America flirts with the dictator

The US authorities reacted quickly to the new situation. Just two weeks after the start of Russian aggression in Ukraine, two high-ranking officials from Washington went to Caracas. Their goal was to discuss the possibility of increasing the export of Venezuelan oil, which would replace Russian oil and, under favorable circumstances, could lower the astronomical price of hydrocarbons.

Data on oil production in Venezuela vary greatly. As representatives of the largest Venezuelan oil company Petroleos de Venezuela (PDVSA) assure, the country produces about 850 barrels per day. Former Venezuelan oil minister under Hugo Chavez, Rafael Ramirez, believes these figures are too high. He says that since 2014, oil production has fallen by 84% and is now somewhere in the region of 650,000 barrels per day. This is slightly less than the amount that Russia exported to the United States before the sanctions began. So can, even theoretically, Venezuelan oil, even if we take the first figures as a guideline, replace Russian oil?

"It can't, because Venezuela has serious obligations to China," said Giovanna de Michelle, a well-known expert in Venezuela. – In addition, part of the oil goes to the domestic market. So it's all fantasy."

At first glance, this is true, given the amount of oil that the Maduro regime sends to “blood brothers” in Cuba, not mentioned by the expert. But there are other opinions as well. It is true that Venezuela now supplies up to 70% of its oil to China. But, as one Venezuelan insider tells the Washington Post, “the dialogue that has begun between the two countries allows Caracas to hope for new, even bigger deals.”

“They (the Venezuelan authorities) have a Mickey Mouse hat in their hands,” the source said. Now they are set, in spite of everything, quite pro-American and ready for negotiations. They think they can make a lot more money shipping oil to Texas than to other parts of the world.”

Venezuelan authorities are quite pro-American and ready to supply oil to Texas

Allowing two European companies to start shipping oil from Venezuela was not the only move towards Caracas. At the same time, the US authorities allowed the oil giant Chevron to negotiate with Venezuela on the resumption of operations in that country. They ended in 2019 when the US imposed severe economic sanctions on Venezuela.

“Maduro needs to understand that after the most severe energy sanctions were imposed on Russia by the West, this country will begin to reorient itself to the same eastern market where Maduro sends his oil,” says Venezuelan economist Luis Vicente Leon. “And in this way, Putin, a friend of Maduro, can become his fiercest competitor in a market where consumption has slowed down.”

Wept billions of Sechin

What can we say in terms of sanctions about the former Russian players in the Venezuelan field, in particular Rosneft. However, the company's troubles began two years ago. In March 2020, Rosneft unexpectedly announced that it would cease operations in Venezuela. She sold all the assets of a company owned by the Russian government . This happened after the US imposed sanctions against Rosneft subsidiaries working with Venezuela. In particular, the Swiss Rosneft Trading fell under the sanctions. At the same time, the Vice President of Rosneft, Didier Casimiro, was included in the US sanctions list.

Venezuela and Rosneft have a long relationship. In 2014 alone, Rosneft gave Venezuela $6.5 billion as an advance payment for oil supplies. Since then, Sechin's brainchild has acquired various licenses for the development of oil and gas fields and shares of other foreign companies (in particular, the Indian Essar Oil) operating in Venezuela.

Now Rosneft can forget about multibillion-dollar investments in the oil industry of Venezuela. Formally, Caracas continues to be an ally of Russia. The Maduro regime gave lip service to the Russian adventure against Ukraine, but Venezuela defiantly did not take part in the UN General Assembly vote in early March, when 174 states strongly condemned the aggression. In May, the country appointed a new foreign minister, Carlos Faria, who had previously been Venezuela's ambassador to Moscow.

The Maduro regime verbally supported the Russian adventure against Ukraine, but Venezuela defiantly did not vote at the UN General Assembly in early March

What does the US want?

But as far as economic interests are concerned, in the current situation, the United States is, of course, much more interesting for Maduro than Russia. Especially in light of the fact that Washington has actually announced a break with the policy of "maximum pressure" on this country, which was pursued by former President Donald Trump. "This policy has failed completely," says Jeff Ramsey, a Venezuelan expert at the Washington office for Latin America. - At the same time, the countries of the hemisphere are trying to find pragmatic ways to resolve the Venezuelan crisis, focusing on the real situation in this country. And it lies in the fact that Maduro, with the help of the military, retains complete control over it.”

