If the Biden administration is considering allowing oil purchases from Venezuela, then it must do it via a humanitarian oil agreement.
By Boston Globe
Mar 28, 2022
Despite its vast oil wealth, Venezuela remains mired in poverty and its citizens continue to suffer under a repressive government. But due to an unlikely chain of events, the Russian invasion of Ukraine may actually provide the Biden administration with an opening to help ease the ongoing humanitarian crisis in the South American country.
After Russia’s invasion in February, the United States quickly banned oil imports from Russia in an effort to isolate President Vladimir Putin and cut off the revenues he needs for his military. Although the United States drills plenty of its own oil, US refiners still need the particular type of crude that Russia exported – and that Venezuela also produces.
For a model of how to import Venezuelan oil without enriching its despotic leaders, the administration should look to the past. In the mid-1990s, the United Nations Security Council launched an innovative effort to provide humanitarian and economic relief in Iraq, which was reeling in the wake of the first Gulf War and the embargo imposed by the United Nations on Saddam Hussein’s regime. The effort, called Oil-For-Food, allowed Iraq to sidestep crippling international sanctions and to export oil on the condition that the proceeds would only be used to pay for humanitarian relief.
The program helped alleviate human suffering and economic hardships, but it didn’t eradicate them. In the roughly six years that Oil-For-Food remained in operation, most of its revenue – roughly $65 billion total – went to buy food and medicine, and to fix infrastructure like the water supply and sanitation systems. Oil-For-Food was responsible, in no small measure, for averting famine. Child malnutrition rates were cut in half. But years later, after Hussein was overthrown, a review found fraud and corruption: The Hussein regime used Oil-For-Food illegally to make money by charging kickbacks, smuggling oil, and other schemes.
The Iraq tale is instructive, since a similar humanitarian oil agreement has been suggested for Venezuela, which is the subject of strict American sanctions. With an understanding of the lessons from the Iraq experience, several economists, oil-industry experts, legal analysts, and Venezuelan politicians have put forward proposals based on the same premise: Let oil sales fund desperately needed aid to keep Venezuelans afloat. It’s an experiment worth trying. The Biden administration – which made a rare approach to the Maduro regime earlier this month after the United States banned Russian oil imports – should get behind it.
It’s not news that Venezuela has been descending into a severe humanitarian crisis for a decade. With the coronavirus pandemic, the social and economic crises have only worsened. The socialist government of Hugo Chávez and his successor, Nicolás Maduro, has massively corrupted and mismanaged Venezuela’s finances. Once South America’s richest nation, the country has been impoverished by sinking oil prices. Between 2014 and 2020, the economy shrank by 74 percent. Hyperinflation reached ludicrous levels; by the end of 2018, it was above 1 million percent.
Roughly 6 million Venezuelans – representing one-fifth of the population – have left, in the largest Latin American exodus in recent history. Today, the nation with the world’s largest proven oil reserves cannot feed or provide basic care for its people, and that’s not an exaggeration. A recent survey showed that more than three-quarters of Venezuela’s 28 million residents live in extreme poverty, with average individual incomes of less than $1.20 a day.
Without a doubt, the US sanctions have exacerbated the Venezuelan crisis as they effectively blocked the Maduro regime from getting access to international markets. That led Maduro to turn to partners like Russia, China, and Irán.
“Russia has been helpful to Maduro in avoiding sanctions,” said Jason Marczak, senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. “This is the moment to put additional pressure [on Venezuela] because of a weaker Russia.” That’s why this moment should be seized, with oil as leverage, to push Maduro onto a road to restoring democracy in the beleaguered country, Marczak added.
Marczak’s organization recently released a report that examined two different approaches to an oil-for-humanitarian-aid program for Venezuela. If the Biden administration is considering easing sanctions to purchase Venezuelan oil to make up for some of the loss of oil in the global market, as reported, then a humanitarian oil agreement is the way to ensure that not a single dollar goes to enrich Maduro or any of his cronies’ pockets.
For such a program to work, the US government, the Maduro regime, and the Venezuelan opposition must partner in the humanitarian oil agreement, according to the recommendations laid out by a group of analysts and stakeholders in the Atlantic Council’s report. There has to be total transparency around the Venezuelan oil sales. “Maduro can’t have anything to do with the revenue,” said Marczak. There is no desire “to finance Maduro or to keep him in power one day longer.”
Without a doubt, the US sanctions have exacerbated the Venezuelan crisis as they effectively blocked the Maduro regime from getting access to international markets. That led Maduro to turn to partners like Russia, China, and Irán.
“Russia has been helpful to Maduro in avoiding sanctions,” said Jason Marczak, senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. “This is the moment to put additional pressure [on Venezuela] because of a weaker Russia.” That’s why this moment should be seized, with oil as leverage, to push Maduro onto a road to restoring democracy in the beleaguered country, Marczak added.
Marczak’s organization recently released a report that examined two different approaches to an oil-for-humanitarian-aid program for Venezuela. If the Biden administration is considering easing sanctions to purchase Venezuelan oil to make up for some of the loss of oil in the global market, as reported, then a humanitarian oil agreement is the way to ensure that not a single dollar goes to enrich Maduro or any of his cronies’ pockets.
For such a program to work, the US government, the Maduro regime, and the Venezuelan opposition must partner in the humanitarian oil agreement, according to the recommendations laid out by a group of analysts and stakeholders in the Atlantic Council’s report. There has to be total transparency around the Venezuelan oil sales. “Maduro can’t have anything to do with the revenue,” said Marczak. There is no desire “to finance Maduro or to keep him in power one day longer.”
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