Venezuelan dictator Nicolás Maduro faces his biggest challenge yet after US President Donald Trump announced a blockade on the South American country’s sanctioned oil exports. Washington will, however, likely need military action to oust the leader, experts say.
Trump declared Maduro’s revolutionary socialist government a foreign terrorist organization and promised “a total and complete blockade” of oil tankers subject to U.S. sanctions going to or from Venezuela.
To enforce it, he cited American warships in the Caribbean, calling the deployment “the largest armada ever assembled in the history of South America.”
Trump’s latest move follows a dramatic operation by U.S. forces to attack and seize an oil tanker off the coast of Venezuela carrying oil worth about $100 million, some of which was destined for Maduro’s ally Cuba.
“We’re not going to let anyone through that shouldn’t,” Trump said. Apparently referring to the nationalization of Venezuela’s oil industry by Maduro’s predecessor, Hugo Chávez, Trump added: “They took all our energy rights. They took all our oil not too long ago. And we want it back.”
Other oil tankers bound for Venezuela changed course midway and ships waiting to leave its waters delayed their departure, ship tracking companies reported.
About 11% of U.S. warships deployed globally were in the Caribbean as of Dec. 15, according to a U.S. Naval Institute fleet tracker. U.S. forces blew up more than 20 speedboats that Washington said were carrying drugs, and flew bombers and fighter jets over the Venezuelan coast.
Trump’s chief of staff, Susie Wiles, said in an interview with Vanity Fair that the president “wants to keep blowing up boats until Maduro surrenders” – a comment widely interpreted as indicating that regime change is the US president’s true goal.
The House of Representatives narrowly rejected two Democratic-led resolutions that would have required Congress to authorize Trump’s Caribbean campaign, one covering boat attacks and the other “hostilities in or against Venezuela.”
Edward Fishman, a former U.S. official and author of “Chokepoints,” a book on economic sanctions, said Trump’s latest move marked a fundamental shift in strategy.
“To impose a naval blockade and intercept most, if not all, of Venezuela’s oil shipments, that seems to me to be an act of war,” he said. A blockade “is generally a prelude to war, not a tool of statesmanship.”
Prices of Venezuelan Treasury bonds have risen as investors see a greater likelihood that Maduro will fall. Daniel Lansberg-Rodríguez of Aurora Macro Strategies, a consulting firm, said the Trump administration “has left Maduro more unbalanced” than ever.
Still, he added: “Maduro is sitting on a giant pile of wet gunpowder. You just make the pile bigger. But sooner or later you’re going to need something to ignite him. I don’t think this will ignite him.”
Maduro survived sanctions, including against Petróleos de Venezuela SA (PDVSA), Venezuela’s national oil company, imposed under the first Trump administration and still has some lifelines left.
There is always a flow of oil. Chevron, which accounts for about 25% of Venezuela’s 1 million barrels of daily oil production, still has a license to pump and sell oil. The company said its operations in Venezuela “continue without interruption and in full compliance with the laws and regulations applicable to its activities, as well as the sanctions frameworks provided by the US government.”
Not all tankers carrying Venezuelan oil are subject to U.S. sanctions, although officials are working to add more to the list maintained by the U.S. Treasury’s Office of Foreign Assets Control. Samir Madani, executive director of the tracking site TankerTrackers.com, estimates that 60 percent of the “black fleet” operated with the help of Russia and Iran was not yet on the list.
“Some tankers have changed direction in both the Indian and Atlantic Oceans, but many others are still en route as it seems unlikely that the United States will pursue vessels that are not on the Ofac list,” Madani said.
The question is how long Venezuela can continue producing oil if exports are blocked. PDVSA said in a statement Wednesday that crude oil exports “are continuing as normal,” but a company official was less optimistic.
“We have approximately five days of storage capacity on land and, in a best-case scenario, an additional seven days at sea, depending on the operability of our fleet,” said the person, who was not authorized to speak to the media.
Guillermo Arcay, a researcher at the Harvard Growth Lab, said PDVSA would likely build up large inventories before having to halt production due to a lack of imported petrochemicals needed to dilute its heavy crude.
A tanker carrying Russian naphtha, a diluent, changed direction last week, according to economic intelligence firm Kpler, although two ships carrying the substance docked in Venezuela on December 13 and 14.
Besides oil, Maduro also has other sources of hard currency that do not appear in Venezuela’s official statistics. Illegal gold mining, on-board drug trafficking and general smuggling generate dollars that help maintain the loyalty of the regime’s law enforcement agencies, including the army and security police.
But the United States has already warned airlines against operating in Venezuelan airspace due to increased risks of military activity.
In Caracas, the Maduro regime maintains a stance of defiance. But on the streets, the bolivar is depreciating faster than ever and dollars are scarce, while economists say inflation is on track to exceed 500% this year. And although Cuba has resisted U.S. economic sanctions for more than 60 years, there are important differences.
Venezuela’s population is almost three times larger, and its pro-regime elites have become accustomed to a much higher standard of living than Cuban revolutionaries.
Havana remains Maduro’s most important and trusted ally – providing his personal guard and counterintelligence officers – but other international allies, Russia, Iran and China, have not offered strong support.
Trump’s oil blockade “is not only a watershed moment for the Maduro government, which now faces the possibility of total bankruptcy, but it is also important for the enforcement of U.S. sanctions,” said Christopher Sabatini, a Latin America expert at Chatham House.
“I don’t see how Maduro can fill this huge revenue gap with gold, drugs and money laundering.”
But given that the “Bolivarian Revolution” launched by Chávez has survived for a quarter of a century, few are willing to bet on the collapse of the Venezuelan regime without US military pressure – something Trump may be reluctant to use.
A former US official said Trump wanted “maximum visibility and minimum risk” with his Venezuela policy, but added: “The risk increases significantly if they undertake a regime change operation.”
Fishman, the sanctions expert, said military pressure is the key to ousting Maduro.
“Regime change is not a viable goal for sanctions,” he said. “There are very few examples in history where nonviolent economic pressure has led to regime change. But when the United States has sought to use military force to change regimes, whether in Afghanistan or Iraq, it has done so. The hard part is: Can you control the consequences?”
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