What does Joe Biden achieve under these conditions? He openly says that the United States can lift one or another part of the economic sanctions if Maduro sits down at the negotiating table with the opposition led by Juan Guaidó (a new round of such negotiations should take place in Mexico). American diplomacy hopes that these negotiations will lead to democratic elections.

But these hopes are unlikely to come true. America itself does not know what to do with Guaidó. Formally, she considers him the legitimate leader of Venezuela, but he has long lost popularity and now poses no threat to the ruling regime. He was not even invited to the Summit of the Americas, held June 6-10 in Los Angeles, the largest regional forum for the countries of the Western Hemisphere. Biden, a few hours before the opening of the summit, tried to explain himself to the oppositionist - he called him on the phone and confirmed that the United States still considers him the president of Venezuela, but this did not make the situation any less absurd.

Salvation in the dollar

But the main thing is that the Maduro regime itself is doing well, despite the ongoing sanctions. “The country has made a rather sharp turn towards a freer market, which marks a return to the era of rampant consumption of the 70s of the last century, which was branded by the former idol of the nation Hugo Chavez,” write Bloomberg reporters. “Maduro’s decision to embrace some elements of American capitalism had the dual purpose of ending the country’s financial crisis and finally burying Guaidó’s influence.”

The main element of the new course was the total dollarization of the country. In recent years, Venezuela has been the world record holder in terms of inflation - its peak was the level of 2 million percent per year. The local bolivar depreciated to the point that local robbers did not steal these bills, and homegrown artisans embroidered shirts with them and sold them to foreign tourists for a couple of dollars.

Bolivar depreciated to the point that people embroidered shirts for tourists with them

In 2018, Maduro allowed the legal circulation of the dollar, and somewhere from the beginning of 2021 it became the main monetary unit in the country. The Greens are now operated by everyone, from the top managers of companies to street vendors, who would have been quickly sent to jail for this under Chavez. Back in January, the authorities announced that they had put an end to hyperinflation (however, according to the latest data, it is 500% per year). Growth in manufacturing this year is expected to be 10%.

Casino against sanctions

Some of the richest neighborhoods in Caracas have begun to resemble American Las Vegas in recent months. Numerous casinos grow there like mushrooms after the rain. Under Chavez, they were also banned, but Maduro gave them the green light, believing that they ... will help the country overcome American sanctions.

“Somewhere at half past eleven in the evening,” writes Bloomberg, “a respectable audience begins to gather at the casino roulette table. Bartenders offer cocktails, dancers flex to merengue music, bingo players compete for a $500 prize. One of the lucky winners won a $2,900 Yamaha motorcycle in May.” “In the last 10 years, we could only dream of places where we would have fun,” says 52-year-old real estate broker Maria Elena Milyan before heading to roulette with her husband.

The casino is located on the roof of a 15-storey building. And below is a car dealership displaying three red Ferraris, the cheapest of which costs $200,000. This is the annual salary of 590 civil servants.

Potemkin village

To an outside observer, it may seem that the Venezuelan regime has managed to get out of the deepest socio-economic hole, that the country is surviving despite isolation. But perhaps this is an illusion. The new Venezuelan economy is a "Potemkin village". 94% of Venezuelans continue to live in poverty, with a monthly family income of $30. 70% of the inhabitants of the Venezuelan capital lives in slums. Venezuela still ranks low at 177 out of 180 on Transparency International's list for corruption, democracy and economic freedom. Over the past five years, 6 million Venezuelans have emigrated from the country, the largest exodus in the world before the start of the war in Ukraine.

Caracas, whose streets are ruled by crime, continues to be one of the most dangerous cities in the world, along with the Honduran San Pedro Sula, which is considered the "murder capital of the world."

Caracas remains one of the most dangerous cities in the world

“The dollar bubble, on which the demonstrative well-being of wealthy Venezuelans rests, can burst at any moment,” said Thomas Straka, a historian at Universidad Catolica Andres Bello in Caracas. “Venezuela is facing change or a new phase of her tragedy.”