Will the World Ditch Its Punitive Approach to Venezuela in 2023?

Welcome back to Foreign Policy’s Latin America Brief.

Below, we preview some of the biggest stories we’ll be following in 2023, including how new approaches to the ongoing crisis in Venezuela could impact the Western Hemisphere. Other areas to watch include the growth of green technology and the fate of the war on drugs.

As we prepared this Brief for publication, we also heard the news of Pelé’s death. I remembered the Brazilian soccer great in this obituary for NPR.

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In 2023, as in previous years, Venezuela’s problems will be much of the rest of the Western Hemisphere’s, too.

By March, Socialist Venezuelan President Nicolás Maduro will have been in power for a decade. His poor economic management combined with an aggressive U.S. sanctions campaign have fueled a crisis from which more than 7 million people have fled since 2015. Venezuelans are among the record numbers of migrants who have arrived at the U.S. southern border in recent months.

Meanwhile, Venezuelan organized crime groups have spread as far south as Chile. And Venezuelan security forces are reportedly cooperating with guerrillas from Colombia’s National Liberation Army (ELN) who operate across the two countries’ shared border. Venezuela’s government could thus choose to act as a spoiler in the Colombian government’s demobilization talks with the ELN, which is the largest remaining rebel group in the country.

Internationally mediated talks between the Venezuelan government and members of the country’s opposition have floundered at least five times over the past decade, most recently in 2021. The latest round of talks is scheduled to move forward in the coming months—this time, in Mexico City.

A best-case scenario for Venezuela’s opposition would include securing guarantees for competitive national elections in 2024 from Maduro; these could come in exchange for international sanctions relief on Maduro’s government and the country’s oil sector. A 2019 attempt to dislodge Maduro by withdrawing his diplomatic recognition was widely backed in the United States, Europe, and South America, but Maduro hung on to power—in large part because rumors of possible defection by military loyalists did not come to pass. In the years since, Maduro’s escalating political repression against members of the opposition has fed further U.S. sanctions.

But in recent months, the United States, some European countries, and several of Venezuela’s important South American neighbors have changed their tune toward Caracas, suggesting less of a focus on forcing regime change and more on dialogue. Even if Maduro stays in power, this shift means some of the secondary effects of Venezuela’s crisis—such as the outflow of migrants and organized crime—could be addressed via diplomacy.

Perhaps the most consequential change has come from Washington. After Russia invaded Ukraine in February, Western sanctions on Russian oil prompted a global scramble for replacement supplies. Venezuela has the world’s largest oil reserves, and experts estimate that removing U.S. sanctions on Venezuela’s oil sector could increase its production to more than 1 million barrels per day within two to three years.

In March, Biden administration envoys traveled to Caracas to urge Maduro to return to talks in exchange for potential sanctions relief; in response to the resumption of the Mexico City negotiations in November, Washington removed sanctions that had blocked Chevron from exporting Venezuelan oil. European countries have reengaged, too, with Spain this week reinstituting an ambassador to Venezuela for the first time in two years.

Newly elected leftist leaders of some of South America’s largest economies, such as Chile and Colombia, also say they support the negotiations and have openly called for democracy in Venezuela. Brazil’s incoming foreign minister said President-elect Luiz Inácio Lula da Silva would join the talks if invited. These moves are significant, as Maduro had previously escaped censure from many left-wing leaders in the region thanks to ideological affinities.

For all those reasons—as well as careful advocacy from Venezuela’s civil society and opposition—the Mexico City talks carry potential. Regardless of their outcome for the 2024 elections, renewed international attention to Venezuela’s crisis could have other important effects.

First, when left-wing leaders in the region call out Maduro’s anti-democratic behavior, it becomes harder to defend power grabs by other ideologically similar politicians. A case in point is the ongoing political crisis in Peru. The turmoil began when former left-wing President Pedro Castillo closed Congress in December in an effective attempt at a self-coup. While Colombian President Gustavo Petro defended Castillo, Lula and Chilean President Gabriel Boric did not—suggesting they would not necessarily give ideological comrades a free pass to descend into authoritarianism.

