This post is part of a symposium on economic sanctions and TWAIL, presented in partnership with the Yale Journal of International Law.
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In February 2020, Venezuela submitted a referral to the International Criminal Court (ICC) alleging that the economic sanctions imposed on it by the United States constituted a crime against humanity. Although Venezuela has faced US sanctions since 2005, the measures that are the subject of Venezuela’s referral date from 2015, when the Obama administration introduced an executive order declaring the Bolivarian Republic “an unusual and extraordinary threat to the national security and foreign policy of the United States.” According to the Venezuelan referral, these measures, which were “aimed at coercing Venezuela,” were intensified by the Trump administration “to the extent of totally strangling the economy and the finances of the country.”
Venezuela is far from alone in being subjected to US sanctions, which proliferated in the wake of the Cold War. More recently, between 2001-2021, the United States increased its sanctions designations by a stunning 933%, and currently has thirty-eight active sanctions programs—targeting everything from weapons proliferation to narcotics trafficking to human rights violations. In contrast to prior eras, in which physical embargos and blockades were used to inflict economic damage, the key mechanisms of economic coercion today are financial. In the case of Venezuela, the sanctions ban the Venezuelan government from accessing US financial markets and prohibit the purchase of Venezuelan bonds, leaving the country unable to restructure its debt. They block the assets of the state oil company Petroleos de Venezuela, S.A (PdVSA) and prohibit US persons from engaging in transactions with it. And, in August 2019, following a decision to recognize Juan Guaidó as Venezuela’s President, Trump issued an executive order that froze Venezuelan assets in the United States, including, most controversially, $347 million in state funds held in the US Federal Service, which were transferred to Guaidó and the Venezuelan opposition.
Such financial sanctions are both enabled by and exacerbate the deeply unequal integration of the post-colonial world economy that is the legacy of colonialism and neoliberalism. They leverage the indebtedness and dependence of countries of the Global South and the global centrality of the US dollar to coerce states and societies. The results of such economic coercion can be devastating, but the abstract mechanisms through which it operates have made it difficult to identify causation, let alone to prosecute its agents under international law. By preventing countries from restructuring their debts, financial sanctions push them into default, generating spiralling interest rates and capital flight. By freezing central bank funds, they deprive countries of the resources to defend their currencies. And by weaponizing inflation and unemployment, they ensure that, even when food and medicine is available, it is too expensive for most civilians to afford.
A report on Venezuela by the UN Special Rapporteur on Unilateral Coercive Measures, Alena Douhan, details the unspectacular yet deadly effects of a form of economic power that degrades the capacity of targeted countries to sustain human life: shortages of basic medicines; hospitals beset by water and electricity shortages and unable to purchase spare parts to repair respirators and dialysis machines; children prevented from travelling abroad for liver, kidney and bone-marrow transplants; the obstruction of access to child vaccinations for meningitis, rotavirus, malaria, measles, yellow fever and influenza.
This latter example recalls the catastrophic comprehensive sanctions imposed on Iraq in 1990 by the UN Security Council, which led to a resurgence of preventable childhood illnesses. As the philosopher Joy Gordon has recounted, the United States’ decision to block Iraq’s import of children’s vaccines resulted in a public relations disaster and prompted the turn to so-called “smart sanctions,” which purported to minimize humanitarian harm. However, as Richard Nephew, the Obama administration policy-maker who designed the more recent Iran sanctions program, acknowledges, talk of humanitarian exemptions obfuscates the fact that contemporary sanctions aim to depreciate an adversary’s currency while also increasing inflation, and so cause “economic pain” to civilians. In the Iranian case, he boasts that sanctions led to spiralling food prices, notably a three-fold increase in the price of chickens. And while medical supplies were exempted from the sanctions, he notes that they were simply not available because “they cost too much for the average Iranian.”
The mechanisms that link a ban on financial transactions with a state oil company to the death of an unvaccinated child from a preventable communicable disease are not the normal stuff of international criminal justice. At a time when human rights NGOs rigorously count civilian deaths in armed conflicts, no equivalent accounting is available to victims of a war waged via exchange rates, inflation, and interest rates. In the case of Venezuela, as in that of other sanctioned countries, responsibility for economic harm is a topic of ferocious political argument.
