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How to Respond to Venezuela’s Humanitarian Emergency
How to Respond to Venezuela’s Humanitarian Emergency
A Twist in Caracas: Is a Venezuela-U.S. Reboot on the Cards?
A Twist in Caracas: Is a Venezuela-U.S. Reboot on the Cards?
People line up to try to buy toilet paper and diapers outside a pharmacy in Caracas, Venezuela, on 16 May 2016. REUTERS/Carlos Garcia Rawlins

How to Respond to Venezuela’s Humanitarian Emergency

Numbers tell the grim tale of Venezuela’s continuing slide into socio-economic ruin. With 1.6 million people fleeing the country since 2015, international donors should step up aid to neighbouring states, while concerned parties fine-tune pressure for political change in Caracas and prepare for worst-case scenarios.

Colombia’s hosting of a meeting on Venezuela today stands as an important opportunity to draw attention to the severity of the nation’s crisis, the suffering of its people and the burden it puts on its neighbours. It is also an opportunity to agree on broad outlines of a political and humanitarian response. The meeting should focus on reaching an international consensus on how to deal with mass migration from Venezuela, how to prod the government toward political compromise and how to prepare for sudden shifts in the country’s deepening crisis.

Facts and numbers tell the story. Venezuela’s economy has shrunk by roughly half since President Nicolás Maduro took office in 2013, due primarily to economic mismanagement and the ensuing collapse of oil production. In late 2017, the economy entered a hyper-inflationary spiral; prices currently are rising by over 200 per cent per month. Critically dependent on imports, and lacking hard currency, the country faces acute shortages of food, medicines and other vital goods. Many essential medicines have vanished from pharmacies while others register shortages of 85-90 per cent. The public health service has collapsed, while the provision of utilities such as water, electricity and gas is suffering prolonged disruption. Malaria, measles, diphtheria and tuberculosis epidemics affect large parts of the country, despite the quasi-eradication of these diseases in the past, and threaten to spread to Venezuela’s neighbours.

Up to 90 per cent of Venezuelans live in poverty and over a third cannot afford to eat three meals a day. Thousands scavenge for food in the garbage. In the past three years, according to figures from the International Organisation for Migration, some 1.6 million have fled the country, sparking a major humanitarian crisis and putting acute strains on the social services and job markets of receiving countries, notably Colombia, Ecuador and Peru, as well as in the northern Brazilian state of Roraima.

Meanwhile, from the Venezuelan government comes little but blanket denial. It claims the crisis is an invention of foreign media, blames shortages on U.S. financial sanctions introduced in August 2017 and refuses to allow in humanitarian aid.

The country is also embroiled in a political crisis. In the 2016 elections, the opposition took control of parliament, but since then the government has blocked its attempts to achieve peaceful political change. The government has used its control of the security forces and the judiciary to repress protests and jail, exile or ban its opponents. Most of the opposition boycotted the 20 May presidential election and the results were rejected by the U.S., the European Union and the fourteen-strong Lima Group of Latin American and Caribbean nations, leaders of which had been supporting negotiations between government and opposition until January of this year.

Three series of steps are in order:

  • Immediate measures to address the migration and humanitarian crisis: Those countries that are bearing the brunt of the migration crisis need urgent, additional assistance from donors. The Inter-American Development Bank (IDB) estimates that Colombia alone needs $1.6 billion a year to deal with the migratory inflow from Venezuela, far more than the circa $50 million provided by the U.S. and EU this year. This support should be funnelled through properly coordinated international mechanisms, including the offices of the new UN envoy for the Venezuelan migration crisis, and draw on pooled funding mechanisms under the supervision of the World Bank and the IDB. In return, Latin American countries receiving Venezuelans should ensure that migrants are eligible for public services and programs of social and economic integration. They also should honour promises made at a recent Latin American summit in Quito not to close their borders or demand unobtainable travel documents from migrants, as Peru and Ecuador threatened to do in August. Foreign donors should strengthen and support civil society groups providing humanitarian aid within Venezuela, while Latin American and European countries, as well as international organisations, must continue to insist to President Maduro that such aid is not a tool of foreign influence but a means of preventing even worse human suffering.
     
