Caracas Chronicles

According to several reports, caretaker president Juan Guaidó won’t be backed by either the United States or the opposition parties next year, as the main focus will be on the 2024 presidential elections. The support from Washington and the Unitary Platform during almost four years were what kept Guaidó a relevant political figure. With both of them probably gone in the coming months, the imminent fall of the caretaker experiment bears numerous consequences for the Venezuelan State, American politics, and probably the reader of this piece. 

Would Venezuelan Assets in the U.S Be Controlled by Maduro?

This is a very complex question to answer swiftly. First, if the White House doesn’t recognize the caretaker government as the official government of Venezuela, that would not mean that Venezuelan assets in the U.S. would go to Maduro’s hands. Unlike the United Kingdom, where the sole reason Maduro doesn’t control the Venezuelan gold is that there’s a UK-recognized Guaidó government that claims that gold, in the U.S., the Venezuelan government as a whole is sanctioned by several Executive Orders through the Office of Foreign Assets Control (OFAC), which means that, if Maduro wants to use that money, he’d need the approval of the U.S. Department of Treasury.

There could also be a possibility that these assets might be controlled by an independent trust. While the prospect of a joint board formed by chavista and opposition members was proposed during last year’s Mexico negotiations, there’s an off chance that in order to completely prevent Maduro from using these American based assets, a U.S.-established fund might get to take hold of the frozen assets for the time being. This already happened recently, in order to block the Taliban from accessing international assets, the United States froze the Central Bank of Afghanistan’s assets abroad and put them into an “Afghan Fund” in Switzerland last month to provide humanitarian disbursements. 

However, Venezuelan ownership over billion-dollar assets such as Citgo are at risk too. In August, an American judge ruled that the Venezuelan State owed ConocoPhillips over 8.7 billion dollars over the 2007 expropriation of the company’s assets in Venezuela by President Hugo Chávez. Also because of Chávez, the Venezuelan State owes Canadian giant Crystallex 970 million dollars over another expropriation. In the case of Crystallex, a Delaware judge recognized two weeks ago the company’s right to indemnization and allowed for Citgo’s shares to be used as payment—a move previously prevented by the U.S Treasury that could be used as precedent. The situation worsens when you take into account PDVSA’s 2017 bonds that used 50.1% of Citgo ownership as collateral and which bondholders are eager to cash. 

For now, OFAC has prevented bondholders from acquiring Citgo stock as payment because of the U.S. recognizing the caretaker government and litigation over the legitimacy of the debt. However, the problem is that such protection is legally due in 2023—and by that time the caretaker government might be gone too—which leaves Citgo in the hands of the bondholders; not Venezuela. 

Even if Maduro is somehow able to get control of these assets, the possibility of some of those assets not being owned by the Venezuelan State by the time he takes over is plausible.

Will the United States Recognize Maduro?

With Guaidó out of the picture, the relationship between Washington and Caracas will probably change. In both countries, the current political environment is drastically different than it was in 2019, so there’s no incentive to maintain the same approach. 

For Washington, our crisis isn’t just an international headline anymore, as Venezuelan migrants entered the heavily politicized election cycle as evidenced by the events of Martha’s Vineyard. The geopolitical implications have changed too, as the war in Ukraine and OPEC production cuts have increased fuel prices and put the Biden administration under pressure, making a negotiation with Miraflores more attractive. For Caracas, the prospect of sanction relief in exchange for what some consider minor concessions is something that’s surely desired by the Maduro regime. However, it’s challenging to predict the new dynamic that might arise from the fall of the caretaker government and how it could affect the daily lives of Venezuelans. 

Dr. Eduardo Gamarra, a professor at Florida International University, has thoroughly researched Latin America (including Venezuela), and served as a consultant for several branches of the U.S. government like the Departments of State, Defense, and Energy, among others. Dr. Gamarra thinks we are in a unique situation where the United States has stopped recognizing Guaidó but doesn’t officially recognize Maduro either: “The confiscation of assets by the U.S. through sanctions complicated the question of who should control the assets. In the case of PDVSA’s joint venture with Chevron, the assets are so intertwined that PDVSA was actually benefiting from the sanctions because Chevron could not have any control.” On last year’s proposition to form a joint board that would manage the assets, “the U.S. would probably get behind a variation of what was proposed, mainly with the objective of preventing Maduro from getting direct access to the assets.”

Even if the non-recognition of the Maduro government is the U.S. official stance on Venezuela, as shared by two very different administrations, the situation has quite changed throughout the years, and the time has come to discuss the chances of recognizing the results of the 2024 elections under certain conditions to be negotiated.

Yet, in the case of a Maduro victory, Biden may end up being forced to recognize Maduro. “Adding to that,” Dr. Gamarra says, “the 2024 Venezuelan elections would run parallel to the 2024 U.S. elections, and if the Republicans win we would have to ask ourselves if they would be willing to recognize Maduro. Nevertheless, in the near future, I believe that the U.S. government will keep an ambiguous approach to Maduro, probably treating him as a somewhat head of state but never officially acknowledging him as president.”

The Migrant Question

For Dr. Gamarra, the current geopolitical and domestic contexts have created a sense of urgency for the U.S. to restore a direct oil market with Venezuela, which might subordinate some humanitarian and democratic interests. Yet if a certain economic relationship is developed, that could lead the Biden administration to restore diplomatic relations with Venezuela like it happened with Cuba. “In practice, it’s much better for the U. S. to have an ambassador in place than to not have it. With a consulate, you can regulate the flow of migrants to the U.S.” Of course, not enough people could actually comply with the visa requirements, compared to the numbers at the border, and Dr. Gamarra admits that “as always, there will be people who will try their luck at the border. But oil production and migration are the key interests for the United States in the negotiations. Fuel prices and immigration are incredibly important for the American voter as these issues poll incredibly high. If given the right chance, negotiating migration with Maduro can be a priority for the White House, even more with a Republican takeover looming.” 

One important issue raises another question: with the recent UN report on the responsibility of chavista leadership on human rights violations in Venezuela, will there be humanitarian concessions? Dr. Eduardo Gamarra considers that “if Maduro truly wants serious negotiations, yes. Maduro could concede on some humanitarian issues, probably political prisoners. The humanitarian issue is part of the American agenda and they will pursue it. Notwithstanding, the main central points are still oil and migration. While humanitarian concerns matter, policy on Venezuela has become a matter of domestic policy.”