During the Trump administration, the United States imposed maximum pressure on the Venezuelan government of Socialist thug Nicolas Maduro.
This policy involved tightening economic sanctions and a seeming attempt to help overthrow his corrupt and oppressive government. Unfortunately, but predictably, this policy failed, and Maduro is stronger than ever, some of which can be attributed to a rally around the flag from an external villain being perceived to have attacked Venezuelans.
Now, to help alleviate pressure on the politically potent oil price caused by international economic sanctions imposed on Russia because of its brutal invasion of Ukraine, the Biden administration recently allowed Chevron to again begin pumping Venezuelan oil. In exchange, the Venezuelan government and opposition agreed to spend, under U.N. management, billions of frozen funds on infrastructure and humanitarian aid at home. Administration officials argued that Chevrons resumption of operations in Venezuela would impel the government and opposition to start talks on a framework and schedule for holding free elections.
Although the holding of free elections in the country with the worlds largest oil reserves would be great, its probably not going to happen anytime soon, and, at best, Chevron in Venezuela will be able to make up only a small fraction of the oil lost to the world because of sanctions against Russia.
According to the Wall Street Journal, Western sanctions on Russian oil could take 1.5 million barrels a day off the world market next year. It also reports that one expert on Venezuelan oil estimates that in the next six months, Chevron could increase Venezuelan oil exports by 20,000 to 30,000 barrels daily. Over the next year, the newspaper projects that Chevron could increase Venezuelas output to only a maximum of 150,000 barrels a daya quantity still minuscule compared with the amount lost from Russia.
Reasons for these meager projected increases are that the sanctioned Venezuelan oil industry is in poor shape, thus requiring Chevron to fix broken equipment and pipelines and rehire oil workers scattered to the winds. The U.S. government is allowing Chevron to operate existing fields in the country, not develop new ones.
Even if fresh wells were allowed, the company likely would be reluctant to invest in them because of the unstable business environment caused by the bilateral political hostility and resulting sanctions and the $4 billion that the Venezuelan national oil company already owes Chevron. The Biden administration now has allowed Chevron to begin selling Venezuelan oil to start collecting this debt, but it could take two to three years to complete the process.
Thus, although Bidens policy change will have little effect on the world oil market anytime soon and has been done largely for domestic political reasons, it could be the tepid start to a policy of badly needed sanctions relief for Venezuela. Perhaps the administration also will allow other oil companies back into that devastated nation, which because of its governments horrid economic policies, has bled talent to other parts of the hemisphere, including the United States.
More broadly, the United States needs to reassess its profligate use of economic sanctions to coerce nations worldwide to be more like the United States. The use of sanctions makes countries more hostile to the United States by harming their economies but has a poor record of inducing major political changes in themsuch as getting them to stop aggression against other countries or replacing rulers unfriendly to the United States. And countries that already have poor economic policiessuch as Venezuela, Cuba, Iran and Russiasanctions give their unpalatable regimes an external excuse to blame for their own internal failures.
In the United States, harsh sanctions against Cuba, Iran and Russia have failed for decades but are politically sacrosanct because of internal U.S. lobbies. The internal lobby for maintaining sanctions against Venezuela is not as strong. Thus, because Venezuela is weak and is no threat to U.S. security, the Biden administration should further reduce or even eliminate sanctions against Venezuelan oil production (and probably all counterproductive sanctions against the Maduro regime).