Pitts: Has US Policy Toward Venezuela Already Failed?

If Venezuela President Nicolás Maduro still remains in power, then U.S. oil sector sanctions have failed.

And there’s plenty of proof to back that hypothesis.

Five years later, Maduro is not only still in power but arguably stronger than ever after surviving pressures from the sanctions imposed in late 2019, coupled with the economic disruptions caused by the pandemic early 2020.

Maduro’s ability to preserve his rule through these tough times has presumably strengthened his resolve, evidenced by his capacity to keep his oil production and revenues flowing, albeit at lower levels.

If U.S. sanctions and restrictions on certain ruling party officials, military officers and other persons associated with Maduro’s government have not succeeded in forcing them to switch sides and/or cooperate with U.S. officials to somehow topple Maduro, then they too have failed.

If it’s not clear, U.S. sanctions on Venezuela are a glaring failure and Washington’s unwillingness to accept that continues to manifest itself negatively via an increasing Venezuelan migrant crisis, which shows no signs of stopping. At last count, just over 7 million Venezuelans have left the country to seek better economic opportunities, while others have fled for political reasons.

With a dysfunctional opposition unlikely to dislodge Maduro in 2024 presidential elections, Washington’s vision of a pro-American government is not likely to evolve.

Presumably, if there are no “free and fair” elections next year in Venezuela, then the opposition will likely not win the presidency. If that is true, then maybe Washington should stop protecting Citgo Petroleum, the U.S. refining arm of Venezuela’s state-owned Petroleos de Venezuela (PDVSA).

To-date, the Houston-based refiner has been shielded from bondholders and creditors who are seeking to attach claims to Citgo’s 807,000 bbl/d-refining network comprised of three refineries (Corpus Christi, Texas, 167,000 bbl/d; Lemont, Ill., 177,000 bbl/d and Lake Charles, Louisiana, 463,000 bbl/d). Citgo also has a network of pipelines and terminals as well as lubricants blending plants across the U.S.

A tell-tale sign Washington is losing confidence in a potential regime change in Venezuela is most evident in a Citgo auction slated to take place in October. Canada’s Crystallex International and U.S. companies ConocoPhillips and Exxon Mobil represent a short list of companies looking to get paid for a string of asset expropriations under the government of late Venezuelan President Hugo Chávez.

Citgo is maybe worth around $12 billion, but the claims far exceed this value. So, breaking up Citgo doesn’t really make sense, or does it? The three aforementioned companies rightfully think so.

If Washington is breaking part or destroying Venezuela’s natural market for its heavy and extra-heavy oil, then Maduro should look elsewhere to find a replacement market.

If that is the case, then China is the obvious answer and market for Maduro’s government to target or in this case, target again.

Caracas and Beijing are no strangers. During this nearly 25-year run under so-called “socialist” rule, the latter has lent the former around $65 billion. Energy and political pundits differ on what remains owed, with values ranging from nothing to around $10 billion. At any rate, China appears poised to try again.

While the recent Caracas-Beijing love affair wasn’t the stuff of fairy tales—due to complications related to delayed oil-for-loan payments, among other issues—the writing on the wall points to the dawn of a new era between the two.

A recent visit by Maduro and Vice President Delcy Rodríguez to China is a clear signal that Venezuela and China are again exploring bilateral initiatives. And rightly so, as U.S.-China relations have deteriorated further in recent times Venezuela is more often than not looking eastward and not westward to revive its oil trade and economy.

During his visit to Shenzhen, China, Maduro wrote on X, formerly Twitter, that he was “confident that China-Venezuela relations would continue on the pathway of growth and prosperity.” Maduro also called his visit “historic to strengthen cooperation ties and build new world geopolitics.”

Datanalisis President Luis Vicente León believes the Caracas-Beijing revival also ties in to the strengthening of the BRICS, which was originally comprised of Brazil, Russia, India, China and South Africa. No surprise that three of the original BRICS countries have arguably continued to support Maduro’s government in one form or another, despite Washington’s full-court press to push Maduro out of power.

While Washington’s failed sanction strategy “is no longer a theoretical analysis,” according to León, he also argues that Beijing’s interest in incorporating Venezuela’s massive oil reserves under its axis of influence is the real deal.

If this is so, then it could be a checkmate scenario for the U.S. in its chess match against China.