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US Policy On Venezuela’s Oil Exports Sparks Controversy Amid Disputed Elections

Amid a disputed 2024 election in Venezuela, the US continues to allow Chevron to pump oil, a decision that has sparked criticism both from opposition leaders in Venezuela and lawmakers in the US. (Read more below)

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US Policy On Venezuela’s Oil Exports Sparks Controversy Amid Disputed Elections


In 2022, Venezuela appeared to be turning a new page. After years of authoritarian rule and crippling economic sanctions, President Nicolás Maduro agreed to pursue a democratic presidential election. In exchange, the United States extended a financial lifeline: a permit for Chevron, the US energy giant, to pump and export Venezuelan oil. This agreement rejuvenated Venezuela’s oil industry, which had long been stagnant under the weight of sanctions. Massive tankers once again docked on Venezuela’s coast to take crude oil destined for the US.

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However, despite promises of a fair and free election, Maduro’s leadership remains in power, having been sworn in for a third six-year term in January 2024, despite credible evidence suggesting that his opponent, Edmundo González, had won the vote. The election’s legitimacy has been widely questioned, and the opposition claims that the financial benefits from the Chevron deal have allowed Maduro’s government to strengthen its hold on power. This situation has sparked growing calls from the US opposition and Congress to revoke the permit that has been seen as a lifeline for Venezuela’s crumbling economy.

According to opposition figures in Venezuela, the Chevron deal has helped Maduro’s regime generate billions of dollars in revenue from oil exports. The White House has so far ignored these calls to cancel the permit, citing that its policy on sanctions towards Venezuela is continually reviewed. President Joe Biden himself told reporters last week that he “didn’t have enough data” to make a decision about the oil-related sanctions before his term ends, as reported by The Associated Press.

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Venezuela, once the owner of the world’s largest proven oil reserves, has seen its oil production plummet in recent decades. Under former president Hugo Chávez, production reached 3.5 million barrels per day in 1999, but by 2020, this had fallen to under 400,000 barrels per day. With the 2019 sanctions under former President Donald Trump, US companies like Chevron were forced to halt their operations in Venezuela. Chevron had been involved in joint ventures with PDVSA (Venezuela’s state-owned oil company), and in 2019, the joint ventures produced about 200,000 barrels a day. But by 2020, Chevron had to wind down production due to the tightening US sanctions.

The situation remained dire for Venezuela until 2022 when Chevron received a license to export oil to the US, which provided a significant boost to the nation’s oil output. By 2024, production from the joint ventures had reached over 200,000 barrels per day, marking a full recovery to pre-2020 levels. While the license prohibits Chevron from paying taxes or royalties directly to Venezuela’s government, the revenue generated from oil sales still indirectly supports the regime. As economist Francisco Rodríguez, quoted by The Associated Press, noted, the revenue from Chevron’s oil purchases is used to fund the government’s treasury through taxes and royalties.

Despite this economic relief, the terms of the agreement between Chevron and Venezuela’s government remain opaque. Neither the Venezuelan government nor Chevron has disclosed the details of the deal, leaving many critics in the dark about how exactly the revenue is being spent. José Guerra, a former economic research manager at Venezuela’s Central Bank, told The Associated Press that the financial impact of the Chevron license is most visible in Venezuela’s foreign reserves, which have increased by roughly $1 billion since February 2022. This influx of dollars is used, in part, by the government to maintain an artificially low exchange rate between the US dollar and the bolívar, the Venezuelan currency.

Opponents of the deal argue that the US government’s decision to maintain Chevron’s oil exports has done little to foster democracy in Venezuela. Following the controversial 2024 election, opposition leaders such as Rafael de la Cruz have urged the Biden administration to revoke Chevron’s permit. They claim that the deal has allowed Maduro’s government to rake in an estimated $4 billion, which critics argue is being used to prop up his increasingly autocratic regime. “In the end, one wonders, and quite rightly so, why the Biden administration continues to maintain a license whose objective was not achieved,” de la Cruz said, as reported by The Associated Press.

Maduro’s re-election, which took place on July 28, 2024, was marred by allegations of vote manipulation. The National Electoral Council, which is loyal to Maduro’s government, declared him the winner hours after polls closed, despite evidence from the opposition showing that González had won by a wide margin. Observers from the United Nations and the US-based Carter Center, who had been invited by the government to monitor the elections, validated the opposition’s tally sheets as legitimate, further casting doubt on the credibility of the election.

In light of these concerns, former US diplomat Elliot Abrams has argued that the Biden administration should reimpose full sanctions on Venezuela. “The election was stolen. Therefore, the basis for any lifting of sanctions doesn’t exist,” Abrams stated, according to The Associated Press. Despite this, President Biden has remained hesitant to tighten sanctions, explaining that the impact of such a move is still being reviewed. He also expressed concerns about what would happen if Venezuela’s oil market were replaced by countries like Iran or Russia, which could potentially benefit from the situation.

Venezuela’s economic struggles are deeply intertwined with its political crisis. Since Maduro became president in 2013, over 7.7 million Venezuelans have fled the country, escaping dire conditions of poverty, food insecurity, and violence. Francisco Rodríguez has warned that revoking Chevron’s license or further tightening sanctions could worsen the crisis, leading to a massive new wave of emigration. He estimated that over 800,000 Venezuelans could leave the country between 2025 and 2029 if the permit is revoked, potentially exacerbating the already severe humanitarian situation.

Despite the ongoing controversy, Maduro continues to resist international pressure. “Venezuela will not be colonized or dominated, neither by carrot diplomacy nor by stick diplomacy,” he proclaimed after his inauguration, reaffirming his stance against US influence over the country’s affairs. As the US weighs its options, the future of the Chevron deal—and its impact on Venezuela—remains uncertain.

Also Read: Ceasefire In Gaza Begin: Israel Receives Hostage List For Release From Hamas


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