The resumption of talks between the Venezuelan government and its main opponents this weekend in Mexico is fueling pressure from all sides to shape the modest agenda, even though it will take far more than a handshake to fully dismantle US sanctions.
A Venezuelan government delegation and representatives of the main opposition factions are expected to sign a Norwegian-brokered framework agreement on rules of engagement for more substantive talks set for September. Short-term objectives are establishing credible conditions for regional elections in November, freeing political prisoners and broadening a humanitarian aid channel.
Others are hoping the agenda will provide an umbrella for bolder aims.
Chevron wants the US to ease its sanctions waiver to rejuvenate its Orinoco heavy oil project and other assets. The government of President Nicolas Maduro is seeking to end a UK Supreme Court battle with opposition leader Juan Guaido's US-backed interim administration over control of Venezuelan central bank gold reserves in the Bank of England with a deal to procure pandemic aid through the UN. Families of six detained executives of Venezuelan state-owned PdV's US refining subsidiary Citgo want them released.
Private equity investors are also eyeing reconstruction opportunities. And PdV bondholders and arbitration claimants pine for debt restructuring, a tall order as neither side wants to assume Venezuela's colossal liabilities, especially the potential loss of Citgo.
Little to lose
Venezuelan president Nicolas Maduro has little to lose in resuming negotiations with his main political opponents after overcoming years of US sanctions. His adversaries are diminished and the regional hostility he once faced has evaporated. But Maduro's goal of lifting all sanctions — and returning Venezuelan oil to the open market — will require ceding more ground than his own political camp may be willing to give up.
After months of policy stasis, US president Joe Biden's administration is encouraging the Venezuelan negotiations in concert with the EU and signaling a willingness to gradually dismantle the sanctions by prioritizing carrots over sticks. An initial step of authorizing LPG sales was symbolic. But restoring Venezuelan crude-for-diesel swaps is possible, a move that would allow EU firms Repsol and Eni to resume PdV in-kind payment for their natural gas production. In contrast to Iran, the upside for Venezuela's deteriorated national oil industry is nonetheless limited.
The last Venezuelan talks, held in Barbados in 2019, collapsed in a regional context hostile to Maduro, echoing former US president Donald Trump's "maximum pressure" strategy designed to oust him. Peru, once a leader of regional opposition to Maduro, is the latest Latin American country to swing the other way, mirroring Argentina and Bolivia. Chile and Ecuador have turned inward, while conservative stalwarts Colombia and Brazil are too weak to carry the anti-Maduro mantle.
Early on, Mexico and Uruguay resisted Trump's hawkish Venezuela campaign, invoking a "non-interference" stance and aligning with a dovish EU approach. Mexico's president Andres Manuel Lopez Obrador, looking to burnish his international credentials practiced on Opec last year, will now host the Venezuelan talks, giving him a platform not unlike Cuba's sponsorship of Colombia's 2016 peace deal.
No white flag
Forced to walk back their all-or-nothing strategy, Maduro's staunchest foes are wary of perceptions that they are re-entering talks waving a white flag. Exiled hardliner Leopoldo Lopez and his more pragmatic rival at home, Henrique Capriles, are using the talks to raise their leadership profiles before Guaido's mandate lapses in January 2022. Maduro is positioned to remain in power at least until presidential elections in 2024.
