Use Venezuelan Assets to Help Venezuelan Refugees

In Venezuela, a humanitarian crisis is coming to a boil. The country’s GDP has shrunk by double digits over the past few years, annual inflation runs to more than 80,000 percent, and 90 percent of the population lives in poverty. Opposition leader Juan Guaidó declared himself the country’s legitimate president in January, and more than 40 countries formally recognized him as such—but he has since lost steam. With each passing day, the opposition’s chances of ousting President Nicolás Maduro fade.

As the instability in their country deepens, Venezuelans flee in droves, precipitating a refugee crisis for which there is no precedent in the Western Hemisphere. An estimated 3.4 million Venezuelans are living abroad, the majority having fled since 2015. More than 1.2 million Venezuelans have settled in neighboring Colombia; another half million live in Peru, while Ecuador hosts a quarter million.

These refugee-receiving countries have deep-seated problems of their own. Colombia, despite its booming economy, remains the second-most unequal country in Latin America, trailing only Honduras. For more than 50 years, its government has fought a low-intensity civil war with the Revolutionary Armed Forces of Colombia (FARC), a Marxist guerilla group. Colombia is second only to Syria in terms of the number of internally displaced persons (IDPs): today, some 5.7 million Colombians are forced to live away from their homes because of the conflict. The landmark peace deal brokered with the FARC in 2016 is unraveling. Colombian President Iván Duque, a former right-wing senator who opposed the deal, has stalled its implementation and is now calling for the renegotiation of some of its key clauses. Violence is re-escalating in the Colombian countryside, and there are worrying signs that the country might relapse into a full-scale conflict.

In Colombia, the impact of the refugee crisis can be seen everywhere. In Bogotá, the capital city, thousands of Venezuelan families, many with newborns and toddlers, live on the banks of sewage canals. In border towns such as Arauca and Maicao, which already had some of the highest poverty rates in the country and large numbers of IDPs, Venezuelan refugees account for nearly one-fifth of the local population. Although Colombia is already spending more than $1.5 billion—0.5 percent of its GDP—annually on the crisis, it is unable to provide basic services such as prenatal care, primary education, and decent housing to most Venezuelan refugees.

An estimated 3.4 million Venezuelans are living abroad, the majority having fled since 2015.

The principle of non-refoulement—which prohibits states from returning refugees to the territories where their lives or freedoms would be threatened—is not only part of 1951 Refugee Convention. It is also a so-called jus cogens norm of international law: like the prohibitions against slavery and genocide, it is considered to be a binding duty for all nations. But the legal regime lacks clarity on who, if anyone, is responsible for solving refugee crises, and how the burdens of such crises should be shared. Instead, refugees generally flee to neighboring countries, which are left to shoulder the economic, political, and social costs associated with their influx. The result is a system of organized hypocrisy. In theory, refugee-hosting countries fulfill a duty on behalf of the entire international community. In reality, the rest of the world free-rides on their sacrifice.  

Consider the case of Turkey: since 2012, the country received more than 3.5 million Syrians, the world’s largest refugee population. Providing for them has cost Turkey more than $35 billion. Although the international community has pledged over 6 billion euros in aid, much of it is yet to materialize, and even if paid in full it would amount to less than one-quarter of what Turkey has spent out of its own pocket.

Nor is money the only problem. When refugees come, they stay for years, even decades. The world’s largest refugee camp, Kenya’s Dadaab, has been home to almost half a million Somali refugees for more than 25 years. In Lebanon, which hosts more refugees per capita than any country in the world, Palestinian refugees have been trapped in camps such as Ayn al-Hilweh since the 1950s.

To absorb millions of refugees and provide them with the means to live in dignity is a Herculean task. Yet the countries expected to do so are often those least able to afford the expense: 85 percent of refugees live in the developing world. Nearly half live in just ten countries. Of those ten, only Germany, which ranks sixth, is a high-income country; the average GDP per capita of the remaining nine is barely more than $3800. International agencies, such as the UN High Commissioner for Refugees (UNHCR), are ostensibly tasked with helping refugee-receiving countries but are chronically underfunded and understaffed. NGOs can do only so much. This is not a sustainable course.

