Keep your enemies closer

Washington needs oil, Caracas needs money

This week the Financial Times reported that Washington could backtrack from overtures to the administration of Venezuelan president Nicolás Maduro (“Maduro”) after a significant domestic political backlash. As war rages in Ukraine, US officials flew to Caracas earlier this month for preliminary talks with the government about a resumption of oil imports. Washington has banned Russian oil, around 11% of its total imports, and is looking to the neighbourhood to fill the void. Are there other factors at play?

A Venezuelan economist and expert in the oil and gas sector said, “It is difficult to believe that the alleged interest of the Biden Administration in seeking alternative sources of oil supply was the fundamental reason for the rapprochement of the US government with the Maduro regime. He is more likely seeking to tie in such overtures with calls for political reconciliation.”

“It is difficult to believe that the alleged interest of the Biden Administration in seeking alternative sources of oil supply was the fundamental reason for the rapprochement of the US government with the Maduro regime.”

Economist and oil and gas expert, Venezuela

Indeed, the resumption of oil imports would necessitate a lifting of oil sanctions on Venezuela that for many Democrats, and certainly Republicans, is politically unpalatable. Last week, White House spokesperson Jen Psaki said a resumption of oil imports was “unlikely” to happen anytime soon. She clarified that Venezuela’s recent release of two US detainees (Citgo executive Gustavo Cárdenas, an American citizen, and Jorge Fernandez, a Cuban-American), was not undertaken in exchange for oil relief.

Political considerations aside, Venezuela’s ability to increase its oil production in the short-term is limited. Industry experts have cautioned that this increase would not exceed 200,000 barrels per day, little help to service Washington’s mammoth fuel needs. That said, Venezuela’s heavy crude does have some compelling competitive advantages. The economist explained, “Refineries on the Gulf Coast of the United States would likely look favourably at future Venezuelan oil imports, several refineries were manufactured to work with heavy crudes such as the Venezuelan ones.”

What is driving Washington’s backtracking this week? A director at the Centre for Politics and government Studies at Venezuela’s Andrés Bello Catholic University said, “It is very possible that the US government has considered it opportune to approach the Maduro regime to propose the advisability of returning to negotiations with the Venezuelan opposition, in exchange for the progressive relaxation of the sanctions imposed by the US.”

“It is very possible that the US government has considered it opportune to approach the Maduro regime to propose the advisability of returning to negotiations with the Venezuelan opposition”

Director, Centre for Politics and Government Studies at the Andrés Bello Catholic University, Venezuela

Indeed, after the meeting held with the US government delegation, Maduro announced that he would return to cross-party negotiations in Mexico. However, Diosdado Cabello, vice president of the ruling United Socialist Party of Venezuela, who is considered the second most influential figure in the administration, later rejected that possibility.

Not only is there serious bipartisan opposition in the US Senate against such measure, but several leading figures of the Maduro administration are also subject to criminal prosecution by the US justice system, which is a serious obstacle for Washington foreign policy mandarins to overcome in their efforts to lay the groundwork for bilateral normalisation with Venezuela.

Selling oil is an attractive prospect for Maduro but staying in power is more attractive still. His administration will be hesitant to engage in negotiations with opposition leader Juan Guaidó for fear of jeopardising their grip on power. The university director explained, “It is natural that the regime would be instinctively hostile to political concessions. Even the prospect of closer ties with Washington and increased government coffers may do little to make Maduro feel that is a path worth going down.”

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