By John Lavelle
Since February 24th, the world stage has been dominated by events in Russia and Ukraine, and rightfully so. This conflict that has lasted for two weeks, which will likely endure for much longer, has been the most destructive and violent conflict in Europe since the Yugoslav Wars. Over 2 million people have been displaced and over 13,000 dead (at least), including far too many civilians.
In response to the conflict, many Western nations have limited or boycotted Russian oil, gas, and natural resources; meaning many nations must look elsewhere instead. Nations are now looking for new sources of energy and fuel, even some considered obsolete or closed off. Could the greatest victor of this conflict be Venezuela, a nation almost six thousand miles away? Could the nation regain its former place as a natural gas daimyo as Russia isolates itself diplomatically and economically?
In 2021, Russia was the world’s largest exporter of oil and natural gas and has always been in the top three for the last decade. However, recent bans and sanctions from the US and UK will drastically cut into Russian exports. For reference, 7% of America’s natural gas and 8% of Great Britain’s oil is from Russia, leaving the EU and China as the only main Russian importers. And even their support for Russia as their main gas supply is wavering. However, the US and UK still need the natural gas from somewhere, and with the Biden administration reluctant to open or reopen oil refineries, the source must be external. With worsening relations with the UAE and Saudi Arabia, their options are limited.
In a surprising move, Washington has turned South, not West, for its need for oil, and to what was thought to be a hostile nation as well. Venezuela was once the largest oil exporter in the world before its economy and Bolivar collapsed in 2015 and economic sanctions under Obama and Trump. More confusingly, Nicholas Maduro, the Venezuelan dictator, has been an outspoken ally to Russia and China since the 2018 election. Many Western and Latin American nations believed that the vote in 2018 was illegitimate due to fraud and corruption by Maduro and that Juan Guaidó is the rightful Venezuelan president. However, Maduro saw diplomatic support and recognition from Russia and China, leading many to believe that US-Venezuelan relations were irreparable.
Enter the Russian invasion of Ukraine. Enter the Russian natural gas sanctions. Enter the need for fuel from two of the world’s largest economies.
In the past few days, America and Venezuela have entered cordial talks to arrange a new trade deal, with them even resulting in Maduro freeing two American prisoners. If the talks continue to progress, Venezuela might replace Russia not only as a key American oil exporter, but as a major international exporter as well.
Much of the details and possible consequences are still unknown. If the deal goes well, the Biden administration might have killed two birds with one stone. Not only did they hurt the Russian economy, but Venezuela could turn away from Moscow and Beijing and back to Washington as diplomatic partners. For Venezuela, the easing sanctions would surely lead to economic growth and prominence on the world stage, and might even lead to American recognition of Maduro as president.
However, this deal could turn sideways for both as well. For America, Venezuela could just turn to Beijing for diplomatic and economic support. Biden cooperating with Maduro will almost certainly be seen as working with one authoritarian to stop the actions of another. Maduro is still a dictator and not popular on the world stage. Possibly worse, America supporting a South American dictator has been seen many times before and will lead to worsening relations with the rest of Latin and South America. Finally, could a deal be made without making Maduro legitimate? How would the world see Washington abandoning an ally in the pro-democracy Guiado for a short term solution?
The waters are treacherous for Maduro and Venezuela as well. The United States will certainly gain more influence in internal Venezuelan affairs, definitely chipping away at Maduro’s power. Could America use this opportunity to give Guaidó the presidency? China might also see Maduro as an unreliable ally, and abandon the dictator all together with zero diplomatic consequences. Moreover, do Venezuelans, even those against Maduro, want American influence?
Time will tell the effects of this apparent detente from Washington and Caracas. But this is just another result of the Russo-Ukraine war, which will certainly see many more drastic diplomatic and economic reverberations and reversals.
The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.
Photo by Beatrice Murch from Buenos Aires, Argentina, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons