Blink first, and you lose Venezuela

The US turned another screw on Venezuela last week, announcing a so-called “secondary tariff” of 25% on any country that purchases oil from the South American nation. The measure seems designed to put further financial pressure on the regime led by Nicolas Maduro, but, like most things in Washington, the devil is in the details, and actions don’t always measure up with the rhetoric. 

The “announcement of ‘secondary tariffs’ appears to be designed not to cut off Venezuelan oil exports, but rather to favor sales to the US over other destinations,” Francisco Rodriguez, a Venezuelan economist and professor at the University of Denver, wrote in a post on X. He referenced the fact that Chevron (NYSE: CVX) just got another one-month extension after being ordered to wind down its operations in the country. Despite decades of frosty relations, the US is currently the second-largest importer of crude from Venezuela.

“This measure will function as an embargo in the first months, where only the US will buy Venezuelan oil,” Ecoanalítica director Alejandro Grisanti said. The new sanctions, meanwhile, could also lead to a discount of 50% on Venezuelan oil exports, he wrote. That’s what you call leverage as the administration of President Donald Trump might see it—with the US increasing its control of the purse strings in Caracas—but don’t expect Maduro to swerve from what’s become a heated game of chicken.

What’s the end game?

As a collision toward the worst possible outcome looms, it may help to ask a simple question: what does each government want? 

Team Maduro is easy to understand. They want to stay in power at any cost. They want to keep the military generals happy and well funded. They want to sell another tanker of oil. They want to dig up more gold. Above all, they want to buy time. Maduro—wanted by the US for narco-terrorism conspiracy, condemned by Amnesty International for human rights violations, and facing investigation by the International Criminal Court—is trapped like a rat in a corner and has nowhere to run. You can count on the fact that the group he sits atop of will fight to the bitter end. That’s what they’ve always done.

The US position, on the other hand, is much harder to read. Is this actually all about migration, and a cat-and-mouse game of trading another month of Chevron exports for a couple of repatriation flights and hostage releases? That’s hard to believe because it’s simply not logistically realistic over the longer term. There are nearly 600,000 Venezuelans in the US who could be subject to deportation efforts, and a few—or even dozens—of planeloads a month won’t make much of a dent. Most will simply not return until political and economic conditions improve back in their homeland.

Maybe the stance is part of some kind of “America First” realignment that could see Russia expand its influence over Ukraine with China ratcheting up pressure on Taiwan and the US taking a lead in the Western Hemisphere, but again, that’s more likely to be a pipe dream. The administration has friendly relations with other autocrats around the world, so what’s the actual beef with Maduro? 

If not just a play for cheaper oil and an easy foil that polls well with South Florida voters, a simpler bet could be that this is all about business, and that a rescued Venezuela would be great for American industry. Opposition leader Maria Corina Machado has certainly been trying to make that case, but that vision doesn’t seem to have gone mainstream yet with most of the discourse still focused on migration, gangs and drugs. Maybe some are just looking for what they think can be an easy win, despite repeated proof that it probably won’t be. 

Amid the intrigue, one thing is certain: regular Venezuelans are certainly in for a tough time in the months ahead, as reduced government revenue will threaten food imports and could see the return of a shortage economy that pushed millions to flee the country just years ago. That’s perhaps the greatest paradox of the latest developments. US officials want to stop Venezuelan migration into the country, but the latest sanctions will only exacerbate the very conditions that ignited all the departures in the first place. 

Sanctions don’t work, but…

As the economist Francisco Rodriguez recently wrote in Foreign Policy, “sanctions contributed to the largest economic collapse outside of wartime and the largest migration exodus in the history of the Western Hemisphere. They failed to drive Maduro from power, allowing him to further crack down on dissent and consolidate his authoritarian rule.” He argued that the US would be better served by a policy of “targeted engagement” instead of one based on “maximum pressure.”

But that’s where history might disagree, and there are many examples. From a failed “dialogue” eleven years ago after then opposition leader Henrique Capriles dialed back pressure on the street for a chance to address the nation on state television at 1am, to the failed Barbados Agreement that propelled the US to relax some sanctions and let Chevron pump more oil for the promise of free elections that were then just ignored, Maduro has shown time and time again that his word is worthless. As the saying goes, fool me once, shame on you; fool me twice, shame on me. 

Everyone knows that sanctions don’t work, but relaxing them doesn’t work either. Maduro has long passed the point of no return, and that makes any talk of negotiated settlements or power sharing a fantasy.

The road ahead

The US, for its part, has a history over the past 25 years of taking hardball stances against Maduro—and his predecessor Hugo Chavez before—only to ease up at the last minute when the going gets tough. In every case, Chavez, and then Maduro, came out even more powerful and entrenched. 

“If you play a chicken game without having credibly committed to staying in the middle of the road, expect to lose one way or another,” wrote Pierre Lemieux, a professor in the Department of Management Sciences at the University of Québec in Outaouais. “The other player is likely not to swerve; and you will have to swerve yourself, or else a crash will occur.”  

If the current administration in Washington really wants to make a lasting change for the better in Venezuela, it can’t once again be the first to back down. But it’s an open question whether it can find the discipline, patience and follow-through ability to confront the coming narrative that will involve the very real suffering of the Venezuelan people that Maduro will only exacerbate to further his cause. The President and his team, after all, have a whole world to play in and can quickly shift gears to another venue. Maduro & Co., in comparison, has only the singular goal of survival.

US leaders of all stripes and colors involved in crafting Venezuela policy should remember two important facts—whether they’re playing chicken, or even “4D chess”—as they plot their next moves. Chavismo has never been keen to swerve away first when the stakes get higher, and Venezuela is never going to get better until things get so bad for the regime that it can’t bear it any longer. Whoever blinks first will lose.