any case, the aim of sanctions is to generate a sufficiently high cost to supporting the regime so as to make the number of selectorate members backing the regime fall below the minimum winning coalition.

Exhibit 1: Effect of sanctions on members of the selectorate

Source: own construction

This dynamic is illustrated in Exhibit 1, which represents the benefits from the status quo for selectorate members and the reward from defection implicit in the sanctions.  The higher the reward, the larger the defections.  Let R be the individual-specific cost of the sanction and let B be the benefit that the individual receives from the status quo (benefit that can only be enjoyed if they support the regime). Then it follows that individuals for whom R>B will not support the regime, and thereby avoid sanctions; individuals for whom B>R, in contrast, will continue supporting the regime and end up sanctioned.

We illustrate two possible sanctions levels: one (A) which is insufficient to force enough defections to generate regime change, and another one (B) that is large enough to provoke enough defections so as to make the regime unable to count with the support of a minimum winning coalition.  A appears to be the equilibrium that Venezuela is stuck in: extensive use of sanctions, and a regime that maintains the support of a sufficiently large coalition.

Why not just raise sanctions to the level C* or higher needed to generate a break in the minimum willing coalition and thus forcing the regime to lose power?  This, indeed, appears to be the logic behind proponents of the “maximum pressure” approach. One reason why this may not be so simple is that it is costly.  It requires giving a reward of C to Xc defectors.  The total cost of this strategy, CˑXc, may exceed the benefits that the sanctioning country would derive from regime change.  Therefore, the optimal strategy for the sanctioner may be to impose sanctions at a lower level such as A.  In equilibrium, (1-XA) members of the selectorate are sanctioned, XA defect, and the regime manages to hold on to power as (1-XA)>M, the minimum size of the winning coalition.

To understand why this may be a consistent explanation of the failure of regime change efforts, it’s worth considering more in detail what the reward from defection is.  The standard U.S. sanction – and its EU analogue – involves freezing of assets through inclusion in OFAC’s Specially Designated Nationals List.  Avoiding these sanctions could mean maintaining access to these funds and the capacity to make transactions in the U.S. financial system.  This may be a sizable incentive for some members of the selectorate.  However, government officials – or their associates – with large deposits in the U.S. financial system are likely to have obtained these funds through corrupt practices and therefore be subject to other risks independent from individual sanctions.  It is unclear that, even if they were to have access to their funds abroad, they would be able to use them in a relatively unimpaired manner.  They would likely be liable to prosecution under the Foreign Corrupt Practices Act or other laws associated with drug trafficking or money laundering.  For other officials who in the absence of sanctions would not have had assets in the U.S. anyway (be it because they are honest or because they decided to stash the money away elsewhere), this reward from avoiding sanctions is likely negligible.

Personal sanctions can also backfire. While they are intended to generate selective incentives that lead key power holders to withdraw their support of the regime, they can end up having the opposite effect if they are not well calibrated.

Of course, there may be much more than meets the eye in the rewards offered to key officials who defect.  At the limit, the U.S. or its associates could be offering them substantial economic rewards using covert funds, for example.  But the challenges associated with setting up such a reward structure today are significant.  For starters, public opinion is unlikely to take kindly to having monetary rewards being offered to human rights violators. The point is that raising the rewards to defectors can be not only economically but politically costly.  There is thus a limit to how high R can be made.

In principle, one could also try to lower the benefits to selectorate members from the status quo. An extreme case of this is a military intervention that makes life very hard for regime insiders.  But the costs associated with these actions are significant. This puts us back in the territory in which the sanctioner is unwilling to pay the costs necessary to generate regime change. 

In the absence of a full-scale military intervention, other tools available to reduce selectorate member benefits under the status quo are often too blunt. If the regime stays in power, a non-defecting member of the selectorate will likely enjoy significant benefits regardless of the external pressure. The government is, after all, playing essentially the same game: it is designing the benefits function so as to target benefits to its minimum winning coalition.  Broad-ranging economic sanctions may thus limit the ability of the government to reward its coalition, but at a very high cost to the population at large.  Even then, it is unlikely that economic sanctions have the capacity to make a sufficiently large part of regime insiders miserable enough to lead them to prefer a situation in which they lose power.

Another reason why it is difficult to raise R is because of the lack of capacity to make credible commitments.  While it may be possible to promise key regime insiders significant benefits to betray the regime, it is unclear that the sanctioner will have any incentive to live up to that promise once the regime loses power.  In fact, it is probable that neither the U.S. nor the opposition have the capacity to stop trials against regime officials for corruption or human rights abuses from going forward in the event of a transition, even if they wanted to do so.  Furthermore, even if they do have the capacity, it is not clear that they would have any willingness to do so once the regime has lost power.  Rational regime insiders are likely to be able to infer this and will thus treat any promises of rewards upon defection as non-credible promises.

