Tonhinge has The change took place in Caracas, the capital of Venezuela. Traffic jams that haven’t existed in years now clog the roads. The political posters that used to hang over cities proclaiming grim mantras like “socialism or death” have been replaced by ads for whiskey or cosmetic surgery. The hum of motorcycles, once terrifying in a capital known for violence, is now more likely to herald food delivery than armed robbery.
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Residents, especially the wealthier ones, make sarcastic comments: “Venezuela se arregló!” (or, the country “is fixed” because someone may have had plastic surgery). But while there have been better days following the government’s decision in 2019 to ease price controls and allow trading in dollars, the country’s underlying problems are far from being resolved.In the past ten years, it gross domestic product It has shrunk by 70%, and about 7 million people, or a quarter of the population, have left the country.
Still, Venezuela today is very different from what it was in 2019. At the time, opposition leader and National Assembly speaker Juan Guaidó was recognized by the United States and several other democracies as Venezuela’s acting president, citing Nicolás Maduro, an unpopular leftist tyrant ( Pictured) rigged the election. (In the absence of a legitimate president, the constitution allows the speaker of the National Assembly to remain in power, pending new polls.)
But Mr Guaido and his supporters misjudged the loyalty Mr Maduro and his predecessor Hugo Chavez from 1999 to 2013 had bought from the top ranks of the military. They underestimated the ruthlessness of the regime. They were caught off guard by the war in Ukraine, which means the US is rethinking its relationship with oil producers.
Today, although the U.S. and U.K. still refer to Guaido as “president,” he holds no power. Better described as one of several opposition leaders, he spends most of his days answering Zoom calls from his spartan office above the mall. The constitutional basis for his rise to power has grown weaker. After a dodgy vote in 2020, the elected National Assembly he led was replaced by one controlled by Mr Maduro’s regime. His term as chairman of parliament expires on January 5. His opposition colleagues seem unlikely to re-elect him.
By contrast, Mr Maduro is still in power nine years later. Over the past six months, the geopolitical pendulum has swung in his favor. Venezuela holds 20 percent of the world’s proven oil reserves, more than any other country. The war in Ukraine has made everyone more nervous about oil supplies, so the cost of isolating Venezuela appears even higher. After decades of mismanagement, Venezuela’s oil industry is too dilapidated to have much of an impact on global oil markets in the short term, but the U.S. and other countries are considering long-term developments.
Under Donald Trump, the United States has imposed sanctions on Venezuela’s oil, banking and mining industries, as well as more than 140 regime insiders. By contrast, President Joe Biden is cautiously re-engaging with Venezuela. Biden’s envoy met twice with members of Maduro’s government in Caracas. In October, seven U.S. citizens held in Venezuela were replaced by two nephews of Mr. Maduro’s wife, Cilia Flores.
On November 26, the Biden administration made a notable shift.It gave Chevron, an American oil company with four dormant joint ventures PDVSA, Venezuela’s state-owned oil giant, has again received a limited license to drill for and export oil to the United States. There are strings attached. The proceeds are intended to pay off billions of dollars in accumulated debt owed by Venezuela to Chevron.pay royalties or taxes to the system, or PDVSAProhibited.
rough diplomacy
In exchange, the regime agreed to resume talks with the opposition, which were suspended in October 2021. Those talks resumed in Mexico City on the same day as the U.S. announcement. Mr Maduro himself did not take part in the talks (his son Nicolás Maduro Guerra will be present). But they are another step toward easing Mr Maduro’s pariah status.
In November, Mr. Maduro made a rare overseas trip to demonstrate just that.this is for policeFrench President Emmanuel Macron greets him on the sidelines of a summit in Egypt on Tuesday. The two talked for less than two minutes, but broke the years of estrangement. Mr Macron referred to Mr Maduro as “president”, although France does not formally recognize him as legal. The Venezuelan laughed and said things were “getting better”.
Maduro also managed to hold a brief conversation with John Kerry, Biden’s climate envoy. It was a small victory for the Venezuelan dictator, as the United States has indicted Mr Maduro on charges of “narco-terrorism” and offered a $15 million reward for information leading to his arrest. The State Department later said he caught Mr Kerry off guard.
