US eases sanctions on Venezuela following election deal

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The United States is partially lifting sanctions on Venezuela following the resumption of talks between the South American country’s socialist government and a US-backed faction of the opposition.

The US Treasury Department on Wednesday evening issued a six-month licence authorising transactions in Venezuela’s oil and gas sectors, and a separate licence allowing dealings with national gold mining company Minerven.

The Treasury also amended two existing licenses to remove a ban on secondary trading of certain Venezuelan bonds and debt of Petróleos de Venezuela (PDVSA), the state oil company, though a ban on primary trading remains in effect.

The announcement of sanctions relief comes a day after the Maduro government and the Unitary Platform — a US-backed faction of the opposition — resumed political talks in Barbados. They agreed to hold a presidential election in the latter half of next year.

“In response to these democratic developments, the US Department of the Treasury has issued general licenses authorising transactions involving Venezuela’s oil and gas sector and gold sector, as well as removing the ban on secondary trading,” the Treasury said in a statement.

The Venezuelan government and opposition also agreed to allow international observers into Venezuela for the election.

They also agreed that all qualified candidates may participate in the election, and that each side may choose its candidate according to its own rules.

The opposition will hold its primary on Sunday, though frontrunner María Corina Machado was banned in June from holding office due to her support for US sanctions and the US-backed parallel presidency of Juan Guaidó in 2019.

US secretary of state Antony Blinken said on Wednesday night that Washington expected the Venezuelan government to start releasing political prisoners and wrongfully detained US citizens, and to begin to lift bans on all candidates by the end of November.

“Failure to abide by the terms of this arrangement will lead the United States to reverse steps we have taken,” he said.

“We believe that this road map is the most viable path for the people of Venezuela to secure a durable agreement that leads to competitive elections, the restoration of democratic order and an end to the humanitarian crisis in Venezuela,” a US official said earlier on Wednesday.

The official added that the US “retains the authority to amend or revoke all authorisations should [Nicolás] Maduro and his representatives fail to follow through on their commitments”.

Maduro, who is widely expected to run in the election, assumed the presidency in 2013 following the death of Hugo Chávez, the father of the so-called Bolivarian Revolution, which promoted heavy public spending underwritten by the country’s oil wealth.

Venezuela boasts the world’s largest proven oil reserves and once pumped about 3mn barrels a day, though production today is well below 1mn b/d.

Corruption and a fall in oil prices led Venezuela to economic collapse, hyperinflation, food and medicine shortages, and the exodus of more than 7mn citizens. Meanwhile, Maduro tightened his grip on power, banning or jailing political opponents and cracking down on protests. His 2018 re-election was viewed by the US, EU, and the Venezuelan opposition as fraudulent.

In 2019, the Trump administration placed strict sanctions on the country, as it sought to oust Maduro by recognising Guaidó’s presidency.

Washington has been seeking ways to boost global oil supplies following Russia’s full-scale invasion of Ukraine last year, which sent energy prices higher. 

It has drained almost 300mn barrels from the US strategic petroleum reserve and last year lifted some energy-related restrictions on Venezuela by granting Chevron a licence from the Treasury to resume limited oil production from its joint venture with PDVSA. 

Most analysts said the easing of US sanctions would have a limited short-to-medium-term impact on Venezuelan production due to a decade-long collapse in capital investment. Rystad, a research group, said it expects Venezuelan production could increase by a maximum of 200,000 b/d of oil six months after sanctions are eased.