One way credible promises can be made to regime defectors is by promising them power in a transition.  This, in fact, appears to have been the thinking behind U.S. actions to support the attempted military rebellion against Maduro of April 30, 2020.  Key regime insiders, including Defense Minister Vladimir Padrino and Chief Supreme Court Justice Maikel Moreno, are said to have participated (or claimed to be participating) in the conspiracy,[6] which would have ensured that they could have been in a position of power after pushing Maduro from power.  If successful, they could have had the possibility of retaining their current roles or even having more prominent roles in the transition government.  This would have given them a reasonable degree of protection against prosecution for their alleged crimes and would have offered them the prospect of key roles in a legitimate transitional government – presumably a much better agreement than their roles in the current pariah de facto government.

It is unlikely that economic sanctions have the capacity to make a sufficiently large part of regime insiders miserable enough to lead them to prefer a situation in which they lose power

However, these benefits can only materialize if the conspiracy is successful.  Put differently, defectors don’t just have to take a personal decision to defect; they also have to solve a coordination problem among themselves.  This coordination problem can be very difficult to solve not just because of the inherent difficulties of these situations (e.g., incentives to free-ride) but also because coordinating is potentially dangerous.  Participants in a failed conspiracy can be sure that the regime will ruthlessly punish them.  Potential conspirators may prefer to become regime informants than to run the risk of spending the rest of their lives in the regime’s torture chambers.  There is very little that sanctions can do to help potential defectors solve this coordination problem.


The foregoing discussion has assumed that the international community’s objective setting the sanctions is to generate a change in Venezuela’s political situation and force the de facto government to revert its violations of human and political rights.  Yet while that is probably one of the objectives of sanctions, it is not necessarily the only one nor the most important one.

Politicians care about votes. If we want to understand the rationale for sanctions, it would make sense to start by thinking about their implications for domestic politics in the sanctioning countries.  Among the few demographic groups in which Donald Trump made important gains over the past four years were Hispanics; his tough stance on the Venezuelan and Cuban regimes is thought to have contributed to these gains. Appealing to radicalized diasporas of Cubans, Nicaraguans and Venezuelans helped the former president win the swing state of Florida comfortably, receiving one million more votes in it than four years ago. Despite his anti-immigrant rhetoric, Trump made significant gains in the Latino community, increasing his share of the Florida vote by 11 percentage points since 2016.  Had 54 thousand persons changed their votes in three other states, Donald Trump would still be leading the country.

Although there is limited research on the issue, there is some evidence that the Venezuelan diaspora strongly backs sanctions – in contrast to those living in Venezuela, who strongly oppose them. More broadly, diasporas appear to be generally supportive of sanctions: a 2018 study found that a one percentage point increase in the size of a country’s diaspora in a swing state increased the probability of sanctions by 11 percentage points.[7]  How much of this reflects strategic as opposed to just emotive thinking is an open issue, yet even just from selection bias, we would expect emigrant populations to be more strongly opposed to the regime than those who stay behind.  Emigrants are also obviously less affected directly by the collateral effects on the sanctioned economy.

Yet perhaps an even more important consideration for imposing sanctions has to do with their deterrent effect on the actions of others. Just as in the case of law enforcement, it makes little sense to evaluate a punishment just for its effect on the punished person.  While reforming criminals and converting them into productive members of society is one of the aims of the criminal justice system, it isn’t the only one, nor is it the one that it is typically most effective at. Rather, the most important aim of criminal punishment in contemporary societies is that of acting as a deterrent to the conduct of others than the punished criminal.

Figure 1: Economist Democracy Index evolution in LatAm (2015 and 2020)

Sources: Economist Intelligence Unit

In fact, most research in criminology finds that individual deterrence effects (the change in the conduct of punished individuals) are low or nonexistent.[8] There is some more evidence – although also a fair amount of skepticism – that collective deterrence (the reduction in criminal behavior in a population as a result of its punishment) is more effective.[9]

Similarly, much of the literature on sanctions emphasizes their effect in deterring conduct among non-sanctioned countries.  Examples abound.  International sanctions on the white-rule government of Rhodesia (today Zimbabwe) were more effective at dissuading white colonists in other parts of Africa from pursuing a similar model.[10] Iraq sanctions in 1990 never got Hussein to withdraw from Kuwait but were considered necessary to send a signal that the international community would not accept nations simply taking over less powerful neighbors. UN sanctions against Iran and North Korea are justified appealing to the 1970 Treaty on the Non-Proliferation of Nuclear Weapons.  A study of this latter set of sanctions concludes:

“Sanctions have been ineffective in halting ongoing nuclear weapons programs, but they have succeeded in deterring states from starting nuclear weapons programs in the first place and have thus contributed to a decline in the rate of nuclear pursuit.”[11]

Venezuela is the most prominent case of democratic backsliding in te region’s recent history.  According to The Economist Intelligence Unit’s Democracy Index, for example, Venezuela dropped from a score of 5.0 to one of 2.8 between 2015 and 2020  (0 indicates complete autocracy, 10  complete democracy). It is now the least democratic country in the region, even slightly below Cuba. 