  • Pressure for political progress: Pressure will need to be brought to bear on the Maduro government to achieve change. Sanctions are one such tool. While the U.S., Canada and the European Union have imposed some restrictive measures, most effective would be similar targeted sanctions – travel bans and assets freezes, for example – applied by Latin American governments against top Venezuelan officials. These penalties should be combined with clear signals that they would be progressively lifted in response to commensurate steps by the government to engage in meaningful negotiations with the opposition and relax harassment of opposition leaders and parties. Regional sanctions would be almost unprecedented and send a stronger signal than those imposed by Western countries alone.

    Some steps should be avoided. These include sanctions that would do broader collective harm by affecting strategic economic sectors such as the oil industry (eg, by banning Venezuelan oil exports to the U.S.), or otherwise inflict more suffering on the population. The same goes for more extreme measures. In recent weeks, reports have surfaced suggesting that the U.S. president had joined some in the opposition in floating the idea of military intervention, a position that a recent public statement by Organization of American States Secretary-General Luis Almagro suggests he also entertains. The solution to Venezuela’s crisis does not and cannot lie in such scenarios, which, if carried out, almost certainly would prove disastrous, and which in being proposed merely serve to deepen the Venezuelan government’s siege mentality. Military intervention would risk plunging the country into further instability and low-intensity conflict due to the abundance of illegal weapons and the presence of violent non-state armed groups, as well as the lack of consensus over who should run a putative transitional government.

    Only a negotiated transition, likely involving some form of guarantee for top officials in the Maduro government, toward the restoration of more inclusive politics and representative government, the reintroduction of constitutional checks and balances, and the economy’s stabilisation offers the hope of a viable and sustainable solution.

    China could play a key role, given its considerable leverage in Venezuela. While it remains close to the Maduro government, its interests would be far better served by a stable transition that respects its investments and Venezuela’s outstanding debt to Beijing, estimated at $20 billion.
     
  • Preparation for a worst-case scenario: Even as they proceed on the former two tracks, Latin American governments and other international partners should be ready to adjust to any sudden political change in Caracas, most likely the result of factional tensions and resulting changes in leadership. The emergence of a more conciliatory Venezuelan leadership would provide an opportunity for foreign powers’ re-engagement in political negotiations and economic stabilisation. A more traumatic division or rupture in the ruling coalition, on the other hand, could exacerbate the economic and humanitarian crisis. In this case, regional states and donors should be prepared to further step up aid to affected neighbours and to pressure Venezuela’s allies on the UN Security Council into recognising the threat to international peace and security that the crisis poses.

 

American and Venezuelan flags are seen as members of the Venezuelan community react after the Biden administration said it would grant temporary protected status to Venezuelan migrants living in the United States, in Doral, Florida, U.S. March 9 2021. REUTERS/Marco Bello

A Twist in Caracas: Is a Venezuela-U.S. Reboot on the Cards?

High-ranking U.S. officials made a surprise trip to Venezuela’s capital, hinting at efforts to improve bilateral relations and end the standoff between the Maduro government and its opponents. The backdrop is Russia’s invasion of Ukraine, which just might be changing strategic calculations an ocean away.  

An unexpected visit to Caracas by the highest-level U.S. delegation in over five years has raised the prospect of a reboot in efforts to resolve Venezuela’s protracted political and humanitarian crisis. A flurry of statements from both sides, meanwhile, has planted the notion that Venezuelan-U.S. relations can be revived. It was the U.S. that took the initiative, suddenly reversing its refusal to talk directly to President Nicolás Maduro’s government three years after it closed its embassy in Venezuela and cut diplomatic ties. The move was all the more startling in light of Maduro’s vocal support for Russia following its invasion of Ukraine. Yet it is precisely events in eastern Europe that seem to have triggered Washington’s about-face: the Biden administration’s decision to ban imports of Russian oil and gas in retaliation for the assault on Ukraine means it must scramble to find alternative sources. Beyond the question of access to fuel, however, the significance of this partial détente for the conflict in Venezuela and for U.S. policy in Latin America remains hard to gauge.

The delegation that visited Venezuela on 5-6 March, headed by Juan González of the National Security Council – the White House’s senior Latin America adviser – also included Roger Carstens, special envoy for hostage affairs, who has been seeking the release of a number of U.S. citizens Washington regards as unjustly imprisoned in Venezuela. In what is seen as an encouraging confidence-building measure, the Maduro government freed two of the captives as a result of the meeting.

