Can Venezuela Chart a Path Out of Crisis?

Last month, the government of Venezuelan President Nicolás Maduro and the country’s largest opposition coalition resumed negotiations to address Venezuela’s decades-long crisis. Maduro, who succeeded Hugo Chávez as president in 2013, has rebuffed opposition attempts to remove him from office as Venezuela slid into economic and humanitarian catastrophe. In a first step toward a political solution, at an October 17 meeting in Barbados, the delegations signed a set of agreements establishing plans for a competitive presidential election in 2024. Although the United States is not formally a party to these negotiations, Washington has indicated that it would ease the economic sanctions it began imposing in 2017 if the Maduro administration made democratic concessions to the opposition. Indeed, the day after the breakthrough in Barbados, the U.S. Treasury Department suspended some of its sanctions on Venezuelan oil.

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But disagreements that could derail the negotiations emerged almost immediately. The main point of contention is the ban the Maduro government has imposed on some opposition candidates’ participation in elections. The main opposition coalition named one of the banned politicians, María Corina Machado, its presidential candidate after she won a decisive victory in a primary election on October 22. The Office of the Comptroller General—nominally an independent entity but in practice controlled by Maduro—accused Machado of filing false financial disclosure statements in 2014 while serving as a legislator. Machado has denied the accusations.

Candidate qualification was not the only issue the Barbados agreement left unresolved. The deal included hardly any concessions from the Maduro government that would make a free and fair election possible. Venezuela’s electoral council, which tallies the votes for all elections, is still dominated by Maduro’s allies; strict media censorship largely keeps opposition views off the air; and government loyalists continue to have preferential access to public employment and social programs. On top of this, sanctions relief will deliver Maduro around $10 billion in additional revenue—more than one-tenth of Venezuela’s GDP—just in time for the government to increase its spending ahead of the elections.

American foreign policy hawks were quick to criticize the easing of sanctions as too great a concession to Maduro. Their criticism, however, misses the mark. Washington’s support for the Barbados deal is an overdue acknowledgment that previous U.S. efforts to push Venezuela back toward democracy have failed. In fact, with each unsuccessful attempt, the Venezuelan opposition has grown weaker. The deal the opposition signed last month is a near carbon copy of one it turned down in 2018, a clear illustration of its limited bargaining power.

Initially, the United States promised to reverse its sanctions relief if the Maduro government did not begin to lift candidate bans and free political prisoners by November 30. Just before the deadline expired, Venezuelan negotiators announced that disqualified candidates would be able to petition the country’s Supreme Court. The decision offers little hope for Machado’s candidacy, however; the government clearly does not want her to run for president, and the Supreme Court rarely rules against the government.

In any case, the United States likely will not walk back its easing of sanctions. The Biden administration’s priorities appear to be normalizing relations with Venezuela, stemming migration flows, and clearing the way for the country’s oil industry, which controls the world’s largest reserves of oil, to once again be a reliable supplier to global markets. 

For the past five years, Washington and its Venezuelan partners have been insisting that Maduro step down. Dropping that extreme demand is a welcome development. But as the current negotiations proceed, focusing narrowly on the conditions of the 2024 presidential election would be a mistake. The country’s winner-take-all political system and economic instability virtually ensure continued confrontation between the government and its opponents. The talks that began in Barbados must therefore evolve into a broader conversation about national reconciliation. By taking regime change off the table, all parties can enter negotiations with more modest but, ultimately, more workable goals for humanitarian relief and economic and political reform. Venezuela’s conflict may seem intractable, and achieving even slight progress toward resolution will not be easy. But leaders in Caracas and Washington owe it to Venezuelans to try.

THE LIMITS OF SANCTIONS

The Trump administration anchored its Venezuela policy on the premise that “maximum pressure,” in the form of severe economic sanctions, would push the Venezuelan military to turn on Maduro and usher in a democratic transition. John Bolton, Trump’s third national security adviser, wrote in his memoir about the 2019 decision to impose sanctions on Venezuelan oil: “I thought it was time to turn the screws and asked, ‘Why don’t we go for a win here?’” U.S. officials thought sanctions could boost the power of the opposition, and opposition leaders echoed this belief. Ricardo Hausmann, a Venezuelan economist who was part of a parallel government recognized by Washington until December 2022, wrote in the online publication Project Syndicate that “non-recognition . . . and sanctions are the only sources of leverage on the [Maduro] government.”

They were both proved wrong. After the United States imposed sanctions, Venezuela’s opposition leaders, emboldened by the Trump administration’s support, began to make unrealistic demands that Maduro relinquish power immediately. Military leaders rallied around Maduro rather than align with an increasingly aggressive and vengeful opposition. Instead of helping bring about a political settlement, U.S. sanctions helped trap Venezuela in a destructive cycle of conflict. The opposition blocked the Venezuelan government’s access to resources that could alleviate the country’s economic crisis; Maduro, in response, crafted economic and social policies that would reward government loyalists. Venezuela’s dueling factions subordinated the needs of the nation to their own political interests, turning the economy into a battlefield.

