“Anti-economic blockade law”: the most recent desperate measure of Nicolás Maduro in the Venezuelan crisis

Introduction

The year 2020 for Venezuela has not been one of recovery and prosperity as promised by the socialist leader Nicolás Maduro at the end of 2019(1). As of September of this year, the Venezuelan economy continues in hyperinflation with annualized price growth of 3,246.1%(2), a decrease in oil production of 47.9% compared to December 2019(3); an 81% decrease in oil revenues in the same period(4), and where the size of GDP has reached levels similar to those registered in 1964(5).

To top it all, the COVID-19 pandemic has finished shattering any official “optimism” for this year. To date, Venezuela has registered a total of 86,636 infections with a balance of 736 deaths and 79,694(6) recovered cases, in a context where the quality of health is at levels recorded in the 1960s, where maternal mortality has increased by 65% in 2016 compared to what was registered in the 1990s; and where infant mortality has also been on the rise, registering in the same period a total of 21.1 deaths per 1000 births(7).

In this context, and to evade the sanctions imposed by the Trump administration, the National Constituent Assembly(8) approved the “Anti-blockade Law for national development and the guarantee of Human Rights”. The Maduro regime claims the law aims to provide the Venezuelan regime with “legal tools to counter, mitigate and reduce, in an effective, urgent and necessary manner, the harmful effects generated by the imposition of unilateral coercive measures and other restrictive or punitive measures that affect the human rights of the Venezuelan people”.

What are the measures that this law will apply?

This law is framed in the Economic Emergency Law in force since 2016, and subjects and legal assets “object of protection” established by the law are the human rights of both the Republic and the Venezuelan population, internal investors and foreigners, and the small and medium national company. In accordance with article 7, this law is framed in the Economic Emergency Decree of May 4, 2020, specifically in its article 2 stating “exceptional and transitory regulations necessary to guarantee the promotion of the agriculture-food engines, for the production and distribution of items considered strategic for the satisfaction of the inhabitants of the country”. Another aspect to mention is that there is no specific period in which the law will cease to be applied, leaving the socialist regime free to act with full discretion.

Another example of the discretionary nature of this law is that the types of economic measures that could be carried out during the term of the law are not explained in detail. In addition, it also indicates that the use of the resources generated by the application of this law will be used to compensate workers’ wages, finance the social protection system, improve the quality and distribution of public services, selective import substitution, maintenance and expansion of public infrastructure; and the promotion of science, technology, and technical innovation.

With this law, the socialist regime is empowered to reorganize public companies established within and outside Venezuelan territory, being able to modify their management, operation, and even their shareholding composition, being able to carry out a process of covert privatization of the same, without the authorization of the National Assembly. Another feature to highlight is that all companies that were subject to state intervention or expropriation may be the subject of an alliance with private sector entities.

This law lacks transparency in its management and execution since the socialist regime will not be forced to disclose information regarding the decisions that were taken for its application. In addition, the procedures acts, and records carried out during the implementation of the measures are not required to be published.

Clashes with the current Venezuelan Constitution

This Anti-blockade Law presents violations of the Constitution in force in Venezuela:

• The provisions of article 150 are violated, which establishes that the execution of public contracts of national public interest will require the approval of the National Assembly and that the execution of them without its approval is prohibited.
• Although it is not explicit in the law, it would also imply a violation of Article 303 of the Constitution, which establishes that the State will retain all the shares of the state oil company Petróleos de Venezuela.
• Article 315 is violated since it establishes that the Venezuelan Executive Power at all levels is obliged to render accounts and balance the budget execution before the National Assembly.
• It does not guarantee compliance with article 321 of the Constitution, which refers to the establishment of a macroeconomic stabilization fund, to collect and dispose of the possible resources originating from such anti-blockade law.

Conclusions The Anti-blockade Law for National Development and the Guarantee of Human Rights does not offer a transparent legal framework, much less a set of solid and reliable solutions, for the economic recovery of Venezuela. Rather, this law has a supra-constitutional character in which the Venezuelan regime, headed by Nicolás Maduro, is empowered to control the physical and financial assets of Venezuela in a unilateral and opaque way.

This uses the excuse that the sanctions imposed by the Trump administration have “blocked” the economic and commercial activity of Venezuela when in reality the country has entered its economic collapse since 2014. In addition, this law further emphasizes the authoritarian and opaque nature of the socialist government, as well as its desire to remain in power at all costs, even to the detriment of Venezuela’s productive apparatus and the living conditions of its inhabitants. This law is the most recent desperate measure of Nicolás Maduro in the Venezuelan crisis, and the main expectation is that it will only contribute to deepening the Venezuelan economic collapse.

References

1. See: https://www.youtube.com/watch?v=_DRBbuWgla0; https://www.youtube.com/watch?v=SIrNvv0WF6U.
2. Source: Permanent Commission of Finance and Economic Development of the National Assembly of Venezuela, own calculations.
3. Source: OPEC, own calculations.
4. Source: https://twitter.com/NicolasMaduro/status/1311283933070405632
5. Source: Own calculations based upon Central Bank of Venezuela figures. 2019 GDP value is an estimated figure based upon IMF estimations for Venezuela in the same year.
6. Source: https://efectococuyo.com/coronavirus/coronavirus-en-venezuela-cinco-fallecidos-y-347-casos-nuevos-este-18oct/.
7. Source: Abuelafia, E.; Saboin, J. L. (2020). “Una mirada a futuro para Venezuela”. Inter-American Bank of Development.
8. This is the non-legitimate parliament body that Maduro created in 2017.