As the mid-April deadline looms for the Biden administration to determine the fate of a temporary suspension of sanctions against Venezuela, deliberations are underway regarding potential measures to curb oil sales by President Nicolás Maduro’s government.
The administration seeks to impose these limitations without exacerbating Venezuelan migration, hiking U.S. gas prices, or antagonizing Latin American counterparts.
The stringent sanctions on oil sales, enforced by the Trump administration, were lifted last October following Maduro’s pledge to hold competitive presidential elections.
However, Maduro’s subsequent actions, including the arrest of opposition members and the exclusion of their primary candidate from the race, prompted the State Department to signal its reluctance to renew the six-month sanctions suspension set to expire on April 18.
Under the U.S. Treasury’s “general license” issued last year, international buyers could purchase Venezuelan crude using U.S. dollars, marking a significant shift from Trump’s stringent policies.
In response to Maduro’s failure to uphold his commitments, the administration aims to penalize him while preserving gains secured through negotiations facilitated by the Venezuelan opposition.
One proposal suggests implementing a new sanctions framework permitting Venezuela to sell crude internationally but not in U.S. dollars.
Instead, payments would be made in the Venezuelan bolÃvar, either through debt relief or barter arrangements for essential resources.
This proposal is reportedly the most likely course of action, according to sources familiar with internal discussions.
Concerns about potential political repercussions for appearing conciliatory toward an authoritarian regime underscore the need for careful messaging to distinguish the new policy from capitulation to Maduro’s regime.
President Biden began revising Trump’s policies in 2022 by easing restrictions on Chevron’s operations in Venezuela.
It’s anticipated that no additional constraints will be imposed on Chevron if the broader general license is rescinded.
Negotiations with Maduro’s government, initiated at the urging of the Venezuelan opposition and local companies, have drawn criticism from some members of Congress, notably Senators Rick Scott, Marco Rubio, and Ted Cruz.
Critics doubt the efficacy of sanctions relief in influencing Maduro’s behavior, arguing that the initial concessions were made based on unfulfilled promises.
Reverting to Trump-era sanctions could strain relations with left-leaning Latin American governments like Brazil and Colombia, both grappling with their Venezuelan migrant crises.
The proposed measures aim to alleviate pressure on Venezuela’s domestic economy while providing essential goods in exchange for oil.
However, the existing license’s impact on Venezuela’s cash flow has been limited, and it has not significantly expanded access to the U.S. market.
With uncertainty looming over the suspension’s continuation, foreign interests, particularly from China, Iran, and Russia, stand to gain.
Meanwhile, Maduro’s electoral maneuvers, including barring opposition candidates, have drawn condemnation from regional leaders, signaling escalating tensions ahead of the presidential election.