Their power struggle came at a steep cost to ordinary citizens. Venezuela’s is the largest recorded peacetime economic contraction in world history. Between 2012 and 2020, per capita income fell by nearly three-fourths. Today, four-fifths of Venezuelans live below the poverty line, one-fifth are malnourished, and more than seven million people have left the country.

U.S. sanctions helped trap Venezuela in a destructive cycle of conflict.

The failure of “maximum pressure” should not be a surprise. Economic sanctions have a spotty record, at best, in provoking intended political changes, and their success rate is even worse when the objective is as ambitious as a regime change. What is more, sanctions worsen living conditions in targeted countries. As sanctions take their toll on the economy, poverty increases, health care deteriorates, and civil society weakens. The private sector and other nonstate actors lose their sources of influence, which can end up strengthening the government’s grip on power.

There was no reason to think that policies that have been counterproductive elsewhere would work in Venezuela. And if the United States, more broadly, wanted to promote democracy in the country—a laudable goal—it went about it in the wrong way. Promoting democracy by encouraging regime change is a strategy fraught with problems. First is an optical one: when Washington wields economic might against select authoritarian governments while coddling others that are key allies, such as Egypt, Pakistan, or Saudi Arabia, it invites justified accusations of hypocrisy and double standards and undermines more viable strategies for democracy promotion.

Second, as the United States found out the hard way during its failed interventions in Afghanistan and Libya, there is no quick way to convert an autocracy into a flourishing democracy. Decades of research show that external interventions rarely lead to the emergence of stable democracies. Most often, democratization happens when civil society becomes sufficiently strong to resist interference from authoritarian rulers and sufficiently organized to negotiate limits to state control.

A NEW START

Even as it changes tack in Venezuela, the Biden administration risks retaining too single-minded a focus on pressuring the Maduro government to hold transparent elections. In this case, too, research advises caution. Elections alone do not produce stable democracies. Democracy requires institutions that restrict state power, preserve a role for political minorities, and prevent elected leaders from using their authority to sideline their opponents. With guarantees that the winners of elections cannot use the power of the state to persecute the losers, losers will feel secure enough to acknowledge their defeat and try again in the next electoral contest. Without these elements, one free and fair election will not put a country on the road to democratization.

Venezuela’s current political system lacks the institutions necessary for democracy. The country’s 1999 constitution, ratified shortly after Chávez, Maduro’s predecessor, took office, made the Venezuelan presidency one of the most powerful executive branches in the region. Both Chávez and Maduro have used this power to subordinate all other branches of government to the presidency. Under these circumstances, the electoral playing field is so tilted in favor of incumbents that opposition politicians choose to confront the regime through violent protests, electoral boycotts, or lobbying foreign powers to impose sanctions. Their actions have allowed Maduro to characterize the opposition as undemocratic and unpatriotic.

The talks that resumed in Barbados in October are the eighth set of negotiations between Venezuela’s government and the opposition since Maduro became president in 2013. The previous seven either ended without a deal or yielded agreements that broke down on implementation, with each side accusing the other of failing to negotiate in good faith. Unless the latest talks address the country’s institutional deficits, the results will likely be no different.

For the United States, allowing Venezuela’s crisis to continue should not be an option. Although the country’s economic collapse can be traced in part to years of mismanagement by the Chávez and Maduro administrations, my research indicates that around half the Venezuelan economy’s contraction since 2012 can be attributed to U.S.-led sanctions. Living standards deteriorated sharply after the Trump administration cut off Venezuela’s oil industry from international financial markets in 2017. The recession in the country deepened when Washington further restricted Venezuela’s access to oil markets and transferred control of the government’s foreign assets to the opposition in 2019.

As the United States confronts the limits of its economic coercion strategy, it should also recognize the pain its sanctions have caused and take responsibility by committing to a new approach.

HOW TO BUILD DEMOCRACY

The way out of Venezuela’s current crisis is not through foreign-backed regime change, but through an inclusive political settlement that allows the country’s competing factions to coexist. Drawing on the strategies of peace mediation and conflict resolution, negotiations should focus on institutional reforms that make power sharing possible. The United States and its partners should not try to help one side prevail in the fight for control of the state. Rather, they should push the Venezuelan government and opposition to resolve their differences peacefully and cooperate to address the country’s problems.

To correct Venezuela’s extreme imbalance of power, a political settlement will need to reduce the authority of the presidency and protect political minorities. Only by ensuring that the president cannot abuse the power of that office can Venezuela become a true electoral democracy. Before they discuss the conditions for the 2024 elections, negotiators should focus on eliminating the president’s authority to convene constitutional assemblies, setting term limits, and establishing firm supermajority requirements for appointments to judicial posts and key ministries. The public should have an opportunity to vote on these reforms in a constitutional referendum before the next presidential election.

