Rice University's premier undergraduate journal of scholarship in domestic and international policy.
Max Renteria
Nov 27, 2022
The Glimpse of a New US-Venezuela Relationship
In the past decade, during the Maduro regime, Venezuela has seen the worst humanitarian crisis in the Western hemisphere. The International Criminal Court in 2021 is investigating egregious abuses by Maduro’s security forces which include, extrajudicial killings, enforced disappearances, arbitrary arrests, and torture (Human Rights Watch 2021). Furthermore, the regime exacerbates systemic oppression as millions are unable to access basic health care and adequate nutrition (UNHCR 2022). Finally, the humanitarian crisis is mainly characterized by the 6 million Venezuelans that are being displaced by these oppressive conditions (Van Praag 2019). These 6 million people have fled Venezuela as refugees because of the threat of “generalized violence, internal conflicts, and massive violation of human rights.” The United Nations High Commissioner for Refugees (UNHCR) and the International Organization for Migration (IOM) has called for $738 million to assist refugees, asylum seekers, and countries that take them in. However, in July 2019 only 24 percent of the funds were raised (Van Praag 2019). As of 2022, the United States Foreign Relations Committee and Executive Order 13692 recognizes the Venezuelan crisis as a national emergency.
Because of this recognition, the United States has imposed a multitude of sanctions on Venezuela and members of the Maduro government. The main mechanism for sanctions on Venezuelan government members that are seen as perpetrating human rights abuses is the Venezuela Defense of Human Rights and Civil Society Act of 2014. Since 2009, the US has implemented 431 designations on Venezuelan and foreign nationals to be sanctioned, and currently upholds executive orders that targets the Venezuelan oil and natural gas industry from any foreign transaction (Van Praag 2022).
This targeting of oil and energy is extremely important in a time of increasing market volatility due to price hikes and lessened supply and heightening energy security concerns. In the US, oil production has not been able to match the demand leading to price hikes and consumer fear. Biden is going to drastic lengths to increase oil production/supply such as utilizing the Strategic Petroleum Reserve (SPR) (White House 2022). However, these lengths are not long term solutions, and the administration needs a strategy that will stabilize the US oil market.
Given the conditions of the status quo and contradicting reports about Biden’s intentions regarding Venezuelan energy sanctions, the Biden administration should focus on creating a plan to both uphold its commitment to democracy in Venezuela and to allow Venezuelan oil to curb US demand and lower oil prices. Thus, The United States should increase diplomatic visits with the Maduro administration to create a transparent plan to increase democracy in Venezuela and to decrease energy sanctions. The goal of this policy is three-fold:
1. Create a base for economic welfare in Venezuela through increasing exports from
the country,
2. Decrease political repression and increase political legitimacy in Venezuela,
3. Contribute to the stabilization of the international energy market.
There is a high chance we are able to see this action in the future. First, there have been reports that the Biden administration is already considering loosening sanctions on Venezuela’s oil financial transactions with foreign nationals evidenced through Chevron’s, an American company’s direct investment in the country. This scenario seems likely as in March, Nicolas Maduro and his administration met with American diplomats to discuss increasing relations between the two states (AQ 2022). Maduro stated, “We have agreed to work on an agenda going forward,” after his administration met with American diplomats to discuss increasing relations between the two states (Associated Press 2022). Furthermore, Maduro seemed receptive to diplomatic plans to achieve both states’s best interests. These conditions mean that the United States does have the foundation to condition sanction reductions on a plan for political reform by Maduro.
Decreasing energy sanctions would create an economic base for Venezuela to increase welfare for the Venezuelan people. Loosening sanctions means that Venezuelan oil companies such as Petroleos de Venezuela, American oil companies such as Chevron, and secondary market companies such as liquified natural gas (LNG) can increase exports from Venezuela. This means that the United States and Venezuela can increase their economic engagement through basic international fair trade. For example, the United States leads the international pharmaceutical market which can increase access to medicine for the Venezuelan people. This scenario is especially important as Venezuela has decreased imported US pharmaceuticals since 2014, when the Venezuela Defense of Human Rights and Civil Society Act was signed. Ultimately increasing exports of Venezuela increases government revenue that can be used for more welfare programs and investment in infrastructure. With this plan, hopefully, the conditions that force many to leave their home country can be resolved to some extent. However, this is only a foundation for increasing the standard of living; there must be plans to fix the underlying conditions for corruption and repression.
To uphold democracy and political legitimacy in Venezuela, the United States must ensure that both states actively create institutions that fix the Venezuelan oil market corruption that historically created the conditions for the humanitarian crisis in the early 2010s. It is one thing to increase negotiations with opposition parties, which the United States should also pursue, but this only addresses perceptual and symptomatic issues of democracy in the nation. The Venezuelan government must implement strong internal-review institutions that manage the oil industry and prevent corruption (Cheatham et al. 2021). The absence of these safeguards is what allowed Chavez to consolidate power and gut the nation’s oil market, destroying the only asset Venezuela had for economic growth and poverty reduction (Cheatham et al. 2021). However, through transparent diplomatic planning, Venezuela can better its management of the oil market that allows for private investment and long term growth.
Ultimately, a stable Venezuelan oil market is good news for the United States. This means companies such as the state owned Petroleo de Venezuela can increase their production and oil supply as they now have a new and large trade partner in the United States and, more importantly, transparent guidelines for investment and growth. American company Chevron also has the ability to increase oil production in Venezuela as financial transactions restart between the two states (Kitroeff and Kurmanaev 2022). Stability is able to solve for a short term global oil market as well as a long term US domestic market. Although Chevron currently only produces 1% of US oil, this oil production may calm the global market by signaling that more supplies may be on the way (Kitroeff and Kurmanaev 2022). Resultantly, the consumer may see lower prices in the short term. Furthermore, US engagement with Venezuela signals a new oil stakeholder in the world. Venezuela is 12th in the world in oil production, 1st in the world in oil reserves, and is still seeing large daily surpluses (“Venezuela Oil” 2022). Ultimately, the perception of international supply solves the long term oil demand problem that Biden is seeing in the status quo. Importing oil from Venezuela is a better alternative than dipping into the Strategic Petroleum Reserve.
References
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