The Biden administration has played down the oil supply angle, insisting that the trip was planned months ago and that talks on fuel imports are “not an active conversation at this time”. But there can be little doubt that energy concerns lay behind its choice to kickstart dialogue with a government it has ostracised since January 2019. The Western Hemisphere’s largest known hydrocarbon reserves lie in the subsoil and under the coastal waters of Venezuela. But there is a problem. U.S. sanctions impede imports from Venezuela and threaten dire consequences for third parties that facilitate them. Coming on top of years of mismanagement and corruption, the sanctions have helped wreck the once flourishing Venezuelan oil industry, which now produces only a fraction of its former three million barrels per day and will be hard pressed to ramp up production again quickly.

The surprise U.S. visit to Caracas has triggered two parallel processes. On one hand, talks appear to be under way to determine whether, and how, Venezuelan oil can start flowing again to U.S. refineries. On the other, the Maduro government and the Venezuelan opposition are assessing the new diplomatic configuration to see what form negotiations on a political and humanitarian agreement might take. Meanwhile, Latin American governments, including those in Cuba and Nicaragua, are wondering, along with their foreign allies, what Washington’s apparent new willingness to engage what it perceives as a hostile government will mean for the region as a whole.

An Oily Relationship

It was U.S. companies that developed the Venezuelan oil industry a century ago, turning the country into the world’s top exporter for a time. When World War II broke out, Washington moved swiftly to ensure continued access to Venezuelan production, which played a vital role in the Allied war effort. Oil is the mainstay of the Venezuelan economy and the natural market for it is the energy-hungry U.S. But the relationship began to sour in 1998, with the election of President Hugo Chávez, who sought to free Venezuela from what he saw as a neo-colonial relationship with “the empire”. Among other policy changes, he reoriented oil exports to the Asian market and to China in particular. Simultaneously, the U.S. was developing its shale industry, stimulated by the same high oil prices that helped keep Chávez enduringly popular even as he led a charge to weaken Venezuela’s democratic institutions. These two factors meant that when relations broke down, the disruption was less traumatic for the U.S. market than if it had happened decades earlier.

Venezuela ... has seen [oil] production tumble from around 3.4 million barrels per day at the turn of the century to less than a quarter of that today.

Venezuela, however, has seen production tumble from around 3.4 million barrels per day at the turn of the century to less than a quarter of that today. Even as prices began to rise steeply once more, the country was poorly equipped to take advantage: its crude, though cheap to produce, sells at a heavy discount thanks to sanctions and its low quality, and incurs much greater transport costs en route to Asia than if it were sold to U.S. Gulf Coast refineries. The country’s infrastructure, including not only refineries and pipelines but also roads and electrical grids, is in serious disrepair. Heavily indebted and in default, excluded from the world’s main financial markets and plagued by crime and highly partisan and often corrupt government, Venezuela is unable to raise the capital required to make the improvements it needs.

On paper, there is scope for a rapid deal between Caracas and Washington in which the latter licenses foreign oil companies not only to produce and export oil, but also to receive payments from Venezuela’s state oil company PDVSA, without actually lifting sanctions. Oil major Chevron, which has long been pushing for such a deal, could be allowed to return to the rules in place prior to April 2020, under which it was not only able to produce but also export – with the important difference that now it might be allowed to send its oil to U.S. Gulf Coast refineries, which were designed with Venezuelan crude in mind.

In the short term, Venezuela cannot increase capacity to compensate for the loss of imports into the U.S. from Russia, which in 2021 amounted to almost 700,000 barrels per day, of which 200,000 barrels were crude oil and the remainder oil products. That is almost as much as Venezuela’s current export total. In the near future, Venezuelan exports cannot even make a dent in the world price of crude. But analysts say there is margin for Chevron to add some 120,000 barrels to current production, potentially upping that number to 240,000 within three months. Depending on the conditions, that could allow Chevron to recoup some of the massive debt it is owed by PDVSA.

Breaking the Political Deadlock

A bargain solely involving oil licences but which leaves Venezuela’s political dispute largely untouched would neither mollify the Venezuelan opposition and U.S. critics of the détente nor be entirely satisfactory to the Maduro government. It is on resolution of this dispute, which in 2019 saw two rival presidents spar for control of the country, that both the opposition’s aspirations for a free and fair election and the Venezuelan government’s longed-for economic recovery and return to full international legitimacy depend.

