Venezuela, U.S. Sanctions and the Downward Spiral

Venezuela's political and economic crises may soon go from bad to drastically worse. Within weeks, the U.S. government could implement sanctions against Venezuela's vital oil sector to prevent the government in Caracas from formally starting down the path to a one-party state. In their most severe form, the sanctions would wreck Venezuela's ability to export oil to the United States by denying the state oil company Petroleos de Venezuela (PDVSA) access to the U.S. financial system. And U.S. companies would also be barred from doing business with the PDVSA. That would lead to a quick and steep drop in Venezuela's already declining oil production. In turn, imports would contract sharply and inflation would skyrocket, spurring the mass migration of millions of Venezuelans. But the United States could also resort to lesser sanctions limited at targeting individuals in the Venezuelan government. Either way, the unrest in Venezuela will continue....