On 17 April the US government announced that it will not renew a six-month licence offering relief from oil and gas sanctions against Venezuela, because the government of President Nicolás Maduro has “fallen short” on its commitments to allow free and fair presidential elections.
Analysis:
US officials say they are not renewing General Licence 44 which allowed oil and gas companies to do business with the country and to export Venezuelan crude to the international market. Companies are being given 45 days to shut down their operations. Under the general licence the country’s oil production had revived from a low of 400,000 barrels per day (bpd) in 2020 to over 800,000bpd in the first quarter of this year. US oil company Chevron, which accounts for around one-fifth of Venezuelan exports, will be unaffected, since it operates under an individual licence, as do a handful of others.
- The economic impact of the US move is open to debate. Venezuelan oil analyst Francisco Monaldi told the UK’s Financial Times that renewed sanctions would “slightly impact” non-Chevron output. The latest estimate from Venezuelan consultancy Ecoanalítica is that the country will lose US$3bn in foreign revenue and up to 3.6% of GDP. The exact impact will depend on whether the US issues more individual licences, which it has said will be considered on a case-by-case basis.
- Speaking to reporters off the record, a senior US official said Venezuela had met some commitments it made under last year’s Barbados agreement. It had set an election date (28 July), updated the electoral register, conducted a prisoner exchange, and “started a process to allow international election observation”.
- But the Venezuelan government had also barred María Corina Machado, who won the primary elections for the opposition coalition Plataforma Unitaria Democrática (PUD), and blocked her designated stand-in, Corina Yoris, from taking part in the presidential race. This was part of “a continued pattern of harassment and repression against opposition figures and civil society”, the US official told reporters.
- The Caracas government responded with defiance, but left the door open to potential further negotiation. Jorge Rodríguez, the president of the national assembly and chief negotiator with the US, said Washington had broken its word and that Venezuela had never agreed to allow “people who have violated the constitution and incited violence” to take part in the elections (a reference to Machado).
- On the other hand, in a comment earlier this week, Maduro said he would “never close the door on dialogue” with the US.
- The oil minister, Pedro Tellechea, said “I don’t think these measures will have any effect”, pointing out that the US is still offering a Licence 44A for oil and gas companies to negotiate individual terms for sanctions waivers.
Looking Ahead: In the short term, Machado and the opposition PUD are seeking an agreement to back one of the dozen candidates who are already registered with the national electoral council (CNE). If the government intervenes again to block or manipulate that process, there remains a possibility that US sanctions will be tightened further.