GIVING BACK

There is, however, an alternative. As one of the co-authors of this piece argued in Foreign Affairs almost four years ago, refugee-receiving states and international institutions such as UNHCR should be allowed to fund their relief efforts by drawing on the assets of refugee source countries. Today, billions of dollars in Venezuelan state assets sit frozen in financial centers around the world. These funds could provide countries such as Colombia with a sustainable revenue stream to care for the millions of refugees that have recently settled within their borders.

Although more aggressive conceptions of sovereign responsibility, such as the Responsibility-to-Protect doctrine, remain controversial, it is widely accepted that states can commit wrongful acts for which they can be held liable, and that other states harmed by these acts can request reparations. There is even case-law precedent for the use of frozen assets for such purposes: before Iraq finally agreed to the UN Compensation Commission in 1995, the commission had planned on using Iraq’s frozen assets to pay reparations to Kuwait.

The obvious defense that refugee-generating states would invoke against such measures is force majeure: they are not intentionally inflicting harm on another country but, due to extraordinary circumstances, have been rendered incapable of providing for their citizens. If that is the case, then the transfer of the refugee-generating state’s assets to refugee-receiving states for the purpose of providing basic services to their citizens is even less controversial: had it not been for the extraordinary circumstances, these assets would have been used for the good of the sending country’s citizens anyway. Our proposal does not contest the legal ownership of frozen assets—they still belong to their original owners. What we propose is taking money sitting idly in bank accounts, putting it into good use, and leaving an I.O.U. in its place, with the understanding that the assets will be returned if and when the situation returns to normal.

Syria was the initial impetus behind our proposal, but the opportunity to put it into practice there proved elusive. Although the regime of Syrian President Bashar al-Assad was placed under sanctions and the Assad family’s assets were frozen across Europe, the Syrian economic elite’s domestic investments so outweighed their overseas assets and commercial interests that the total value of assets that could be targeted by the international community was inconsequential in the context of the broader crisis. Freezing more Syrian assets would have required action from the United Nations Security Council, which was impossible given Russia’s unswerving support for the Assad regime. 

In Venezuela, the circumstances are more favorable because billions of dollars in Venezuelan assets already sit frozen in Western bank accounts. The Bank of England, for example, has frozen $1.56 billion worth of Venezuelan assets, while the United States has frozen more than $3 billion. More recently, the United States has imposed sanctions on the state-owned oil company, PDVSA, and transferred control of its U.S. subsidiary, Citgo, to the opposition. Unlike in the case of Syria, the U.S. and other governments can take action against Venezuela without Russian buy-in. They can introduce legislation to requisition these funds for the benefit of UNHCR, which would use them to help Venezuelan refugees. If Moscow compels the UN to turn down these funds, they can be disbursed directly to refugee-receiving countries such as Colombia instead.

Billions of dollars in Venezuelan assets already sit frozen in Western bank accounts.

The assets requisitioned in this manner would remain the property of Venezuela. When the refugees start returning to their country—if they ever do—the assets should be returned as well. Until then, however, there is no reason for such resources to sit dormant in bank accounts while millions of Venezuelans in forced exile languish without access to food, housing, and security. From Cicero to Locke to contemporary legal scholarship, there is a well-established tradition arguing that governments are fiduciaries for their citizens, meaning that they are obligated to look out for their citizens’ interests. The same logic should extend to public assets as well: governments are fiduciaries, not proprietors, of their assets, which actually belong to their citizens. There is a compelling case for using these assets to help citizens in their time of need.

DON'T REPEAT THE PAST

A political as well as a moral logic supports the use of frozen assets to support refugees. As the political scientist Kelly Greenhill has observed, refugee crises are rarely accidental. Rather, certain governments benefit from the mass displacement of their citizens, and they deliberately choose it, even using it as a weapon.

Syria provides a textbook case. By driving millions out of the country, the Assad government destabilized neighboring countries such as Turkey, secured its grip on power, wiped out the domestic opposition, and externalized the costs of civil war. The brave souls that stood up against Assad are dispossessed, devitalized, and dispersed around the world, if not already dead.

Without swift action, the same will happen in Venezuela. The Maduro regime directly benefits from having forced millions of its citizens to depart from the country. The more opponents leave the country, the fewer critics Maduro must face, and the easier it is for him to hold on to power. Such acts should not come cost-free. The world failed at making Assad pay for what he did in Syria. It should avoid repeating the same kind of failure in Venezuela.