The political, social and economic impact of Venezuela’s twin earthquakes (plus: Despite quakes, US still withholds 70% of Venezuela’s oil revenues)

Translation by Federico Fuentes for LINKS International Journal of Socialist Renewal. See also further below, “Despite earthquakes, US still withholds 70% of Venezuela’s oil revenues”.

Natural disasters have the uncomfortable ability to reveal the harsh truth of a situation. They do not cause crises on their own; they simply strip away the facades concealing them. The two major earthquakes that recently struck Venezuela, with epicentres in Caracas and La Guaira, not only shifted the tectonic plates of the Caribbean and South America, but also completely shattered the political, social and economic normality in a country already struggling, with great effort, to get back on its feet. This tragedy also unfolds against an already complex backdrop marked by the January 3 military aggression and imposition of US tutelage over the nation.

US sends troops and equipment: Aid as a control mechanism

Forty-eight hours after the most powerful earthquakes to hit the country in 125 years, the US has exploited the humanitarian catastrophe to accelerate its military control over a country it invaded just six months ago.

US Southern Command announced the deployment of about 100 airforce personnel to take over managing Venezuela’s Simón Bolívar International Airport, now operating at reduced capacity due to structural damage. About 130 marines arrived at La Guaira port to assist authorities in the terminal’s reopening, helping deliver humanitarian aid and heavy equipment.

Several US military helicopters have already transported State Department personnel tasked with leading the aid mission. Meanwhile, US Southern Command has confirmed that the US Space Force is providing satellite imagery to assess damaged infrastructure.

To date, Venezuela has welcomed more than 1600 international rescue workers. As for on-the-ground coordination, US General Kevin J Jarrard arrived in Caracas on June 25 to lead the humanitarian response. On behalf of the Venezuelan government, Acting President Delcy Rodríguez appointed General Juan Ernesto Sulbarán as the sole authority for the emergency, placing the La Guaira region under strict military administration.

Economic impact: Reconstruction figures

The United Nations Development Programme (UNDP) preliminarily estimates damage caused by the two earthquakes at US$6.7 billion (about 6% of GDP), concentrated mainly on homes and property in La Guaira and Caracas, and not counting the enormous long-term reconstruction costs.

The president of Fedecámaras [Venezuela’s big business chamber] ruled out widespread shortages and said the economic impact would be limited because the private sector continues to function. But the tragedy threatens to bring Venezuela’s fragile economic recovery to a sudden halt, following a decade of deep recession. In response, the government announced an initial reconstruction fund of US$200 million drawn from IMF reserves, a figure analysts consider wholly insufficient given the scale of the disaster.

Compounding this crisis is a sovereign debt which various estimates put at $240 billion. This staggering figure greatly complicates the state’s ability to finance a huge reconstruction effort without relying on external support.

Government under the microscope

The double earthquake has placed the executive’s operational capacity and nature of its institutional control under intense public scrutiny. Far from being a simple logistical challenge, the emergency exposes the state’s weaknesses: the constant friction between military control of security and the free flow of aid, the pre-existing collapse of healthcare infrastructure, and an information blackout that breeds mistrust through inconsistent casualty figures.

The interim Delcy Rodríguez government is staking its survival and political capital on its handling of the crisis. This will determine whether it can consolidate power or whether a misstep, corruption scandal or perceived neglect will catalyse mass protests by a society unwilling to tolerate further mistakes.

Elections on hold and the centrality of power

Disasters of this magnitude redefine national priorities, altering the relationship between social classes and those in power. In the current climate, the crisis caused by the earthquakes provides the perfect pretext to postpone any electoral process or discussion of political transition until the end of 2026. It also puts wage demands on hold under the unifying banner of national reconstruction.

However, amid disasters, social solidarity often flourishes outside of the government’s political apparatus: neighbours clear rubble with their own hands, students transform into rescue workers, doctors improvise field hospitals, and churches, universities and community organisations coordinate relief centres.

In just a few days, a social force has emerged whose significance will far transcend the current emergency. This phenomenon not only reveals the strengths and weaknesses of official institutions, but also the enormous capacity of a society to organise itself, care for the most vulnerable and build responses from the grassroots up — a popular energy that will undoubtedly shape the country’s political future.

Sanctions and confiscated oil revenue

The double earthquake has forced the international community to adopt a pragmatic shift. The US announced a $150 million humanitarian aid package and temporarily suspended some economic sanctions to facilitate the flow of emergency funds. Meanwhile, the European Union increased its aid to victims but refused to amend its restrictive measures.

Washington’s move reveals a stark paradox: the nations now providing temporary support are the same ones imposing the sanctions that have strangled Venezuela’s economy and hampered its independent capacity to respond to disasters.

