Hitting Venezuela's Government Where It Hurts

5 MINS READFeb 28, 2017 | 09:00 GMT
Washington still has the upper hand over Caracas.

Increasingly, the worries of Venezuela's government are extending beyond the domestic political opposition. Not yet two months into his tenure, U.S. President Donald Trump has demonstrated his intention to increase the pressure on Venezuela's government, whose imperatives are at odds with those of his own administration. Washington appears ready to impose further sanctions on Venezuelan officials and entities, perhaps even against the country's vital state oil and natural gas company, Petroleos de Venezuela (PDVSA). Trump, moreover, has already discussed the matter with regional leaders, including the presidents of Peru, Argentina, Colombia and Panama. As the political left loses both influence and elected offices across Latin America, right-leaning governments across the region may be more willing to heed Washington and take a tougher stance on Venezuelan President Nicolas Maduro's administration. Venezuela's leaders, in turn, could find themselves facing a regionwide challenge to their continued rule.

Notwithstanding their historical reluctance to interfere in one another's affairs, South America's leaders are preparing to deal with the fallout of Venezuela's unraveling. The Common Market of the South (Mercosur) voted in December 2016 to partially suspend Venezuela from the organization, a sign of growing enmity toward Maduro's government in Brazil and Argentina, the bloc's two largest members. To further isolate Venezuela, Washington could impose additional targeted sanctions against institutions and people in the country while also lobbying regional governments to adopt a harsher position on the Maduro administration.

The U.S. efforts could eventually lead regional heads of state to sponsor a vote in the Organization of American States (OAS) to determine whether the Venezuelan government's actions have violated the organization's Inter-American Democratic Charter. Maduro's administration, for instance, has repeatedly postponed constitutionally mandated regional elections to ensure a strong performance from the ruling United Socialist Party of Venezuela (PSUV). In addition, Venezuela's intelligence service has refused to release important prisoners — including Leopoldo Lopez, a member of the political opposition, and Joshua Holt, a U.S. citizen — despite objections from Washington and concerns from other parts of the country's government, such as the Defense Ministry.

Forming a Regional Front

The OAS would be a logical venue for the United States to try to censure the Venezuelan government. After all, the Inter-American Democratic Charter calls on member states to act to preserve democracy in other signatory countries, mainly by suspending those that defy the pact's terms. And even if the organization declined to take action against Venezuela's government, a vote finding that Caracas had broken the charter could justify heavier U.S. sanctions against the country. It could also prompt other Latin American states to reconsider their own policies toward Caracas. Governments in the region could, for example, go after the assets of Venezuelan officials under investigation or deny them sanctuary in the event that greater social unrest drives them to exile.

Already, the deteriorating economic situation in Venezuela has prompted its citizens to flee to Brazil and Colombia. Both countries are slated to hold elections next year that will play a significant role in determining their policies toward the Maduro administration. If Colombians elect a leader from the conservative Democratic Center party in 2018, the government in Bogota would be more likely to join U.S.-led efforts to isolate Venezuela. Brazil's voters, on the other hand, could usher in a more leftist government, for instance under former President Luiz Inacio Lula da Silva's Workers' Party — a result that would likely complicate Washington's attempts to bring the country into an alliance against Venezuela.

A Simpler Solution

In fact, the U.S. government may find it easier to keep targeting Venezuela through sanctions than to organize a regional response. Venezuela still has allies in the OAS, particularly among the organization's smaller Caribbean and South American nations, many of which have historically depended on its fuel supplies. Given their ties with Caracas, member states Haiti, St. Kitts and Nevis, Grenada, Antigua and Barbuda, St. Vincent and the Grenadines, Guyana, and Suriname would be loath to vote against Venezuela. And if other member countries that are typically wary of cooperating politically with the United States, such as Chile, were to abstain from a vote to suspend the country from the OAS, Caracas' allies could foil that plan to pressure Maduro's government.

As Washington works to crack down on Maduro's government in the coming months, the security forces and civilian leadership of the PSUV will probably increase their support for the president. Venezuela's political elite have all but run out of other options. Facing mounting domestic and international pressure, the government's most prominent members will be hesitant to upset the status quo. The Maduro administration, meanwhile, will continue making overtures to the opposition Democratic Unity Roundtable to try to encourage at least some faction of the divided coalition to join it in negotiations sponsored by the Vatican. The talks would not only give the government the appearance of engaging with its opposition, but they would also buy time for Maduro's administration to look for ways to stabilize the collapsing economy and avoid defaulting on foreign debt.

Regardless, the United States will still have the upper hand. If the Trump administration imposes heavy sanctions on PDVSA, thereby preventing U.S. companies and businesses subject to Washington's jurisdiction from doing business with the oil firm, it could herald Maduro's ruin. Caracas depends on oil for about 95 percent of its total export revenue, and it has already had to slash imports over the past few years as a result of limited production capacity and sanctions. In 2016, Venezuela's imports came to just $18 billion, a fraction of the $66 billion they reached in 2012. Tough sanctions on the state oil and gas company would only intensify the economic crisis and probably also the divisions within the government over whether Venezuela should continue down the path of international isolation. Whether more sanctions would cause the Maduro administration to change course depends on the ruling party's internal dynamics.

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