Venezuela (Washington Insider Magazine) — On Thursday, April 18, General License 44, granted by the Joe Biden administration last October, expired, marking a turning point in relations between the US and Venezuela. This license allowed companies to do oil and gas business with the Venezuelan government. “However, on Wednesday, April 17, the Office of Foreign Assets Control (OFAC) of the US Treasury Department announced its decision not to renew General License 44. This license has now been replaced by License 44A.”
Under the new guidelines of License 44A, oil companies that commenced operations in Venezuela after the easing of sanctions under License 44 may continue their activities. However, there is a crucial caveat: these companies must now apply individually for licenses from the Ministry of Finance to maintain their presence in Venezuela. If they do not receive these licenses, they must cease their activities by 31 May.
Exemptions for Major Players
Major participants in Venezuela’s oil sector, including Chevron, Eni, and Repsol, who already obtained special licenses in 2022, are free from this need and can continue to work with Petróleos de Venezuela (PDVSA).
Experts see General License 44’s non-renewal as a tweak aimed at encouraging a more nuanced approach, rather than a reintroduction of economic sanctions. They saw the establishment of License 44A as “leaving a window open” for businesses to engage in Venezuela while encouraging a shift toward individual licensing.
Political Context
According to Hispanopost, This development is closely intertwined with Venezuela’s electoral landscape, particularly in light of the upcoming presidential elections on July 28. Observers note that the failure of the Maduro government to fully commit to the Barbados agreements, which aimed to ensure free and fair elections, has influenced the US decision-making process.
Temporary Extension
Dolores Dobarro, a former deputy minister of Energy and Mines, emphasizes that License 44A provides a temporary extension until May 31, contingent upon the evolving political situation in Venezuela. The Treasury Department will evaluate license applications from American companies on a case-by-case basis, reflecting a cautious approach towards engagement with PDVSA.
Geopolitical Dynamics
Economist Carlos Mendoza Potellá implies that these advancements are associated with ongoing talks regarding Venezuela’s political scenario, encompassing deliberations on potential presidential contenders. He emphasizes the intricate equilibrium between exerting political leverage on the Maduro administration and protecting American interests.
Venezuela’s Resiliene
Notwithstanding the US declaration, Venezuelan Oil Minister Pedro Tellechea affirms his nation’s resilience amid sanctions, underscoring potential impacts on the worldwide oil market and gasoline prices in the US. This determination aligns with extensive geopolitical shifts, encompassing tensions in the Middle East and the Latin American migration crisis.
Limited Impact
The expiration of General License 44 affirms the transient nature of US-Venezuela relations, with limited opportunities for significant investment or project development within a six-month timeframe. While License 44 facilitated certain operations, its successor, License 44A, imposes even tighter constraints.
Pressure Tactics
Analysts speculate that License 44A may serve as a pressure tactic to incentivize electoral reforms in Venezuela. However, concerns persist regarding the potential implications for the electoral process and the broader political landscape.
In conclusion, the US decision not to renew General License 44 reflects a nuanced approach towards Venezuela, balancing geopolitical interests with concerns for democratic governance. As the country navigates complex internal and external challenges, the evolution of US-Venezuela relations remains a significant factor in shaping the region’s political and economic dynamics.
