This is a guest post from Marcin Menkes, Assistant Professor in the Department of Business Law at Warsaw School of Economics:
The dramatic descent of Venezuela from riches to rags—from a fiery critic of “the devil” in the White House and sponsor of Cuban “revolutionary democracy” to an economic crisis, suffocating criminality and corruption, and an ultimate struggle for power—is deeply troubling. From an international law perspective, it is also a captivating story. Separate posts could focus on:
- Humanitarian intervention: US President Donald Trump alluded to this possibility in August 2017. However, now we have an explicit protest by two permanent members of the UN Security Council, Russia and China, supported by a NATO member, Turkey, against any attempt to overthrow what they deem the “legitimate government”. Accordingly, there is no prospect of acquiring from the UN more of a legal mandate to intervene than Secretary General António Guterres’ call for a dialogue. At the same time, the situation has been grave enough for the ICC prosecutor to launch a preliminary examination (six states reported crimes against humanity, covered by the ICC jurisdiction) and Human Rights Watch and the Office of the High Commissioner for Human Rights reported the systemic use of, inter alia, torture. In other words, the Maduro regime is with high probability consistently violating peremptory norms of international law.
- Diplomatic-consular tension: When the US recognised the opposition leader, Juan Guaidó, as the interim head of state, President Nicolas Maduro declared it an attempted coup d’etat, broke off diplomatic relations with the US, and requested its diplomats leave Venezuela within 72 hours. The US refused to withdraw its diplomatic and consular personnel, claiming that at the time of the request Maduro was no longer the head of state. Faced with the US call upon neighbouring states to take sides in this power struggle, Maduro ultimately backtracked on his bellicose demands; however, it adds to the legal uncertainty concerning the pre-emptive recognition of the Venezuelan government.
- Recognition of government: We’ve witnessed, on the one hand, initial British, French, German, and Spanish ultimatums towards Maduro to call early elections while, on the other, the US, Canada, Columbia, Brazil, and Australia transferred conditional recognition of Maduro to the opposition’s Guaidó. In terms of recognition de facto, e., provisional in nature, it is doubtful whether the right to withdraw recognition can be equated with conditional recognition. In the case of the US’s conditional offer to recognise Guaidó as the interim head of state conditioned on him calling early elections, one would think that either he is recognised or not. Yet, there is no legal basis for a foreign government to recognise an opposition leader (implicitly the one with democratic legitimacy forfeited by the former president) and force him to call elections. If sanctions are powerful enough to cause a government to fall, one may ask how to qualify the threat of imposing to the same measures against the new government, recognised de facto. In other words, the US can clearly withdraw recognition of any government, but this is not the same as imposing sanctions currently employed against an alleged perpetrator of torture and crimes against humanity.
In terms of the European ultimatum, have we witnessed “a revolutionary break in the legal continuity of [the Venezuelan] constitutional existence”? If so, there is no basis for the continuous recognition of the Maduro government (see the remark below on recognition in an illegal situation). Otherwise, there are no legal grounds to force elections in another sovereign state, even if the form and practice of government are contested by foreign states.
The above considerations bring us to the actual purpose of recognition. Given the nature of financial sanctions (to redirect funds rather than block income, as discussed below), it seems clear that at least some states are trying to jump-start a political transformation. To this extent, one may recall Hersch Lauterpacht’s words (supra): “[t]here is no doubt that (…) what may be called the tortious or delictual (…) recognition. It is contrary to international law to grant premature recognition. (…) premature recognition is more than an unfriendly act; it is an act of intervention and an international delinquency.”
Now, the basis for and moment of recognition is directly relevant to the financial sanctions imposed upon Venezuela. The US imposed sanctions on Venezuela’s oil industry, namely Petroleos de Venezuela, S.A. Although the Bank of England refused comment, top news agencies reported that the bank “is reluctant to release” Venezuelan gold reserves (Reuters, Bloomberg, CNN). Supposedly, the bank froze an equivalent of 1.2 bn USD out of Venezuela’s 8 bn USD in foreign reserves.
