Falling for Maduro’s Lobbyists

In Washington today, there are two groups lobbying for the Maduro regime: oilmen and oil companies who would benefit from trading with Venezuela, and bondholders whose Venezuelan bonds would jump in value if it seemed that the United States and the Maduro regime were about to resume more normal relations.

Needless to say, they never argue that they just want to make more money; instead they speak in terms of U.S. national interests. As The Wall Street Journal put it in the headline of an article, “More Oil for Fewer Migrants: Trump is Urged to Make Deal with Venezuela.”

This is an entirely specious argument. More than seven million Venezuelans have fled their country and millions more will do so if the Maduro regime remains in power. Venezuelans are not fleeing U.S. sanctions: the huge increase in migration began in 2015, while heavy U.S. sanctions were imposed in 2019. Venezuelans are fleeing the Maduro economic policies that have ruined the country and the brutal repression that marks his regime.

Maduro stole the July 28 presidential election, claiming victory when democratic governments around the world have acknowledged that he lost by roughly a two-to-one margin. Since then, the repression has increased—and for many Venezuelans, hope for change is disappearing. If the Trump administration cozies up to Maduro, that loss of hope will be broadened and hastened—and the result will be much more migration. And as for oil, significant increases in investment could yield 500,000 to 1 million barrels a day of Venezuela’s very heavy or sour crude. Who exactly would those investors be? And how much would that additional production affect world oil prices, given a global market of over 100 million barrels per day?

A year ago, the U.S. Energy Information Administration said this about increased oil activity in Venezuela due to a softening of sanctions by the Biden administration:

we assess that these ventures could raise Venezuela’s total output to about 900,000 b/d by the end of 2024. Further increases in Venezuela’s crude oil production will take longer. Much of Venezuela’s crude oil production capacity and infrastructure has suffered from prolonged lack of access to capital and regular maintenance The potential for further growth remains highly uncertain at this time because significant new investment would be required for additional production.

That estimate for 2024 was correct: oil production is now about 950,000 barrels per day. Correct as well is the judgment about how much time and money it would take to raise production significantly.

So a policy that goes even further than the Biden administration did in softening sanctions on the Maduro regime, just after it stole an election and vastly increased internal repression, will not produce “More Oil and Fewer Migrants.” It will in fact produce “More Migrants and Very Little More Oil.” That’s a very bad deal for the United States and the Trump administration. Investors and oil companies have an absolute right to put their own interests ahead of those of the United States. The Trump administration should not fall into their trap.