It is quite plausible that sanctions may have intended not so much to stop this deterioration but to avert its occurrence in other countries in the region.  Their effectiveness then may not be so much in changing the conduct of the sanctioned regime.  As we have argued above, the incentives for this to happen can be relatively low-powered.  Yet by very strongly signaling what life would be like for a regime that overstepped democratic bounds, the international community may have sought to show other budding autocrats what the consequences could be of undermining democratic institutions in the same way that Maduro did.

The deterrent effect of sanctions also needs to be understood in a context in which the United States has a more specific policy objective of deterring the emergence of non-democratic states associated with leftist political movements, particularly when this happens in the region it has historically seen as its backyard. Former President Donald Trump made this point prominent in a 2019 meeting with Egyptian President Abdel Fattah Al Sisi when he quipped, “Where’s my favorite dictator?”[11]  Trump appears to have cared little about Sisi’s well-known human rights abuses, as long as Sisi remained his ally.  Even in Latin America, it seems that the U.S. is less uncomfortable with democratic backsliding in right-leaning governments such as those of Honduras under Juan Orlando Hernández or El Salvador under Nayib Bukele than in left-leaning governments like those of Bolivia and Venezuela.

If the aim of U.S. policy could be characterized as stopping democratic backsliding in leftist governments in the region, we should judge its success by its effect on those countries in which the backsliding did not occur as much as in those where it did.  Judged by that standard, the policy could arguably look more successful.  In any case, its conduct needs to be assessed more in the absence of democratic backsliding in countries with leftist governments such as Argentina, Bolivia, and Mexico.

That this is the case is not necessarily good news for Venezuelans.  The sanctioning of the Maduro regime may not seek to generate a change in Venezuela.  It may rather seek to deter, say, the government of Andrés Manuel López Obrador in México or Alberto Fernández in Argentina from behaving like Maduro. Venezuela’s opposition should have no expectations that sanctions will help them recover democracy.  This is not because the international community doesn’t want to help.  Rather, it could be because it has by now given up on Venezuela and decided to focus on stopping other countries from going the same route.

If this view is correct, then Venezuelan pro-democracy forces may be well-advised to focus less on lobbying for sanctions and more on acting on domestic levers that have a greater potential effect on generating regime change. Tightening or loosening sanctions is unlikely to make much of a difference to Venezuela’s political stalemate. Rather, the key challenge continues to be getting a large enough part of the selectorate to support an alternative to the status quo. Domestic coalition-building that seeks to include moderate factions of that selectorate in the pro-democracy camp may be a much more efficient route in seeking change for Venezuela.


[1] See, for example, Rodríguez, Francisco R. Sanctions and the Venezuelan Economy: What the data say, retrieved from https://franciscorodriguez.net/2020/01/11/sanctions-and-the-venezuelan-economy-what-the-data-say/ February 22, 2021.

[2] Luis Romero propone crear sistema de respaldo a la moneda nacional, El Universal, November 13, 2020.

[3] We refer to members of the selectorate who do not support the regime as defectors.  It is immaterial whether they have supported the regime in the past.  What is important is that they have power, and that they currently do not support the regime.

[4] See Mesquita, B., Smith, A., Siverson, R.(2004) The Logic of Political Survival, The MIT Press, March 1

[5] Filing a Petition for Removal from an OFAC List, U.S. Department of Treasury, 2021. 

[6] How a plot filled with intrigue and betrayal failed to oust Venezuela’s president, The Washington Post, May 3, 2019.

[7] Kustra, Tyler (2018) Sanctioning the Homeland: Diasporas’ Influence on American Economic Sanctions Policy, SSRN, August 6.

[8] Nagin, D., Cullen, F., & Lero, C. (2009) Imprisonment and Reoffending, Crime and Justice, vol. 38.

[9] Dölling, D., Entorf, H., Hermann, D (2009) “Is Deterrence Effective? Results of a Meta-Analysis of Punishment,” European Journal on Criminal Policy and Research, 15, 201–224, March 3.

[10] See the discussion in Baldwin, D. (2020) Economic Statecraft, Princeton University Press, chapter 8.

[11] Miller, N. (2014) “The Secret Success of Nonproliferation Sanctions,” International Organization, 68(4), pp. 913-944.

[12] Trump, Awaiting Egyptian Counterpart at Summit, Called Out for ‘My Favorite Dictator’, Wall Street Journal, September 13, 2019.

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