Estimates of the value of Venezuelan assets frozen abroad vary, but are calculated to run into billions of dollars. Economist Asdrúbal Oliveros estimates the total as about $22 billion, although a formal audit has not been conducted. Of these assets, about $8 billion from oil sales are under the US Treasury Department’s direct control.

A workers’ emergency plan

Venezuela’s reconstruction must not follow free-market logic nor become a source of profits for financial elites or the traditional bourgeoisie. It is crucial that the people and the working class develop a national emergency plan based on active solidarity, sovereignty and popular control. To prevent resources being misappropriated and the crisis worsening, we raise three urgent demands:

• IMF emergency funds, international aid and resources from sanctions exemptions must be allocated exclusively to repair homes and schools, ensuring they are not lost to bureaucracy, corruption or the Central Bank of Venezuela’s (BCV) foreign exchange auctions.
• Housing and logistical solutions must come from organised communities. The state must facilitate aid without imposing bureaucratic hurdles, military cordons or accepting foreign interventions that compromise national sovereignty.
• Repatriating frozen funds is vital. We must demand the immediate return of Venezuelan assets held in foreign banks due to oil sanctions. It is unacceptable that, while the country faces a severe shortage of funds for machinery and medicines, its own resources remain frozen. Likewise, the suspension of debt renegotiation is unacceptable.

The working class must not allow itself to be distracted amid the crisis. The traditional right and conservative sectors will try to divert public debate towards artificial and self-serving discussions, but today the absolute priority is addressing people’s material needs, who demand a dignified life and have taken to the streets not only to save lives, but to demonstrate that they constitute the country’s true social majority.

Despite earthquakes, US still withholds 70% of Venezuela’s oil revenues

By Autonomous and Independent Workers’ Committee. Translation by Federico Fuentes for LINKS International Journal of Socialist Renewal.

While La Guaira state struggles to rebuild out of the ruins of the double earthquake, one financial factor is worsening the humanitarian crisis. Technical reports and expert statements say the US administration’s sanctions policy ensures most of the foreign currency Venezuela generates from oil sales remains under US control, drastically limiting the funds available for reconstruction.

Oil engineer, Einstein Millán Arcia, who is also a former manager at Venezuela state oil company, PDVSA, says since January Washington’s control over Venezuela’s trade decisions has been “growing and sustained.” International buyers, via a network of Treasury Department licenses, are having to deposit oil payments into US-supervised accounts.

The figures to May reflect the magnitude of this discretionary control:

• Total production: Between January–May, Venezuela exported about 152.38 million barrels of oil.
• Frozen cash: This generated a gross value of $11.673 billion. However, 70% of this remains frozen in US Treasury-managed accounts.
• Authorised trickle: Washington only allowed a small fraction of these funds to flow into Venezuela. The US State Department reported to Congress that it had authorised the disbursement of some $3.5 billion (via intermediaries such as Qatar), primarily for the public payroll and foreign exchange market. The Central Bank of Venezuela (BCV) has not formally confirmed this figure.

Impacts: Fewer cranes, more inflation

This has direct consequences on the state’s ability to respond to the natural disaster, which has caused damages totalling $6.7 billion (about 6% of Venezuela’s GDP) according to preliminary United Nations Development Programme (UNDP) estimates.

Economist Francisco Rodríguez, author of The Collapse of Venezuela, warns the structural impact of this policy is severe, especially in the area of ​​infrastructure:

During Venezuela's long economic implosion, the sector that most contracted was construction — with its GDP falling by a whopping 95.9% between 2013 and 2020…

We should not forget that for more than 7 years, US sanctions barred the Venezuelan government from purchasing the heavy machinery that is needed to dig people out of the rubble today.

Added to this is the problem of macroeconomic instability. As most oil revenue does not enter the country in a sovereign and regular manner, the BCV has fewer tools to stabilise the exchange market, driving up prices and devaluing ​​budgets allocated to humanitarian aid. Even the US Treasury Department admits that, prior to the earthquake, there were operational obstacles to coordinating international assistance and acquiring disaster relief equipment.

Financial crossroads

The scale of the destruction, which has left more than a hundred buildings collapsed along the country’s central coast, exceeds the country’s current liquidity. Analysts agree the lack of transparency and discretionary management of Venezuela’s funds abroad adds a layer of uncertainty to the tragedy. According to UN experts, the financial urgency is so profound that addressing the housing and infrastructure crisis could require immediate relief, and even the complete lifting, of financial restrictions on Venezuela’s energy industry.

In response to the crisis caused by the recent earthquakes, the Autonomous and Independent Workers’ Committee takes a clear stance: we join the national and international demand for the US Treasury Department to give back Venezuela’s financial resources.