Caracas Chronicles

The surprise visit of a U.S. delegation to Miraflores last weekend unleashed a myriad of interpretations and speculations. Most of them focused on the idea that the Russian invasion of Ukraine and the corresponding commodities shock forced the U.S. to seek Venezuelan oil again, even if that means turning the page on the support to the Venezuelan opposition and the democratic cause. 

We believe, and our sources cited in last week’s Political Risk Report support that view, that this isn’t only about oil. How much oil could Venezuela export that could contribute to reducing the price of the gas gallon in the U.S.? It’s no secret that PDVSA is struggling to produce even one-third of their typical levels of output, and that they would require years and a lot of investment to reach even two-thirds. The Americans have better options, starting with their own strategic reserves, and all other OPEC countries with healthier oil industries.

However, it’s evident that there are ongoing lobbying efforts in the U.S. to push the Biden administration to lift sanctions on the Venezuela oil industry, with even some right-wing, socialism-hating commentators seemingly having changed their mind overnight as to whether the U.S. should even meet with Maduro, and are now calling for Venezuela oil to return to the U.S.

The U.S. saw an opportunity to undermine the alliance between chavismo and the Putin regime, which as Venezuela observers know, goes back to the apex of the Chávez era and comprises a deep military relationship, where Venezuela is an enthusiastic buyer of Russian weapons and military services, in exchange for mutual support in the international arena and Russian presence in the energy sector.

The U.S. found itself in need of acting against something that has been growing for years: a budding Russian stronghold in the Caribbean with Cuba and Venezuela. Cuba is another story, but with Venezuela the Biden administration has a carrot to offer: softening some sanctions to allow PDVSA to export oil to the U.S. again. While the U.S. still has an interest in helping the Venezuelan opposition get chavismo out of power, that goal is unlikely to be achieved until 2024 at the earliest.

The Russian invasion of Ukraine created a new, shorter-term goal for the U.S., in driving a wedge between Maduro and Putin. Russia proved to be just too dangerous and unpredictable to allow it to brag about its military presence so close to the U.S. The U.S. doesn’t need Russian warships or planes in the Caribbean and the northern part of South America, where U.S. military warships and planes routinely patrol the seas and skies hunting drug boats and planes, and keeping an eye on Colombian guerrillas.

The explosive interest on the visit induced the U.S. to make clear they still support the opposition and the return to democracy in Venezuela, in a similar way that the chavista regime had to refresh their support to Russia and make Delcy Rodríguez travel to Turkey to be photographed with the Russian foreign minister while he was there during a Turkish attempt to broker a peace agreement with the Ukrainians.

A likely result of the meeting between U.S. diplomats and Maduro is the return of the regime to negotiations with the opposition—which has been one of the U.S. and the opposition’s main objectives for a few months. Yet this new development exposes the real composition of the stalemate and the negotiation: the opposition is more a subject to talk about, or a guest at the table, while the real conversation is between the Maduro regime and the U.S. government—the sanctioned party that needs sanctions to go away, and the one that imposed and enforces such sanctions.

As one source put it in the report very clearly, “In Mexico, the government will talk with the opposition, but will negotiate with the U.S.” We must assess whatever happens in the coming weeks with that reality in mind.

New variables stand in the way of success in Mexico, especially the evolution of the war in Ukraine, and how costly it will turn out to be for Putin? The Ukrainian willingness to fight, and the unprecedented sanctions on Russia, forecast a long and bloody conflict that will determine the fate of Russia and its economy for decades to come. Old questions reappear: how much is Maduro willing to concede—beyond the two Citgo executives he released—and how much do the Americans need to restore consular relations, allow the resumption of Miami-Maiquetia flights, or lift any sanction.

In the full report, you’ll find more details on what’s going behind the curtains of the Venezuelan political struggle. You can subscribe to the PRR here.