How Biden can bring Venezuela’s economic nightmare to an end

President Nicolás Maduro of Venezuela announced last week that national elections will be held on July 28, ending months of speculation over whether and when a vote might go ahead. In greenlighting the election — albeit one from which the main opposition leader, María Corina Machado, looks set to be excluded — Maduro argues that he has fulfilled his end of an agreement with the Biden administration that provides sanctions relief to Venezuela in return for democratic reform.

The deal signed last October, known as the Barbados Agreement, is set to expire in April. If the U.S. does not extend the agreement’s provisions, then sanctions will be reimposed on Venezuela’s energy sector, returning the country to dire economic and humanitarian straits and cutting the West off from the country’s prodigious oil and gas reserves.

Instead, the Biden administration may choose to extend sanctions relief, satisfied that Venezuela is on the path back to democracy, however imperfectly, and can continue in its historic role as a vital energy supplier to the West. 

President Biden is being pushed towards an extension of the Barbados Agreement by the groundswell of support amongst Venezuelans for an election, whatever the conditions. The polls are close, indicating that Maduro is by no means guaranteed victory, regardless of the final ballot. 

This appetite is partly explained by a fear on all sides — Venezuelans and their government, foreign governments and creditors — that the return of sanctions will augur a repeat of the past five years, during which Venezuela has existed in economic and legal limbo.

Venezuelans fear a return to the darkest days of life under sanctions, gripped by hyperinflation and suffering acute shortages of food and medicine. The Maduro government continues to face the ire of poverty-stricken citizens, powerless to rectify declining living standards after having been frozen out of the U.S.-led financial system.

For the U.S. and its allies, sanctions not only failed to topple Maduro but also cut the West’s access to Venezuelan hydrocarbons, doing so during a spate of near unprecedented shocks to global energy markets.

America’s credibility as a steward of the international legal system also suffered a blow. Indeed, the recognition of Juan Guaidó’s shadow presidency by the Trump administration in 2019 broke with the long-standing and well-established principles of international law governing the criteria for the recognition of states.

In practical terms, the U.S. decision to blind itself to the reality over who truly called the shots in Venezuela — Maduro did and still does retain full executive power — precluded meaningful negotiations over both democratic reform and humanitarian relief for a population of 30 million in dire need. 

The policymakers responsible will have learned the lesson that recognizing the government of the day — rather than using recognition as a tool to promote preferred candidates — is a prerequisite for the proper working of bilateral and multilateral negotiations. 

The recent history is somewhat inglorious, but at least current geopolitical headwinds point to a continuation of détente. Energy markets would be shaken by an end to sanctions relief and Biden is loath to lose Venezuelan oil imports in an election year; expensive gasoline could easily tip a close race in Trump’s favor.

Geopolitical alignments are often shaped by energy requirements. The longer the West has kept Venezuela in economic isolation, the closer Maduro has moved to energy-hungry states like China. Russia doesn’t need the oil, but will keep coming to the aid of an isolated Maduro regardless. It is in the U.S.’s strategic interests to reverse both trends.

The third geopolitical factor that may swing Biden in favor of an extension of the Barbados Agreement is migration. Venezuela’s economic predicament has sparked an ongoing exodus of migrants heading to the southern U.S. border. Sustained increases in arrivals, which America is struggling to process, are political poison for Biden as he seeks to convince swing voters that Democrats are serious about border security. 

Looking at both sides of the ledger, Biden must decide whether to pursue perfection (Maduro folding to all demands, however unlikely) or decide, given geopolitical realities and past failings, that the election slated for July is good enough.

If Biden bows to GOP pressure and concludes that the perfect is the enemy of the good, all sides would be back to square one. From this unenviable position, the onus would be on the U.S. to demonstrate how it could ensure that the next five years aren’t as mutually destructive as the last.

Adam DuBard is a graduate of the Johns Hopkins School of Advanced International Studies and a former John Quincy Adams Society Marcellus Policy Fellow.