Over the course of a decade, the president VenezuelanNicolás Maduro, has remained firmly in power despite mass protests, widespread poverty and despair, harsh US sanctions, and an international attempt to recognize an alternative government. Your survival instincts are kicking in again.
The Maduro regime this week ordered the arrest of key advisors of its main political adversary, testing the patience of US officials who temporarily eased sanctions because Venezuela promised free and fair presidential elections next year. It has also been slow to meet U.S. demands for the release of detained citizens.
And in recent days it has even unsettled its regional allies by calling for a large chunk of land claimed by neighboring Guyana becomes a Venezuelan state, threatening to shut down oil producers doing business there. While Venezuela’s assertion of rights to the territory known as Essequibo dates back more than a century, Maduro’s decision to escalate the dispute now adds to the sense of chaos in Caracas.
There is some logic to the machinations of Maduro, 61, who by now has governed longer than his predecessor Hugo Chávez, the inspiring leader of Venezuelan socialism who died in 2013. With little chance of winning an open election, Maduro is using almost every lever at his disposal to rally domestic support and ensure he extends his presidency.
Maduro is “spiraling,” said Christopher Sabatini, senior fellow for Latin America at Chatham House, a policy institute in London. “He doesn’t want to have free and fair elections. Now that there is a remote possibility of political change that didn’t exist before, all the compromises they agreed to suddenly seem really scary.”
The risk is that Maduro goes too far, alienating the United States and other global powers and rocking Venezuela’s economy. So far, the United States has shown tolerance, as the Biden administration would like nothing more than to turn on the taps on the world’s largest oil reserves and stop the exodus of Venezuelan migrants to the north. But each new affront by Maduro undermines the argument that sanctions relief is putting the country on the path to democracy and international cooperation.
Without a doubt, Maduro has proven to be adept at maintaining control of power levels even in times of crisis. His military leadership remains loyal and he has constructed his own version of Chavismo, replicating the legendary hour-long televised speeches of his predecessor, but adding some moves toward capitalism. His crackdown on dissent has so far kept his opponents at bay despite his unpopularity.
Polls show that Maduro would clearly lose to opposition candidate María Corina Machado if the elections were held freely. This week, the government prosecutor charged three of Machado’s associates with treason, conspiracy and money laundering, saying they were plotting to sabotage a referendum designed to generate support for a takeover of Essequibo.
“Maduro acts at a time when he needs to rescue internal connections with the population and raise popularity and the capacity for mobilization,” said Luis Vicente León, director of the local pollster Datanalisis. “I don’t think he has any intention of moving beyond this. Although, of course, when you engage in these strategies, you don’t know when someone is going to get out of control.”
Sanctions Snapback
Machado is currently barred from holding office, although Venezuela has outlined a legal path to restore his eligibility, under pressure from the United States. In exchange for reaching a deal with some opposition leaders, the U.S. Treasury eased oil sanctions last month, allowing foreign companies, including Chevron Corp., to expand operations in the country and increase exports. providing Venezuela with much-needed income.
These licenses, however, will expire in six months, meaning sanctions could be applied again if negotiations for free and fair elections do not progress. The United States has also said it could withdraw the licenses before then if Venezuela does not meet its commitments.
The belligerence toward Guyana is also putting pressure on Maduro’s recently restored relationship with Brazil, forcing President Luiz Inácio Lula da Silva, a long-time ally, to mediate the conflict between his northern neighbors. In a phone call on Saturday, Lula told Maduro to avoid unilateral measures that could deepen the crisis, according to a note from Lula’s press office.
“If there is something we do not want in South America, it is war,” Lula had said on Thursday.
Following Saturday’s talks, the Venezuelan government said in a statement that “high-level” negotiations with Guyana will be announced in the coming days.
Many observers believe that a military escalation against Guyana is highly unlikely and that Maduro is making noise to secure the support of his socialist base. He could also take advantage of a tense situation to consolidate power.
“Maduro is trying to save an emergency card that he could use in case the elections become a serious danger for him,” León said. “He could use it to delay the elections, even more so if he has not achieved a negotiation that reduces his exit costs.”
Renewal risk
Even if Maduro manages to maintain stability, the fragile internal democratic process and hostility on the border are reason enough to worry investors. Renewal of US licenses after the initial six-month period is “already at risk”, Wood Mackenzie analyst Luiz Hayum said, warning that restrictions could even be reimposed sooner.
Oil production is expected to grow by 25% if foreign companies continue to step up their operations in the country by the end of 2024. If U.S. oil licenses are reversed, Venezuela’s estimated growth of 9.7% would be cut by more than half, according to economist Asdrúbal. Oliveros, and it is estimated that $8 billion in revenue will evaporate.
“This is revealing of the economic fragility of the country,” said Oliveros, director of the local financial analysis firm Ecoanalítico. “Changes in just a few licenses can dramatically affect Venezuela’s economic performance.”
