There is a growing push within the Biden administration to reshape the relationship with oil-rich Venezuela, as officials seek to contain a crush of migration at the southern border and make progress in the energy war against Russia.
The discussions, which U.S. officials say revolve around restarting oil exports from Venezuela if the country takes steps to restore democracy, could spur a major diplomatic shift with America’s staunchest adversary in South America.
Since President Biden took office, the administration has signaled an openness to rapprochement with Venezuela in exchange for a democratic opening, partly because some U.S. officials believe that a purely hard line approach has failed to push the government of President Nicolás Maduro away from autocracy.
But there is increasing pressure on the administration to work toward a deal, analysts say, after the world’s biggest oil producers decided to cut production this month and with Venezuelan migration to the United States soaring.
In an attempt to topple Mr. Maduro, President Donald J. Trump in 2019 banned all Venezuelan oil exports and blacklisted the country’s state oil company, effectively imposing an embargo on the country with the world’s largest proven oil reserves.
Now, the administration is moving closer to allowing Chevron, the last American company producing oil in Venezuela, to resume exports if Mr. Maduro’s government agrees to take meaningful steps to alleviate the country’s humanitarian crisis and formally resumes negotiations with the country’s opposition, according to a senior Biden administration official and two people familiar with the matter who were not authorized to speak publicly.
So many Venezuelans are migrating that the number intercepted at the U.S. border from October 2021 through August reached more than 150,000, a huge rise from past years.
To deal with the increase, the administration is considering a humanitarian parole program for some Venezuelan migrants, similar to one offered to Ukrainians.
But some U.S. officials also say that lifting sanctions on Venezuela’s already precarious economy could help stabilize the nation, and eventually stanch the flow of Venezuelans leaving.
Because the United States ended diplomatic relations with the Maduro government in 2019, Venezuelan migrants cannot be easily sent back — a key reason they are arriving at the border in waves, experts say.
“It’s a huge crisis now,” said Michael Penfold a Venezuela-based fellow at the Wilson Center, a Washington-based policy group. “They are looking at this with dismay and realizing that they need to bring some kind of solution to Venezuela,” he added, referring to the administration.
Speaking to reporters last week in Lima, Peru, Secretary of State Antony J. Blinken said “there was no change” in the administration’s policy toward Venezuela, but added: “We will review our policies, including our sanctions policies, in response to constructive steps by the Maduro regime to restore democracy.”
Mr. Biden inherited from the Trump administration a near-total ban on Chevron’s operations, which permits the California-based company to conduct only basic maintenance at its four Venezuelan oil fields.
Trump officials, led by the national security adviser, John Bolton, actively plotted to topple Mr. Maduro and hoped in vain that starving his regime of cash could accomplish that.
Mr. Biden has continued the Trump sanctions despite complaints within the United States that they are causing humanitarian suffering, while doing little to threaten Mr. Maduro, who with the help of allies like Iran and Russia has built alternative oil export routes to Asia.
But any appearance of reconciliation with Mr. Maduro risks angering some American voters, and the administration is debating how to engage with the autocratic leader without legitimizing or helping perpetuate his rule. A March trip to meet with the government in Caracas — the first high level visit by the U.S. government to Venezuela in years — was met with criticism by lawmakers in both parties.
Earlier this month, the administration upset the Venezuelan diaspora by releasing two of Mr. Maduro’s nephews-in-law, who were serving U.S. prison sentences for major drugs convictions, in return for seven Americans jailed in Venezuela. But the move led some analysts to speculate that Biden officials are starting to take more political risks to break the diplomatic deadlock.
The question facing the administration in loosening the Venezuelan oil embargo is what to do with the revenue that Chevron and other foreign companies in the country would generate. Under normal conditions the windfall would be shared between private firms and PDVSA, Venezuela’s state-owned oil company.
But the U.S. government does not want to see money flowing into Mr. Maduro’s pockets, so officials have been considering alternative ways of distributing oil revenues.
One option being explored by U.S. officials is to funnel the oil revenues into a trust fund that would finance humanitarian activities within the country.
The idea has some precedent in the administration’s policy toward Afghanistan following the Taliban takeover last year. After initially freezing roughly $7 billion in Afghan funds, the administration eventually moved about half of those reserves into an account managed by a Swiss foundation to be spent on improving conditions in Afghanistan without benefiting the Taliban.
Another possibility is to allow PDVSA to use revenues from oil exports to draw down its debts with Chevron, said Francisco Monaldi, a Venezuelan oil expert at Rice University in Houston. The administration in the summer allowed a similar arrangement for two European oil companies, Repsol and Eni.
Chevron’s operations in Venezuela could bring up to 100,000 barrels a day to the oil market, which represents just 1 percent of America’s daily oil imports. Still, some U.S. officials and analysts say it could help calm a volatile global energy market by signaling that more supplies may be on the way.
U.S. gas prices, after months of declining, began to inch up following a decision last week by the world’s largest oil producers, led by Saudi Arabia and Russia, to slash production.
It is unclear whether Mr. Maduro would have much incentive to accept an arrangement where his government does not share in the profits of oil exports. After crushing the opposition and engineering a modest economic recovery, the Venezuelan autocrat remains firmly in control despite the sanctions and has little reason to meet the United States’ demands, analysts said.
“He has learned to survive,” said Félix Seijas, a prominent Venezuelan pollster. “He’s not going to hand over anything that threatens his loss of power.”
With Mr. Maduro holding most of the cards, simply allowing Chevron to get paid without providing direct financial benefit for the Venezuelan government may not be enough to entice the authoritarian leader to agree to democratic concessions, said Mr. Monaldi, the oil expert.
Mr. Maduro’s envoys and the Venezuelan opposition met in Mexico City last year for the latest rounds of talks aimed at resolving the country’s political standoff — but Mr. Maduro ended the talks after just one meeting.
The Maduro government and the opposition have been discussing how to address the humanitarian emergency in the country and appear close to reaching an agreement, according to U.S. officials and the Venezuelan opposition.
Some in Washington say the political environment may soon allow for a softer approach to Venezuela, especially after the midterm elections. If Florida remains firmly Republican-controlled, as pollsters project, Biden advisers may see less downside in angering the large Venezuelan diaspora in the state by engaging with Mr. Maduro’s government.
A changing political reality in Latin America may also push the administration to revise its policy toward Venezuela, analysts say. For years, Mr. Maduro’s neighbors have absorbed millions of Venezuelans, effectively containing the bulk of the exodus before it reached the United States.
But after the pandemic battered economies across the region, Venezuelan immigrants struggled to find jobs in host nations like Colombia and Ecuador. In record numbers, they have been streaming through one of the world’s most treacherous jungles, between South America and Panama, trying to reach the United States border.
The election of left-wing leaders in key South American countries has led to more vocal calls for a change in the region’s approach to Venezuela. Gustavo Petro, Colombia’s new leftist president, recently normalized diplomatic relations with Mr. Maduro, a major policy break from his predecessor.
A senior official in the Biden administration said Mr. Petro may soon begin demanding that the U.S. lift sanctions on Venezuela to help stabilize the neighboring country with whom it shares crucial security, economic and migration interests.
“There’s growing realization that there has to be a change in the U.S. policy toward Venezuela,” said Dany Bahar, a Venezuelan migration expert at Brown University in Rhode Island. “You can no longer ignore that it has been a failure.”
Michael Crowley, Genevieve Glatsky and Isayen Herrera contributed reporting.