The Maduro government’s systematic violation of civil and political rights will be a controversial issue in any negotiated solution. In 2020, a UN fact-finding mission established reasonable grounds to believe that Venezuelan authorities had committed crimes against humanity, including murder, torture, rape, and forced disappearances. The prosecutor of the International Criminal Court is investigating these allegations. As a signatory to the Rome Statute, the ICC’s founding treaty, Venezuela is obliged to fully cooperate in the investigation of these crimes, the prosecution of the perpetrators, and the enforcement of their sentences.

The Venezuelan state will bear responsibility under the Rome Statute no matter what deal the country’s politicians reach. But their agreement can set out a path to justice that balances accountability for serious rights violations with the objective of national reconciliation. Appointing an impartial figure to serve as Venezuela’s prosecutor general, an office currently occupied by a government loyalist, would be a first step toward opening a transparent inquiry into the crimes of the last decade. A Venezuelan-led justice process would be compatible with the ICC’s practice of ceding jurisdiction to national authorities that carry out credible investigations of serious crimes.

Venezuela’s current political system lacks the institutions necessary for democracy.

Efforts to resolve Venezuela’s economic and humanitarian problems should proceed separately from negotiations over power distribution and transitional justice. Conditions on the ground are too dire to allow political disagreements to undermine an opportunity to improve Venezuelans’ lives. As one way forward, scholars and civil society groups both inside and outside Venezuela have proposed an oil-for-essentials program in which the oil revenues generated by Venezuela’s reentry into global markets are earmarked for humanitarian initiatives; the program could have an autonomous governing board, with international organizations supervising the distribution of funds. The Maduro government and the main opposition reached a similar agreement in late 2022 to use previously frozen assets to finance social expenditures, but the plan has yet to be implemented—and both sides blame the other for the delay.

The United States’ and the United Kingdom’s decisions to withhold recognition of the Maduro government is a key impediment to releasing funds. Since 2019, Venezuelan state-owned assets in both countries have been under the control of the Venezuelan opposition, which has prevented their use to provide humanitarian relief. To circumvent this constraint, the government and opposition could agree to appoint a nonpartisan board to manage Venezuela’s external assets with support from international organizations—and the U.S. and British governments should pledge to respect the board’s authority.

Venezuelan negotiators should also begin discussing a program of essential economic reforms that can proceed no matter who wins the next presidential election. These reforms should focus on recovering the country’s oil sector, privatizing inefficient state-owned enterprises, restructuring external debt, guaranteeing property rights for domestic and foreign investors, and depoliticizing social programs. At a minimum, steps such as these should allow Venezuela to recoup some of the losses of the last decade. But if the country’s political factions can go further and commit to forming a national unity government after the 2024 elections, with nonpartisan professionals leading the finance ministry, central bank, and state-owned oil industry, they can set the groundwork for a major economic recovery.

A WAY OUT

Venezuela’s conflict is deeply entrenched, and it will be a challenge for the government and the opposition to come up with a viable power-sharing agreement. That is one reason why negotiations must proceed on two tracks: one aimed at comprehensive political reform, the other focused on the immediate humanitarian emergency. Even if the first proves intractable, the second could make real progress in addressing such urgent problems as the deterioration of public services and the lack of affordable food for many Venezuelans.

Despite the inherent difficulties, a conflict-resolution approach offers the best chance for a peaceful negotiated settlement to end Venezuela’s governance crisis. With a goal of coexistence, rather than the triumph of one group over another, negotiators can converge on reforms that both sides consider a win. If a settlement guarantees both the heirs of Chávez’s political movement and its opponents the opportunity to participate in Venezuelan politics, instead of threatening either side with persecution and repression if they lose the next election, the risk of accepting a deal will be lower for all. After a decade of destructive conflict, Venezuela’s political factions now have a chance to jointly steer the country toward economic recovery and stability.

For the negotiation process to be credible and effective, it will need the buy-in of the entire nation. Talks that include only the government and the main opposition are insufficient. When Maduro’s opponents were unified within the National Assembly, that model made sense. But Venezuela’s last legislative elections that were recognized by the opposition were held in 2015, and new leaders have since emerged. Expanding participation to include nongovernmental organizations, the Catholic Church, academic institutions, business and labor associations, and centrist political groups will give the negotiations greater legitimacy among Venezuelans and will increase the likelihood that talks lead to improvements in economic and social conditions, as past examples of multistakeholder negotiations in South Africa and Northern Ireland have shown.

Instead of threatening economic punishment, the United States and its partners should offer positive inducements to encourage the political change Venezuela needs. To start, Washington can commit to providing economic support, both directly and through multilateral institutions such as the World Bank and the International Monetary Fund, to a Venezuelan national unity government that introduces a program of economic reforms, guarantees political rights for all, and pursues a process of national reconciliation.

Working across Venezuela’s political divide to resolve the country’s crisis may be distasteful to the opposition hard-liners in Caracas and foreign policy hawks in Washington who see the maximalist goal of ousting Maduro as the only way forward. But their strategy has not worked, and continued confrontation will only make things worse for Venezuelans. Nearly 30 million people face a harrowing daily reality in this country torn apart by destructive conflict. A political settlement offers them the best hope for a way out.