Events on the doorstep are also helping the Tyrant out of the cold. The victory of Luiz Inácio Lula da Silva in Brazil’s presidential election means that all of the region’s major economies will soon be led by leftist governments that are far more left-wing than previous right-wing governments. Government hostility toward Mr Maduro is generally low. When Lula, as he is known, takes office in January, he is expected to swiftly restore diplomatic relations with the Venezuelan regime.
The Colombian government, under new leftist President Gustavo Petro, has begun repairing relations. On 1 November, Mr Petro became the first Colombian leader in a decade to be received at the presidential palace in Caracas (he is pictured on the left). “Colombia and Venezuela share a common destiny,” Mr Maduro said. He meant it as a compliment.
But foreign governments are taking a gamble by courting Mr Maduro. First, Venezuela may be rich in oil, but it is also problematic. Refining is heavy and laborious. After years of mismanagement and corruption, PDVSA It is in ruins. Production this year is expected to average 650,000 barrels a day, a fraction of the government’s own target of 2 million barrels and less than a fifth of pre-Chavez output of about 3 million barrels in 1998 (see chart).
Ángel Alvarado, an opposition congressman now at the University of Pennsylvania, said much of the oil would not hit the market until 2024. Even if Venezuela were to produce 1 million barrels of oil per day by 2025, that would represent only about 1% of current global production. For this to happen, other foreign companies such as Spain’s Repsol or Italy’s Eni need to be able to operate without restrictions.
It would also require a substantial increase in foreign investment, which seems unlikely.Estimates vary widely, but José Toro Hardy, former director PDVSA, arguing that the company needs $25 billion a year to produce as much oil as it did 20 years ago. That’s an incredibly large sum at the moment, given the regime’s record of pressuring creditors and mistreating investors.
Second, Mr Maduro’s record also suggests he will not play fair at the negotiating table. Broadly, the agreement sought is one in which the regime agrees to hold presidential elections with sufficient guarantees that the elections can be considered free and that the opposition agrees to participate. The Biden administration could provide more so-called “sanctions relief” if steps are taken to restore democracy to Venezuela. But Mr Maduro is unlikely to agree to an election so clean that he might actually lose.
Still, maybe he believes he can win the legitimate vote. Mr Maduro has 26 percent support, according to pollster Datanalisis. That figure is low, but only slightly lower than that of the most popular opposition leader, Zulia state governor Manuel Rosales, who is at 30%. And his approval rating is much higher than that of Guaido, who has an approval rating of 16%. Pro-regime Carabobo state Governor Rafael Lacava, who has 40 percent support, has never said he would oppose Mr Maduro and could be an asset in the president’s re-election bid.
Another possibility is that the regime plans to pass motions to prepare for clean elections, but in no way bends to the will of voters. Mr Maduro is already getting tough on the US. On November 30, he said free elections could only be held if “all sanctions” were lifted.
However, those who say any discussion is better than a standoff point to some non-election issues that the two sides may agree on. One is access to about $3 billion in Venezuelan government assets currently frozen in U.S. and European banks. As talks began in Mexico, the two sides agreed to create a UN-managed fund initially focused on improving infrastructure, including fixing the country’s power grid and building schools.
No agreement on the format of the election is expected in the first round of talks. But once a decision is made, the question of who will be the candidates remains.Mr Maduro expected to be uncontroversial in ruling Power SUV party. On the opposition side, at least 20 candidates are currently shortlisted, including Mr Guaido. Originally there were more than 80. “That’s the problem with the Venezuelan opposition: They all want to be president,” regretted a Caracas-based diplomat.
The exact timing of the election is also a matter of debate. While the constitution says it should be held six years after the last session – in 2024 – some in the government, including the powerful former National Assembly speaker Diosdado Cabello, have hinted that it could be held within months . Such a decision would be made by the electoral commission, which the regime still controls.
This may be part of a strategy to keep the still-unorganized opposition in check. But it will also help Mr Maduro and his cronies. Despite the softening of the hostility of the Biden administration, the myth of “Venezuela is a foregone conclusion” may be about to be unraveled. Annual inflation hit 340,000% in February 2019, according to the regime’s own data. It was then subdued by the use of the dollar, but started to rise again. It is now growing 155% year-over-year, the highest in Latin America. The black market value of the bolivar against the dollar fell 43% in the first four weeks of November, and the central bank clearly lacks the funds to back it up.
For years, the opposition, backed by the United States, has called for early presidential elections. Mr Maduro may want to bluff and head to the polls before the bubble bursts. ■
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