When the Centre for Economic Policy Research released a report alleging that sanctions had caused around 40,000 deaths in Venezuela, a Brookings Institution report responded that, without an adequate counter-factual, it was not possible to conclude that the sanctions had even worsened Venezuela’s socio-economic crisis, let alone caused tens of thousands of deaths. As a dismissive article about Venezuela’s ICC referral published in Opinio Juris notes, these conflicts make it highly likely that “any litigation on this issue would unravel into a battle of experts and require a Chamber to pass judgment upon the complex economic models and other matters entirely unfamiliar to the ICC.” Today, the opacity of the mechanisms by which sanctions work secures the impunity of those who impose them.
A World Saturated with Economic Coercion
A recent article on Venezuela’s ICC referral published in the American Journal of International Law argues that the US sanctions cannot qualify as crimes against humanity because they are not even unlawful under international law. “It is generally accepted, no doubt correctly,” the authors write, “that a rule of customary international law against economic sanctions does not exist.” In fact, the legal status of unilateral economic sanctions is a topic of significant disagreement; since 1996, the UN General Assembly has adopted regular resolutions on “human rights and unilateral coercive measures” that characterize the latter as unlawful, as have the Non-Aligned Movement and the Group of 77.
The section of Venezuela’s referral devoted to the “Illegality of Unilateral Coercive Measures” begins with a reference to the Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States adopted by the UN General Assembly in 1970. This Declaration, adopted by consensus at the high point of anti-colonial legal activism, contains a preambular statement recalling “the duty of States to refrain in their international relations from military, political, economic or any other form of coercion aimed against the political independence or territorial integrity of any State.” In outlining the principle of non-intervention, the Declaration further states that “[n]o State may use or encourage the use of economic, political or any other type of measures to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights and to secure from it advantages of any kind.”
This “wide definition given to the principle of non-intervention to include political and economic pressure” was, as the great Egyptian jurist Georges Abi Saab has described, a key victory for non-aligned states. It is this victory that Venezuela has sought to build on in indicting US attempts at economic coercion. And yet, as the authors of the AJIL article on Venezuela’s referral note: “The crux of the matter is the term ‘coerce’ on which a great deal turns.” How one defines economic coercion depends not only on one’s philosophical theory of freedom but also on where one situates the borders between politics and economics, coercion and competition, and how one understands the legitimate scope of economic freedom in a given economic context.
The drafting history of the Friendly Relations Declaration makes clear that strong prohibitions on economic coercion foundered on the difficulty of achieving consensus on how the forms of coercion to which such prohibitions should apply would be distinguished from the “ordinary” economic coercion that was an entrenched feature of the unequal, post-colonial world economy. By 1964, when the drafting of the Declaration began, it was already starkly apparent that the formal independence and sovereign equality won by national liberation movements were undermined by economic dependence and inequality.
A joint proposal submitted by Algeria, Burma, Cameroon, Dahomey (now Benin), Ghana, Kenya, Madagascar, Nigeria, the United Arab Republic and Yugoslavia proposed (as Brazil had done at the inception of the UN) that the term “force” in Article 2 (4) of the UN Charter should be expanded to include economic pressure. “The developing and newly independent countries could not forget,” the report on the drafting process reads, “that such forms of pressure had long been used to coerce them, against their will.” Although their attempt to stretch the Charter’s definition of force failed, they had greater success in construing economic coercion as a prohibited form of intervention in the domestic affairs of sovereign states.
The difficulty, their opponents were quick to stress, was that “there was no legally-satisfying definition of economic and political pressures.” In an integrated world economy, representatives of wealthy industrialized states argued, a prohibition on economic coercion risked jeopardising many “normal and useful transactions among states” including “international agreements for the exploration or development of natural resources” and commodity exchange agreements—whether fair or not.
The reason it proved so challenging to draw the line between prohibited coercion and acceptable economic competition was that the post-colonial world economy was saturated with coercion; representatives of socialist and non-aligned states mentioned threats to withdraw technical assistance, destruction of a state’s markets and even “economic exploitation” itself as examples of the economic coercion they sought to prohibit. In a climate of optimism about the possibility of a New International Economic Order (NIEO), they hoped that international law could remedy the profound inequalities of wealth and power that left newly independent countries deeply vulnerable to the economic power of wealthy states. Instead, with the rise of neoliberalism, the agenda that crystallized in the NIEO was defeated. As post-colonial societies were subjected to the coercive restructuring of their economies, unilateral sanctions became a key weapon against those who did not comply with the New World Order.
