Image Source: OilNow.
On April 17, the Biden administration announced that the full range of sanctions would be leveraged against Venezuela due to President Nicolás Maduro’s failure to abide by the terms of the Barbados Agreement. The amended General License 44, which for six months allowed U.S. companies to invest in and export Venezuelan oil, now calls for companies to wind down operations before a complete snap back of sanctions on May 31. This will mark a major financial setback for Venezuela, which recently reached its highest level of oil sales since the COVID-19 pandemic as foreign investors flocked to take advantage of the temporary sanctions relief. The resumption of sanctions is expected to reduce the government’s budget by up to $10 billion — a tenth of its GDP.
The decision to reimpose oil sanctions on Venezuela represents a calibrated response aimed at maintaining diplomatic engagement while upholding democratic principles. This strategy differs from the administration’s previous approach by gradually reinstating sanctions, underscoring the consequences of not adhering to democratic norms agreed upon in international settings.
The initial easing of sanctions was a gesture of goodwill intended to nudge the Venezuelan government towards a more democratic posture, as evidenced by the October agreement to hold a free and fair presidential election. However, the rapid suppression of opposition figures following this agreement, including the disqualification of leading opposition candidate María Corina Machado, demonstrated a clear regression from these commitments.
This reimposition serves a dual purpose: it signals to the Maduro regime and other global actors that the U.S. will not overlook breaches of democratic agreements, and it maintains leverage by allowing, for now, the continued operation of Chevron’s joint venture with PDVSA. (Chevron has been the largest U.S. oil investor in the country, announcing plans for another $1.3 billion in investments late last year.) This careful balance aims to minimize economic disruptions that could increase oil prices domestically and globally — an important consideration in a U.S. election year.
Moreover, this approach maintains open channels of dialogue, as evidenced by ongoing negotiations and previous prisoner exchanges, highlighting a nuanced policy that avoids the pitfalls of complete isolation or unchecked engagement. Although far from perfect — since U.S. companies can still apply for permits to remain in business and European firms, which started drilling before the October deal, do not face sanctions, and opposition leader and primary winner Maria Corina Machado has been banned from the July presidential election — this approach is a modest step in the right direction.
The administration will give companies 45 days to “wind down” business in Venezuela’s oil and gas sector. The gradual nature of the sanctions allows the U.S. to adjust its stance based on Venezuela’s actions, thus maintaining a pragmatic foreign policy posture.
Though the policy change marks a promising start, the U.S. should not stop here. The failures of both Trump’s maximum pressure and Biden’s prior engagement call for a reevaluation of the U.S. approach to Venezuela. The Maduro regime’s resilience showcases the degree to which Venezuela has deepened its ties with the network of authoritarian powers across the globe. China remains Venezuela’s largest oil purchaser, and Russian officials have made several high-level visits to the country in recent months to help prepare the country for the return of sanctions. So long as these relationships exist, unilateral U.S. sanctions will be unlikely to bring about the democratizing results the policy targets.
Yet, rather than give up hope for a democratic transition of power, as recently unveiled MOUs between the U.S. government and Venezuela’s ruling party seemed to do, the U.S. should take advantage of the uniquely isolated position of the Maduro regime. Collaboration with the European Union on sanctions could limit energy purchases from one third of the global economy and put some of the last major Western investments on the negotiating table. The U.S. should also make proactive efforts to involve OAS members in pressuring the Maduro regime, as recent attempts to rig the 2024 election have brought condemnation even from traditional Venezuelan allies such as Colombia’s President Gustavo Petro and Brazil’s President Luis Inacio Lula da Silva.
And while the situation may look dire inside the country, the truth is that the Venezuelan regime is the least popular it has been since Chavez took power in 1999, due in no small part to the increased repression and humanitarian crisis of the Maduro government. Poll after poll show that Maduro would lose in a landslide were free and fair elections permitted, something not lost on the regime itself, which has made unprecedented efforts to repress and divide the opposition ahead of the July 28 elections. The U.S., in coordination with the international community, should continue to support the opposition’s right to compete, and issue new individual sanctions on any regime officials found guilty of participating in the rigging of July’s elections.
Past policies may have failed, but now is a time to redouble U.S. efforts to support a democratic Venezuela rather than concede to the Maduro dictatorship. The reimposition of sanctions by the Biden administration reflects a reasoned recalibration of U.S. policy towards Venezuela without normalizing the Maduro regime. It marks a promising new position in the continued struggle for a free Venezuela, hopefully a first step in the right direction, rather than the last.