President Maduro was re-elected in May 2018 in what the U.S. and many of its allies regarded as a rigged election. The following year, the Trump administration recognised Juan Guaidó, head of the opposition-run parliament, as acting president of Venezuela and imposed sweeping sanctions on Maduro’s government in a failed bid to topple him. The sanctions remain in place under President Joe Biden, albeit with the condition that the White House would ease them should Maduro take clear steps toward free and fair elections. Although a new legislature, overwhelmingly dominated by government loyalists, was seated in early 2021 and Guaidó’s popularity is now as low as Maduro’s, Washington, along with a half-dozen allies, still recognises the opposition’s “interim government”. It is under huge pressure to maintain this policy from powerful players in the U.S., including the Democratic chair of the Senate Foreign Relations Committee, Robert Menendez, and political leaders from across the spectrum in the state of Florida. That recognition, however, looks more than a little shaky now that senior U.S. government representatives – including Ambassador James Story, who is accredited to Guaidó’s administration though based in neighbouring Colombia – are dealing directly with Maduro.

The economy has shrunk by more than three quarters since Maduro came to power almost a decade ago.

At the same time, despite lip service to the statist economic policies favoured by his predecessor Chávez, Maduro has been forced by desperately straitened circumstances to carry out a chaotic series of market reforms, eliminating exchange and price controls, allowing the U.S. dollar to circulate freely and returning state assets to private hands. Even the oil industry, a totem of Venezuelan nationalism, is not off limits. But the economy has shrunk by more than three quarters since Maduro came to power almost a decade ago, and the anemic growth it is now beginning to see is far from a real recovery.

Facing an election in 2024, and badly in need of a boost to his dismal poll ratings, Maduro is naturally keen for a deal with the U.S. that would see sanctions eased. But he is much less enthusiastic about the principal condition Washington and the mainstream Venezuelan opposition have attached: namely, that he allow a free and fair presidential contest. Accused of everything from drug trafficking to crimes against humanity, he and his closest collaborators naturally fear the consequences of losing power, quite apart from the likely impact on their income and wealth.

Back to Negotiations?

Pressing ahead with the talks between government and opposition facilitated by Norway could provide the key to resolving these differences. The first series of negotiations was held between May and August 2019, with sessions in Oslo and Barbados. The government withdrew when the Trump administration further tightened sanctions, and the Guaidó-led opposition declared the process “exhausted” soon thereafter. The opposition and some of its foreign allies proceeded to explore military options, seeking first to have Venezuela’s neighbours invoke a mutual defence treaty. When that option failed to gain traction, Guaidó’s team set in motion a tragicomic “invasion” of Venezuela by a handful of ill-equipped volunteers and mercenaries in May 2020. Even so, against the backdrop of the deepening humanitarian crisis, the COVID-19 pandemic and signals from the Maduro government that it might be willing to make concessions, negotiations restarted with a different format in August 2021 in Mexico City.

The Mexico talks are governed by a memorandum of understanding committing the parties to seek agreements on issues such as political rights and electoral reform. A deal between government and opposition to discuss the use of Venezuelan funds frozen by the U.S. to address the country’s humanitarian emergency seemed to mark an early breakthrough, although it has yielded no tangible results to date. These talks were also suspended, however, when the Venezuelan government withdrew once more, angered by the October extradition from Cape Verde to the U.S. of a close Maduro ally, the Colombian businessman Alex Saab, whom the U.S. has charged with money laundering.

Following talks with the U.S. delegation to Caracas, Maduro publicly declared that he was willing to have his representatives resume negotiations, although it remains unclear whether, and if so when, they might go back to Mexico. Maduro also made no mention of Saab when he expressed his willingness to return, although he has probably not dropped the demand for concessions in that regard. The opposition has also reiterated its wish to start talks again, and Washington has insisted on the need for a comprehensive agreement ending in fair polls.