Neoliberalism and the Naturalization of Economic Coercion
Venezuela’s history illustrates how the rise of neoliberalism intensified the dependence of both States and individuals on the market and international creditors and created the conditions for the successful use of unilateral sanctions. Facing spiralling debt, Venezuela accepted its first International Monetary Fund structural adjustment package in 1989. As was true elsewhere, the package entailed “orthodox shock therapy” complete with cuts to public spending and wages and trade liberalization. The results were also typical: rising poverty and inequality, deindustrialization, the degradation of the agricultural sector, and increased dependence on oil revenue.
Neoliberalism also saw a shift in broader understandings of coercion, as a new emphasis on the coercive power of the state went along with the naturalization of economic power. According to the leading neoliberal theorist Friedrich Hayek, the world market was a spontaneous order, and its crises were akin to natural disasters for which no one could be held responsible. “While we can legitimately say that we have been compelled by circumstances to do this or that,” Hayek argued, “we presuppose a human agent if we say that we have been coerced.” Hayek offered a definition of coercion that worked to center individual intentions and to distinguish it from what Karl Marx called the “mute compulsion of economic relations” that defines a capitalist economy.
Unilateral sanctions, in which powerful states restrict economic relations with others for political ends, would seem to challenge this characterization of the free market. Clearly, sanctions are imposed by agents, and at least some of those agents are upfront about the fact that sanctions are a means of “imposing their will on opponents.” But to count as coercive, on Hayek’s terms, it is not enough that the agent’s actions alter the economic environment in ways that deprive people of choices or enhance their vulnerability, as the sanctions on Venezuela surely do; such actions must be accompanied by an intention to make a given individual the servant of the agent’s will.
To have one’s choices constrained by deepening poverty and to act under the pressure of necessity is not, Hayek insisted, to be coerced. “Even if the threat of starvation to me and perhaps to my family impels me to accept a distasteful job at a very low wage, even if I am ‘at the mercy’ of the only man willing to employ me, I am not coerced by him or anybody else,” he wrote. Despite the persistence of what Johan Galtung called the “naïve theory” of sanctions, which assumes that economic deprivation automatically translates into political opposition to a ruling regime, the unpredictable effects of economic pressure and the diverse ways in which civilians respond to it, have ensured that sanctions have not captured the attention of neoliberal critics of coercion.
The twinned rise of neoliberalism and an individualized human rights politics generated a turn away from the concerns with economic coercion that animated post-colonial legal activism in the 1960s and 1970s towards an emphasis on direct imposition of pain on human bodies. It was in such a moral climate that economic sanctions came to be framed as non-violent alternatives to armed conflict. The International Criminal Court is a child of this revolution in moral sensibilities. Venezuela could not hope for a less hospitable climate in which to indict the coercive use of economic power.
In May of 2021, as its referral lay stranded in the court’s preliminary investigation phase, Venezuela’s Foreign Minister wrote to the ICC’s Prosecutor, Fatou Bensouda, asking that Richard Nephew’s The Art of Sanctions and an article in which Nephew assessed the Venezuela sanctions be used as evidence for the prosecution. But even this sanctions architect’s unusually frank praise of the Trump administration, for developing “a strategy to carefully, methodically, and efficiently increase pain on those areas that are vulnerabilities while avoiding those that are not” is unlikely to challenge the contemporary impunity for economic harm.
Despite Nephew’s visceral language, which evokes the torture scene, international law is ill-equipped to deal with the harm that results from unequal economic power. The paradigm of the deliberate infliction of pain on bodies, which animates the politics of human rights and international criminal justice, has failed to do justice to those whose suffering takes the dull form of persistent hunger. Humanity’s law seems incapable of seeing the “inhumanity” of economic coercion. No wonder then that Venezuela recently seems to have given up on the ICC and to be looking elsewhere for relief from sanctions—not to international law or global governance but to alternatives to the hegemony of the dollar-driven global financial system and the unequal power it entrenches.
