Is U.S. Policy Towards Venezuela at a Turning Point?

On March 31, the Trump administration announced a pivot in U.S. policy towards Venezuela. The United States has spent more than a year backing opposition leader Juan Guaido, whom the United States and more than 60 other countries recognize as Venezuela’s legitimate president, in his stand-off with Russian- and Cuban-backed strongman Nicolás Maduro. In a Wall Street Journal op-ed and a State Department factsheet, the United States has now proposed that both Guaido and Maduro step aside to allow the creation of a transitional government that would lead to free and fair elections.

With the global coronavirus pandemic threatening to further exacerbate Venezuela’s catastrophic economic decline and dire humanitarian situation, a transitional government of the type called for in the new U.S. policy would represent a welcome change in Caracas. But it remains unclear whether Maduro’s key allies in Venezuela’s military establishment or top international backers, Russia and Cuba, are prepared to abandon Maduro, without which the current stalemate is likely to continue.

Washington’s announced policy shift follows multiple significant developments in recent weeks. Russian oil firm Rosneft made a surprising announcement on March 28 that it was selling all of its Venezuelan assets to the Russian government and ceasing all operations in the country. This move distances Rosneft—though not Russia—from the Latin American nation. It also follows sanctions that the United States imposed earlier this year on two Rosneft subsidiaries, Swiss-based Rosneft Trading S.A. and TNK Trading International S.A., for trading Venezuelan oil. Even more strikingly, on March 26, U.S. prosecutors unveiled an indictment against Maduro on charges of narco-terrorism, drug trafficking, corruption, money laundering, and other charges, the first against a de facto head of state since similar charges against Manuel Noriega in 1988. U.S. indictments also targeted a number of senior Venezuelan government officials—including the Chief Justice and Minister of Defense, as well as members of the Colombia-based Revolutionary Armed Forces (FARC).

The Trump administration next faces a decision on Venezuela policy in a few weeks when licenses that currently allow U.S. oil companies to operate in Venezuela despite U.S. sanctions expire. The Trump administration has periodically renewed these licenses since early last year, but speculation has been growing that the administration will stop renewing the licenses unless Maduro agrees to leave power. Though this move would hurt U.S. companies at a time when they are already reeling from low oil prices, the Trump administration may be betting that those concerns are outweighed by the objective to see movement on the situation in Venezuela.

Despite these developments, however, it remains unclear whether the U.S. policy of forcing Maduro from power is nearer to success. Trump administration officials last year hoped that crippling U.S. sanctions on Venezuela’s national oil company and government would force a quick change of power, but Cuban and Russian support have helped Maduro weather the storm. Meanwhile, despite reported secret U.S. talks with Maduro regime insiders about deposing Maduro and shifting towards elections, the regime appears to have remained relatively cohesive in the face on international pressure.

Additionally, some of the recent developments may prove less significant than they appear: for example, while Rosneft announced that it has exited producing oil in Venezuela, Rosneft did not shut down the oilfields where it operated. Instead, it transferred its assets to an unnamed Russian government owned-company—likely one with little exposure to the United States or international markets, which would make it less susceptible to sanctions pressure. This means that Russia’s involvement in Venezuela’s oil sector will continue, just in a different form. In fact, as its oil price war with Saudi Arabia shows, Russia is willing to double down on its efforts to undercut U.S. interests in the midst of the global Covid-19 crisis in the hopes of further strengthening its own hand.

There were no immediate public signs that the indictment of Maduro on drug trafficking charges had weakened the regime’s internal coherence, either. However, the Trump administration may be hoping that a new $15 million reward for Maduro’s capture will tip one or more of his associates into helping depose him. Similarly, Cuba, which has also faced sharply increased U.S. economic pressure over the past year, will likely dismiss the recent U.S. policy moves and continue its warm embrace of Maduro and his followers.

The Maduro government has been an unmitigated disaster for Venezuela, with GDP shrinking by 60 percent since 2013. In the coming months, the number of Venezuelans who have fled the country may exceed the number of people who have fled Syria during that country’s civil war. The average Venezuelan adult has lost more than 20 pounds as a result of the nation’s economic collapse. Against that backdrop, any shift in strategy that increases the odds of change in Caracas is welcome. But after years of increasing entrenchment by the Maduro regime and its backers, a resolution to Venezuela’s long crisis may be as remote as ever.