The US Sanctions. The premise for the US sanctions is the withdrawal of recognition of the Maduro government. As declared by US Secretary of the Treasury Steven Mnuchin, the sanctions are supposed to “help to prevent further diversion of Venezuela’s assets by former President Maduro (…) and preserve these assets for the people of Venezuela.” Unlike the sanctions against, for instance, Iran, the US did not try to block trade in Venezuelan oil, rather to redirect the funds, which confirms the assumption that the US attempts to change the sovereign government.
As mentioned above, whether the conditional transfer of recognition from the president in office to the opposition leader breaches international law is questionable; however, given the stalemate in the UNSC, until this matter is resolved by some dispute-settlement body, the US is acting on the assumption that the control over part of Venezuela’s territory and population is exercised without legal title (is Maduro a belligerent in IHL terms?). If the US also assumes that Maduro is responsible for violations of peremptory norms of international law, it would be obliged under international law not to recognise the situation, to bring to an end to the situation, and not to aid or assist in such acts.
UK Sanctions. The situation seems entirely different under the British scenario. We don’t have access to the Bank of England’s formal decision and the latest information concerning the financial restrictions on Venezuela provided by HM Treasury and the Office of Financial Sanctions Implementation are dated from the 8th of November 2018, i.e. the review of Regulation (EU) 2017/2063 concerning restrictive measures in view of the situation in Venezuela. We do know, however, that the EU sanctions were imposed predominantly on the military sector (Regulation (EU) 2017/2063 arts. 1-2), including financing related to equipment used for internal repression (art. 3(a, c)). It seems unlikely that the bank froze the foreign assets on the EU’s behalf, so the UK must have adopted autonomous sanctions. Among the statutory bases available to these ends—2010 Terrorist Asset-Freezing etc. Act, 2008 Counter Terrorism Act, 2001 Anti-Terrorism, Crime and Security Act (ATCSA)—an order to freeze the assets based on the last one seems most probable (as of February 2019, no Venezuelan entities or figures were on the consolidated list of financial sanctions targets).
On whichever basis the domestic law nexus was deemed sufficient, from the international perspective, the actions of the Bank of England, clearly attributable to the UK, were imposed while the UK still recognised the Venezuelan government (Maduro). Even acknowledging the seriousness of the human-rights crisis—although apparently not grave enough to withdraw recognition immediately—not only has the UK not shown similar sensibility to other possibly worse atrocities, but there could be no proof that the gold reserves were earmarked for purposes relating to breaches of human rights. To the contrary, it is possible that they would have been used for taming the economic crisis and humanitarian assistance instead.
The Russian Factor. Three further observations are to be made regarding Russia. Given the legal assessment of the situation in Venezuela by the UK and the US, as reflected by the conditionality of their respective acts of recognition, one should reverse the question. Similar to concerns raised with respect to Britain’s post-Brexit sanctions law, the US and UK are two of the largest financial hubs in the world. If the US insists upon the legality of recognition and a freeze on sovereign assets—and compared to the range of financial sanctions used on other occasions, including the case of Russia’s occupation of Crimea—then it is the restricted scope of the primary sanctions and lack of secondary sanctions altogether that appear to be tolerating international crimes. The same remark will apply to the UK, once it transfers recognition to another government; until then the British might have gone too far while the recognition would occur too late (referring to my earlier post, the UK would have managed too much, too little and too late, all at the same time!).
The situation also appears as a mirror reflection of the Crimean case. While western countries argue that under international law states are obliged not to recognise the de facto government in Crimea, in the case at hand we’ve witnessed de facto recognition of a contender to power, who in fact does in fact not exercise control over the territory or population.
Finally, as oil incomes kept falling, the Maduro regime increasingly relied upon private and public credit (notably provided by Russia). Assuming that the government compromised its mandate to the extent of losing its right to exercise power and—in accordance with the implicit legal assessment by the Bank of England—that the funds are used to harm its population, the new government could try to repudiate such odious debts. To this extent, the situation of, for instance, the US Goldman Sachs seems worse than the Russian one, since the former was aware of its allegedly odious purpose (to some extent contested by Russia).
