A war in the eastern edge of Europe created a communication channel between Caracas and Washington D.C. that may lead to Maduro drinking less vodka and exporting more oil.
By Caracas Chronicles – Carlos Rodríguez López
Mar 10, 2022
When the first artillery rounds were fired over Kyiv, the world saw with shock how Europe dived once more into a sanguinary conflict that was reminiscent of its tragic previous century. However, Russia’s decision to invade Ukraine has brought immense pressure on its allies. Russia’s close allies like Cuba, Iran, and Venezuela have been outspoken against NATO and the United States, but some of them failed to support Moscow when the United Nations overwhelmingly passed a vote condemning the Russian invasion.
Putin made everyone’s lives more difficult, for the moment, on the geopolitical board.
His decision to brutally invade a sovereign country made it difficult, even for his closest and also sanctioned friends, to back the most sanctioned country on the globe. Meanwhile, as of the time of writing, the price of crude has reached $130 a barrel in the United States, a price that hadn’t been seen since 2008. This creates significant political pressure in the U.S. as the midterm elections approach while gas prices are continually on the rise. Moreover, while many have called for the U.S. to ramp up its oil production to curve the rise of oil prices, several analysts have doubted that U.S. companies could fill the gap in the necessary timeline due to structural problems. In the words of Robert Mcnally, president of the Rapidan Energy Group, “They can’t find the people and can’t find the equipment. It’s not like they are available at a premium price. They are just not available”.
As the White House moved to prohibit Russian oil from the American market, a measure with bipartisan support in Congress, the United States had to reach out to former oil suppliers to cover the gap that the Russian oil will leave. While the gap isn’t much considering U.S imports, a ban on Russian oil will increase the price of energy in the United States even more, which is something that the American leadership is currently trying to avoid.
With this in mind, Washington D.C. remembered its southern, unfriendly neighbor Venezuela, which holds the biggest proven oil reserves in the world.
In a surprise visit to Caracas last weekend, a delegation of U.S. senior officials held talks with chavista leaders Jorge and Delcy Rodríguez. While some outlets reported that the meeting had modest progress at best, Maduro called the reunion “friendly and respectful” and added that “the Venezuelan and the American flags looked good together.” Nevertheless, the meeting itself is a surprising turn of events, as just six days prior, Maduro held a call with President Putin in which he offered Venezuela’s support.
While it’s too early to call and both Biden and Maduro are keeping their cards close, on Tuesday night, Maduro released two American political prisoners as “a sign of good faith.”
We have seen such a change of course before, but it was surprising all the same. Two weeks ago, the country was going through a political stalemate where there was an opposition that had lost popular support, a dictatorship that was governing comfortably even in the face of U.S. sanctions, and an adamant White House that insisted on negotiating sanction relief only with Juan Guaidó on board. Today, members of that very White House are in a room in Miraflores across from the very dictator that they put a bounty on.
Putin’s imperialistic ambitions resounded in the Caribbean when he accidentally led to what looks like one of the most significant major U.S. policy changes towards Venezuela in recent years.
The Possible Return to México
When it was announced last summer that the Venezuelan opposition and the Maduro regime were engaging in talks observed by the United States and Russia respectively, there was some optimism. As a matter of fact, both delegations agreed upon some preliminary issues and even made a symbolic gesture towards the Venezuelan claim on the Esequibo territory. Nevertheless, as usual, the Maduro regime sabotaged the negotiations when they gave an ultimatum and the dictatorship refused to negotiate further until Alex Saab was freed from U.S. custody and returned to Venezuela. After that, negotiations were put on hold.
Russia, in its position as Maduro’s backer in the negotiation, never publicly abandoned the idea of political dialogue and supported it, though admonishing the United States was “using Alex Saab as a pawn.” That drastically changed with the invasion of Ukraine and the international condemnation and sanction of Russia. The involvement of Russia in the Venezuelan negotiation became toxic. Moscow is absorbed in a war where things aren’t working out as Putin expected. Venezuela’s still a client, especially for its weapons, but Russia’s busy dealing with its own economic debacle and selling weapons abroad doesn’t look like a good idea.
In this sudden context, Maduro could have seen a window open, allowing him to at least attempt to resolve the most important issue for chavismo: U.S sanctions.
This time, however, he wasn’t going to waste any time dealing with the opposition, he appealed to the people that actually called the shots: the United States.
Now, the gamble for Maduro is if the Americans are willing to give out sanctions and licenses to sell oil in exchange for some political prisoners. In the end, while the U.S. could benefit by speaking directly with Maduro, Maduro needs the U.S. more than the U.S needs Maduro. But at this precise moment, the U.S. wants some Venezuelan oil and Venezuela not being a Russian commodity in the Western Hemisphere.
Can Venezuela increase oil production to cover some of America’s oil shortfall and justify an easing of sanctions in the eyes of Washington? The director of the Latin America energy program at Rice University, Francisco Monaldi, believes that the outlook isn’t “immediately rose-colored.” Monaldi thinks that existing problems such as the unreliability of electricity, industrial accidents that went without reparations, lack of industry workers, and a staggering $15 billion investment a year makes a dramatic increase in production a “highly ambitious goal.” However, it’s still worth noting the role that American transnationals can play in the production of oil. For months, Chevron has been lobbying to return to pre-sanction production levels. According to Bloomberg, Chevron’s aiming to use its already existing joint ventures with PDVSA to increase oil production and use the refineries in the Gulf Coast – which are tailor-made for Venezuelan oil. Chevron needs the approval of the U.S. Treasury Department for this to happen. If they are allowed, oil companies like Chevron could significantly improve production.
The Biden administration might also take advantage of the rapprochement with Venezuela to restart the negotiation process between the dictatorship and the opposition. Soon after the visit of the American officials, Maduro announced that the talks in Mexico City will resume. Compared to the previous sessions, the change of Russia’s influence and the prospect of an oil agreement with the U.S. alter the incentives for Maduro to negotiate and the power balance at that table. If Maduro decides to sabotage the process again, he risks losing the significant opportunity that Biden is giving him.
We can’t fool ourselves: extracting the sizable Russian presence from Venezuela is no easy task. However, with this week’s events, the Biden administration is taking the first substantial steps to combat the Kremlin’s foothold in the country, probably one of the most important long-term goals for the White House regarding the region.
Only time will tell if these engagements between Maduro and Biden will be fruitful, we’re living in times when the unthinkable can happen. Not many saw coming that the bombing of the streets of Kyiv thousands of kilometers away would open a path for Venezuela to reestablish relations with the infamous “empire from the north.”
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Read More: Caracas Chronicles – How Putin’s Ukrainian conquest led to a Maduro-Biden Rapprochement
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