Amid High Gas Prices, US Seen as Likely to Make Venezuela Sanctions Concessions

The Biden administration could soon lift certain sanctions against Venezuela as it recalibrates its strategy toward the country amid global oil shortages, experts said. But they also said it remains unclear if those moves will entice President Nicolas Maduro regime to hold free and fair elections or stop committing human rights violations.

“I think the oil markets are a huge piece. I think the gas prices are a huge piece,” Adam Smith, a former senior adviser at the Office of Foreign Assets Control, said during an event hosted by the Wilson Center last week. “And I think that the likelihood of there being changes are pretty high right now.”

The Biden administration is reportedly preparing to relax sanctions against Venezuela and the Maduro regime to allow Chevron to resume certain oil activities in the country, a move that could eventually lead to the reopening of U.S. and European markets for Venezuelan oil (see 2210060014). Smith, a Gibson Dunn sanctions lawyer, said Biden would be “fairly unfettered, in my mind, to sort of make these changes if he so chooses,” adding they could have a large impact on Venezuela’s ability to sell oil.

“Oil is the lifeblood of the Venezuelan economy. It's really the only game in town in many real respects,” Smith said. “There could be a huge amount of money flowing into Venezuela very, very quickly if some of those restrictions were lifted.”

The impact partly depends on how a potential Chevron license is structured, Risa Grais-Targow, director for Latin America at the Eurasia Group, said. If the authorization allows Chevron to resume drilling activities but restricts any proceeds to be “used to repay debt owed to Chevron” by Venezuela's state-owned oil company Petroleos de Venezuela, “that's not going to be as big of an immediate benefit to Maduro,” Grais-Targow said.

She also said other companies could start lobbying the U.S. for licenses if Chevron receives one, pointing to India’s Reliance Industries and China’s national oil companies. “I think if Chevron has a license, we could see those companies then moving to ask the U.S. for permission to import or feeling emboldened to do so,” Grais-Targow said.

But even if the U.S. lifts some restrictions to secure Venezuela as an oil supplier to help tame rising gas prices, it’s unclear if that step would lead to any concessions from Maduro on human rights or free elections. “The Chevron license is not the first time that the United States has tried to entice the Maduro regime to the table,” said Wilson Center Executive Director Carrie Filipetti, the State Department’s former deputy special representative for Venezuela. “The Biden administration has been doing what it said it would do, which I think is very important for trust-building measures, and yet what ends up happening is they just keep having to give more and more, because we have not seen a shift from the Maduro regime.”

Smith said the Maduro regime is “very much in power,” and the likelihood of a Chevron license “leading to meaningful concessions” on human rights issues “is fairly low.” Still, the Biden administration may move forward with the license, Smith said, partly because of political pressure to stem high oil prices.

“I think the likelihood of some change, I think, is very much there,” he said. “And I think that the ability for the president to make good on that offer, I think, is very real.”