Discussions are under way to work out the details. An issue that will have to be resolved is the involvement of Russia, which was designated at the outset, along with the Netherlands, as an “accompanying country”. In present circumstances, the Russian government is hardly suited to play this role, so a substitute agreeable to both sides would likely have to be found. An even trickier question is the composition of the opposition delegation, which the government would like to see broadened to include parties from outside the Unitary Platform under Guaidó, including those that took part in the 2020 legislative elections boycotted by the mainstream opposition. As it is, the Platform is anything but united, and insiders have even warned of a possible split between Guaidó’s party, Voluntad Popular, and the other three main coalition members. Meanwhile, relations between the Platform and other opposition parties are marked at best by mutual suspicion and in many cases by overt hostility. In several cases, the government has used its control of the Supreme Court to divide opposition parties, handing their symbols and assets to a faction antagonistic to the current opposition leadership.

Room for Progress

Even if these issues can be resolved, there is clearly a risk that, once again, the two sides will embark on negotiations in which one or both are reluctant to make the necessary concessions. The government has frequently given the impression that it uses talks primarily to gain time, as well as to sow discord in opposition ranks, while having no intention of entertaining any risk that it will lose power. The opposition appears eager to negotiate but remains divided over how far it should go in offering concessions to what many of its leaders see as a dictatorial regime. The opposition’s main foreign backer, the U.S., has not formally changed its position on sanctions relief. In February, the U.S. issued a joint statement with nineteen other countries and the European Union saying, among other things, any lifting of sanctions would require “meaningful progress” toward free and fair elections within the framework of the Mexico City talks.

Progress toward a deal between government and opposition is likely to be arduous in these conditions, but it is not impossible.

Progress toward a deal between government and opposition is likely to be arduous in these conditions, but it is not impossible. Two compromises are likely to be required from the Maduro government if a settlement is to be reached. The first would involve providing the conditions for genuine electoral competition in 2024 – potentially including the reforms set out in the EU Observation Mission during the 2021 regional elections – in return for the progressive lifting of sanctions. For the government, there can be no question of a level playing field unless sanctions are at least partly lifted. The second and potentially more troublesome issue concerns post-electoral guarantees. As Crisis Group has previously argued, losers must be certain that they will not be persecuted or barred from participation in formal politics. Giving such assurances will require a much more comprehensive settlement, almost certainly involving constitutional reform and some form of transitional justice scheme. But government officials also make clear that they would chafe at any opposition presidential candidate whom they perceive as directly threatening the interests of chavismo and its supporters. They express particular antipathy for Guaidó and his Voluntad Popular party.

As for the opposition, its fundamental split has always been between those who will not settle for anything less than the prompt removal of chavismo from power and those who are prepared to negotiate some form of political coexistence with Maduro and his allies that would eventually allow for a peaceful alternation in power determined at the ballot box. Despite the former camp’s evident failure, in alliance with the Trump administration, to achieve its objective via “maximum pressure”, this faction continues to enjoy a privileged status in Washington. A vital question is how heavily the global crisis the U.S. now confronts will weigh in Washington’s calculations over its Venezuela policy – and the potential benefits the Biden administration perceives in a shift in tack – compared to the backlash from the Venezuela lobby in Congress and in Florida if and when negotiations proceed.

The Western Hemisphere in the New Global Order

Beyond resolving Venezuela’s protracted crisis, but inextricably bound up with it, lies the question of how relations between the U.S. and the Latin American and Caribbean region as a whole could evolve as a result of the tectonic shift in geopolitics brought on by Russia’s war in Ukraine. It is too early to draw firm conclusions, but some aspects of future U.S. engagement in the region are already coming to the fore.

Long before Russia’s invasion, many in the U.S. foreign policy establishment considered that neither Moscow nor Beijing had any business planting flags in the Western Hemisphere. Members of the Trump administration openly spoke of reviving the 19th-century Monroe Doctrine, which defined the Americas as a U.S. sphere of influence. During the Cold War, Washington helped instal and propped up a long series of repressive, authoritarian regimes whose common feature was their espousal of anti-communism. Since the Soviet Union fell, however, Latin American countries have been largely free to determine both their domestic policies and their international alliances, while Washington – somewhat unsuccessfully – sought to bind the region together primarily through trade and adherence to tenets of liberal democracy. Many emerging governments, particularly of the left, often inspired by chavismo and the Cuban revolution, looked to broaden their relations, taking advantage of the new, multipolar world.

It would be neither practical nor appropriate for the U.S. to attempt to revive a Cold War-style “spheres of influence” approach to relations with neighbours to the south.

