The U.S. eases sanctions on Maduro in return for political promises.
The Editorial Board
In negotiating with oil-producing dictators, the Biden Administration has a consistent strategy: Make concessions in hope the other side will return the favor. It hasn’t worked with Iran, and now the White House is trying with the thugs who run Venezuela. What could go wrong?
The U.S. lifted Trump-era sanctions on Caracas over the weekend, renewing a license for Chevron to pump oil again in its joint ventures with the state-owned oil company PdVSA. The U.S. will also unfreeze $3 billion in Venezuelan assets for what it says will be “humanitarian” needs. In exchange, dictator Nicolás Maduro is promising to negotiate free and fair elections in talks with the opposition in Mexico City.
Venezuela once produced 3.4 million barrels of oil a day and was the richest nation in Latin America. But two decades of socialism have degraded petroleum infrastructure and exiled human capital. PdVSA now pumps fewer than 700,000 barrels a day, and Mr. Maduro relies on narcotics trafficking to pay his military.
Mr. Maduro wants to produce more oil, and the Biden Administration also wants more oil to replace Russian supplies reduced by the Ukraine war. Easing permitting rules on U.S. federal land offends the Democratic Party’s climate donors. So the Administration has gone hat in hand to OPEC and the Saudis and now Venezuela. It’s mind-boggling to see the U.S. go begging to dictators when the U.S. has huge untapped reserves.
Oil analysts say that even with new licenses Venezuelan output is unlikely to increase by more than about 0.2% of world demand in the next year or two. So the Administration now says the sanctions relief for Caracas is unrelated to oil and instead is a carrot for talking with the opposition about returning to democracy.
Venezuela has made similar overtures before, only to rig the next election. Why would Mr. Maduro change now that he has the sanctions concessions he wants? The opposition is going along more or less because it has few other options, and the U.S. made an offer it couldn’t refuse.
The U.S. says Venezuela won’t benefit because the oil license stipulates that Chevron may not pay taxes or royalties to Venezuela or dividends to PdVSA and must sell the oil in the U.S. market. But there is sure to be leakage in a joint venture majority-owned by the regime. PdVSA will use the oil shipments to repay the hundreds of millions of dollars it owes Chevron, which will reduce Venezuelan debt. The $3 billion in unfrozen assets is supposed to go to a fund managed by the United Nations, but the money will help the regime sustain itself in power.
The deal welcomes Mr. Maduro back to the world community as a respectable ruler rather than a rogue who has impoverished his country and unleashed millions of refugees on his neighbors. The U.S. says the six-month lease with Chevron won’t be renewed if Mr. Maduro doesn’t negotiate in good faith with his opponents. Maybe if Texas declared itself to be a dictatorship, President Biden would negotiate and allow more U.S. oil production.
WSJ Editorials are written by the The Wall Street Journal (WSJ) Editorial Board. The Board speak for free markets and free people, the principles, if you will, marked in the watershed year of 1776 by Thomas Jefferson’s Declaration of Independence and Adam Smith’s “Wealth of Nations.” So over the past century and into the next, the Journal stands for free trade and sound money; against confiscatory taxation and the ukases of kings and other collectivists; and for individual autonomy against dictators, bullies and even the tempers of momentary majorities. Energiesnet.com does not necessarily share these views.
Editor’s Note: This article was originally published by The Wall Street Journal (WSJ), on November 28, 2022. (Appeared in the November 29, 2022, print edition as ‘Biden’s Man in Venezuela’.) EnergiesNet.com do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld or EnergiesNet.com
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wsj.com 11 292022