Engaging Venezuela Is Worth the Gamble

Engaging Venezuela Is Worth the Gamble

In a bid to ease pressure on global energy supplies, the U.S. has opened talks with the government of Venezuelan leader Nicolas Maduro, which could lead to the lifting of some sanctions against his regime. Such an outcome would be a blow to Venezuela’s opposition and its desire to see Maduro removed from power. The U.S. should move forward anyway.

Re-establishing diplomatic ties with Venezuela is a necessary step toward harnessing its immense energy-producing potential. It could also drive a wedge between Venezuela and its chief patron, Russia. Steps toward easing U.S. sanctions against Caracas will face stiff political resistance from lawmakers of both parties, who’ve already criticized President Joe Biden for engaging with Maduro. Nevertheless, a realistic policy that emphasizes gradual political reform, rather than the illusory hope of regime change, would not just advance the U.S.’s strategic interests but also the aspirations of Venezuelans themselves.

While still in its earliest stages, Biden’s opening to Caracas represents a significant reversal. Since accusing Maduro of stealing the 2018 presidential election, the U.S. has recognized opposition leader Juan Guaido as the country’s leader. Former President Donald Trump placed sanctions on Maduro, his family and much of his inner circle, and blocked purchases from Venezuela’s state-owned oil company, Petroleos de Venezuela SA. In recent years, the weight of sanctions, government corruption and the pandemic has exacerbated a humanitarian crisis that’s caused 6 million Venezuelans to flee the country.

Yet there are few signs that this “maximum pressure” campaign has weakened Maduro’s grip on power. Maduro has exploited splits within the opposition to consolidate control over the country’s judiciary, security services and electoral system. He’s also pursued a strategic partnership with Russia, which has provided the regime with military hardware, proceeds from oil sales and investments in the country’s energy sector — in exchange for allowing Russia to deploy nuclear-capable warships to Venezuelan ports.

That bargain may now be in jeopardy, however: Western sanctions imposed on the Kremlin for its invasion of Ukraine have left the Maduro government unable to access funds held in Russian banks. That provides an opening for the U.S.

In return for Venezuela’s halting military cooperation with Russia, the Biden administration should waive some sanctions against Caracas to allow the country to import equipment to upgrade production facilities and resume selling oil to the U.S. In the short run, the added Venezuelan supply will have a negligible impact on global crude prices, which have already started to fall. On optimistic assumptions, Venezuela could increase production to 1.5 million barrels a day by year’s end if restrictions are eased, nearly double its current output. Even a more modest pickup in supply would help U.S. refiners make up for the loss of Russian oil imports and potentially limit short-term spikes in consumer gasoline prices.

Biden should remain clear-eyed about the moral hazard of doing business with an authoritarian like Maduro. Further steps toward normalization should be conditioned on Venezuela’s willingness to accelerate market-oriented economic reforms and continue negotiations with the opposition to allow greater political freedoms. The U.S. should insist that the government release political prisoners and prosecute human-rights abuses. Though the European Union no longer recognizes Guaido as Venezuela’s president, the U.S. should continue to do so until Maduro commits to a timetable for holding a freely contested presidential election monitored by international observers.

Ousting Maduro was a defensible goal at a time of relative stability — but the strategic environment has changed. However distasteful, engagement with the Venezuelan regime is critical to protecting America’s core interests and containing Russian influence in the Western Hemisphere. Biden should aim for a policy that balances economic and security needs with a commitment to democratic values — and provide a path to a more productive relationship with Venezuela and its long-suffering people.

The Editors are members of the Bloomberg Opinion editorial board.

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