It would be neither practical nor appropriate for the U.S. to attempt to revive a Cold War-style “spheres of influence” approach to relations with neighbours to the south. Indeed, it would run directly counter to the argument that Ukraine should be free to align itself however it chooses.

Even so, Washington may well calculate that it has an opportunity to prise Venezuela from the grip of Russia in particular. The Maduro government has gone out of its way to reiterate that it has no intention of re-evaluating its foreign policy orientation. Yet rather than decrying this stance, a sensible approach for the Biden administration would be to let events take their course while seeking, where possible, new routes to engagement with countries wary of the U.S. regional footprint. An impoverished and isolated Russia cannot in the medium or long term compete effectively for influence in the Western Hemisphere. At the same time, the decision by Cuba and Nicaragua, stalwart allies of Caracas and longstanding friends of Moscow, to abstain from – rather than voting no to – the UN General Assembly condemning Russia’s invasion of Ukraine demonstrated that their aversion to the use of military force against a sovereign state weighed in their calculations alongside relations with Moscow (Venezuela could not vote due to its failure to pay its UN dues).

China’s reaction to the war and the way it positions itself in Venezuela also have major significance for future U.S. policy. Beijing embarked on a lending spree in Venezuela during the Chávez years and got badly burned. Billions of dollars were simply stolen or wasted on infrastructure projects that were never completed. China’s bet that the underlying loan guarantee – Venezuela’s massive oil deposits – meant repayment was assured proved ill-advised when the sharp downturn in crude prices exposed the corruption and mismanagement at PDVSA. In theory, Venezuela’s crude exports to China would offset the debt, which stands at about $18 billion, but that scheme is not working. Nor are China’s oil concessions in Venezuela producing a profit. To make matters worse for Maduro, the discounts Russia is now obliged to offer to export its crude oil, located much closer to China, threaten to shut Venezuela out of the Chinese market.

Talks have been under way between the Maduro government and China about investments in Venezuela’s collapsing infrastructure, including the electricity industry. If and when there is a political settlement in Venezuela and sanctions are lifted, China is well placed to assist in, and benefit from, what will be a long and costly economic recovery. Washington will not much like such significant Chinese involvement, and it has an interest in moving swiftly to ensure that it can take advantage of any opening instead. Yet Beijing has a clear head start, and provided that its outstanding loans and investments were guaranteed, it would have no good reason to oppose a political settlement between government and opposition.

It is well past time for the region as a whole to make its voice heard and ... adopt common policies toward shared problems.

Lastly, it is well past time for the region as a whole to make its voice heard and, following the devastating health and economic effects in Latin America of COVID-19, adopt common policies toward shared problems. One pernicious effect of the hostility between chavismo and its hardline opponents has been the intense polarisation of Latin American politics, with Venezuela’s severed relationship with its neighbour Colombia standing out. These tensions have spoiled the Organization of American States as a forum for resolving disputes, while bodies set up ostensibly to replace it have failed to offer any effective alternative. As the region undergoes further political churn, there is an opportunity to leave the rancour behind. Ideally, the U.S. would support the creation of new multilateral mechanisms while respecting the diversity of opinion within them.

What’s Next?

Direct talks between Washington and Caracas could offer a chance to break a political deadlock that arose in large part due to Maduro’s intransigence but also partly because of U.S. reluctance to move on sanctions relief and insistence that Guaidó’s “interim government” is the only valid representative of Venezuela’s opposition. Employed judiciously, the leverage the U.S. has with regard to sanctions and, in particular, the possibility for Venezuela to resume oil exports to the U.S. market, could achieve progress in resolving the political and humanitarian crisis, potentially through a resumption of the Mexico talks.

Although a route forward is discernible, it is strewn with obstacles. An agreement on a credible presidential election in 2024 that secures the consent of all contenders is not around the corner. The road back to a legitimate, functioning state in Venezuela is likely to be long and bumpy. But the only way to achieve a sustainable political settlement acceptable to most Venezuelans is through negotiations that are supported, or at least not sabotaged, by the major international allies of both government and opposition, including first and foremost the U.S., but also on the government side China, Cuba and, in an ideal scenario – however unlikely it might now appear – Russia. From unlikely quarters, an opportunity might have emerged to set that process in motion.