Experts react: As the US eases oil sanctions, is Venezuela coming in from the cold?

A pariah no more? The United States on Saturday eased oil sanctions against Venezuelan President Nicolás Maduro’s administration, following the resumption of talks between the Venezuelan government and its political opposition. The Mexico City talks come four years after Maduro’s re-election, which was widely denounced as fraudulent, prompted a political crisis in Venezuela and international isolation of the Maduro regime. The US Treasury Department’s agreement to allow Chevron to expand its joint operations with Venezuela’s state-owned oil company also heralds the potential return of Venezuelan oil to global markets amid an energy crisis sparked by Russia’s invasion of Ukraine. 

What’s next for Venezuela? What’s behind the US decision? Our experts drill down on the details.

This article will be updated as events unfold and more reactions roll in.

There’s a light at the end of the tunnel for Maduro—but only if he follows through on reform

The long-awaited Biden administration decision to peel back oil-sector sanctions is reflective of the new reality in Venezuela. It comes three years after the Trump administration halted all drilling activities as part of a maximum pressure campaign designed to force political change. Maduro, of course, still remains in power, but a new willingness to sit down with the opposition Unitary Platform has now opened the door for limited sanctions relief.

Two important steps to ease the suffering of the Venezuelan people, although still insufficient, provide hope that the country may be turning a corner: 

1. The announcement of a joint agreement between the Unitary Platform and the Maduro government asking the United Nations (UN) to administer a humanitarian relief program. The program would draw on the approximately three billion dollars in frozen Venezuelan assets that could only be unlocked with agreement by the opposition. 
2. The resumption of far-reaching political and humanitarian negotiations in Mexico City—stalled for the past year—that include discussions on the 2024 Venezuelan elections. 

Why is this happening now? For one, although Maduro has historically used negotiations to stall, without any intention of agreement, this time may be different. The interim government—a US-backed parallel entity led by Juan Guaidó that has failed to provide a viable alternative to Maduro—will cease to exist come January, providing further incentive for a recalibrating opposition to ease up on some of its demands. But the opposition still holds the key to billions of dollars in frozen Venezuelan assets abroad.

For Maduro, who only weeks ago was shaking hands at a UN-sponsored gathering (the climate-change summit, COP27) for the first time in years, the global energy crisis and the renewed focus on containing Russia are twin developments that make him less of a global outlier. He will want to capitalize on that momentum in a bid to get sanctions removed.

Two months ago, all seven of the Americans wrongfully detained in Venezuela finally returned home.

Although severely dilapidated, Venezuela holds the world’s largest proven oil reserves, but with production at less than a quarter of what it was a decade ago. In the years to come, and with significant investments, that oil will play a role in alleviating energy pressures.

US domestic politics generally play a role in its policy toward the Western Hemisphere. And Venezuela is no exception. Following the midterms, the clear shift in Florida politics provides political space for the easing of oil-related sanctions. Now that Florida is a reliably Republican state, US policy no longer needs to revolve around the more hard-line interests of voters in the state that is home to over half of Venezuelan immigrants in the United States.

What should we look out for? The US Treasury Department’s issuance of General License 41 is meant to show Maduro that sanctions relief is possible when it makes concrete agreements—that are then monitored and upheld—with the opposition. But the license is only for six months and is limited in scope. Sanctions can also be snapped back at any point. This shows Maduro that there is a light at the end of the tunnel, but that light can be quickly extinguished if he does not act in good faith. 

So expect close scrutiny of progress at the negotiation table. In addition, the UN humanitarian relief agreement is a verbal one. If it falls apart in the details, then the re-imposition of sanctions is likely. But if progress continues to be made, the continued easing of oil and other sanctions—first imposed in 2006—is possible.

—Jason Marczak is the senior director of the Atlantic Council’s Adrienne Arsht Latin America Center.

The evolution of Florida politics helps explain Biden’s shift

The Biden administration’s decision to ease sanctions on the Venezuelan oil sector prioritizes US geostrategic interests over domestic political pressure. Hard-line anti-socialist Latinos in Florida have historically played an outsized role influencing US policy toward Latin America and the Caribbean. But after a Republican sweep in the midterm elections, Florida—once seen as key to securing the presidency—is now considered a Republican stronghold rather than a swing state. The global energy crisis caused by Russia’s invasion of Ukraine and Latin America’s turn against incumbents, electing a new wave of leftist leaders, are added factors that led to this change of policy.

The announcement made by the US Treasury Department came after months of secret talks in Caracas negotiating a UN-managed humanitarian deal that would unlock around three billion dollars in frozen assets abroad for health, infrastructure, and education programs.

Now that Maduro’s and the opposition’s delegations are officially back to the negotiation table in Mexico and with a new Republican-led US House of Representatives, we can expect a spike of scrutiny over the administration’s policy toward Venezuela in 2023. The new House leadership will likely organize hearings and draft new legislation seeking to delay and handcuff any potential easing of the more hard-line policy toward the country. The new Congress should work on an updated bipartisan framework for democratic transition in Venezuela that defines a clear path to achieve the conditions for free and fair elections in 2024, an independent electoral process and judicial institutions, freedom of expression, the unconditional release of political prisoners, and respect for human rights.

—Diego Area is the deputy director for strategic development at the Adrienne Arsht Latin America Center.

Related Experts:
Jason Marczak and
Diego Area

Image: Venezuela’s President Nicolas Maduro gestures during a meeting with Belize’s Prime Minister John Briceno (not pictured) at the Miraflores Palace, in Caracas, Venezuela November 25, 2022. REUTERS/Leonardo Fernandez Viloria