Second, a focus on Venezuela could yield financial resources urgently needed to respond to its migration crisis. Around 200 nongovernmental organizations across the region worked together with the United Nations to craft a regional plan to respond to Venezuela’s migration flows in 2022 but have only received donations to meet a quarter of its total $1.79 billion cost. The group released a similar appeal for 2023.

Finally, the fact that Washington has considered lifting sanctions on Venezuela may spur wider reflections on the purpose and effectiveness of the U.S. sanctions regime more broadly. In the Guardian in June, former New York Times reporter William Neuman wrote that the Trump administration drew up the idea for restrictions on Venezuela’s oil sector as the “ultimate sanction” for use only when it appeared that Maduro’s fall was imminent, due to the level of pain those sanctions would cause everyday Venezuelans. But the sanctions enacted in 2019 remain today, Maduro sits firmly in power, and Venezuela’s economic misery has sent millions of people fleeing north.

Neuman argued that easing U.S. sanctions on Venezuela could return economic growth to the country. As the case of Cuba shows, 60 years of sanctions can fail to deliver regime change—and spur outward migration instead.

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U.S. Secretary of State Antony Blinken and Colombian President Gustavo Petro shake hands after holding a press conference at the headquarters of the Colombian presidency in Bogotá on Oct. 3.LUISA GONZALEZ/POOL/AFP via Getty Images

Unwinding a long war. In addition to negotiating with the ELN, another one of Petro’s ambitious goals is to fundamentally change course in what he calls the failed war on drugs, a decades-long joint enterprise between Washington and the Latin American policy elite.

The militarized, prohibition-based approach to drug production and dealing is present across Latin America, but Colombia—a key recipient of U.S. anti-drug security assistance—has for decades been one of its epicenters. In Petro’s telling, the war on drugs has killed more than a million people in Latin America without seriously reducing the power of drug trafficking mafias.

Reversing such a long-standing campaign is a towering proposition. Petro’s first steps include kicking off demilitarization talks with criminal groups that traffic drugs; plans to increase government financial support for would-be producers of coca, the base ingredient for cocaine; and backing legislation that could decriminalize recreational marijuana use.

Because the war on drugs intersects with other risk factors for violence, such as poverty and access to arms, crime rates in Colombia could get worse before they get better. While public support for Petro’s plans is robust right now, attitudes could snap back toward favoring militarization as he executes his first steps.

The Biden administration, for its part, has voiced support for Petro’s policies, though ending the drug war has not been one of its leading priorities in the region so far.

Candidate Javier Milei of La Libertad Avanza party celebrates with his supporters after Argentina’s legislative midterm elections in Buenos Aires on Nov. 14, 2021.Amilcar Orfali/Getty Images

Debt and distress. The global debt crunch for developing countries will affect some Latin American governments more than others next year. As the U.S. Federal Reserve increases interest rates to combat inflation, countries with large dollar-denominated foreign debts will need to spend more from their own budgets to pay them down. In addition to El Salvador and Ecuador, high on the list of vulnerable countries is Argentina—which is experiencing over 90 percent inflation and will hold a presidential election in October 2023.

For over three decades, Argentina’s presidency has been held by one of two coalitions: the ruling leftist Peronists and a pro-market technocratic group most recently led by former President Mauricio Macri. But the current economic instability could bring a far-right political outsider to the Casa Rosada—libertarian economist and self-described “anarcho-capitalist” Javier Milei.

An aerial view of brine ponds and processing areas of a lithium mine run by the Chilean company SQM in the Atacama Desert in Calama, Chile, on Sept. 12.MARTIN BERNETTI/AFP via Getty Images

A green leveling-up? Latin America is home to many raw materials critical to green technologies, such as the lithium and copper used in electric car batteries. In 2022, international mining companies rushed to try to secure deals in the lithium-rich countries of Argentina, Bolivia, and Chile—together known as the “lithium triangle.” What is less clear is whether countries rich in critical minerals can create higher-value green goods for export, such as the batteries themselves.

Lithium triangle countries said this year that they plan to cooperate on green technologies. Brazil’s state development bank is helping to finance wind turbine production plants to boost the wind energy sector in the country. And Chile’s government has awarded grants to pilot projects to create green hydrogen.

We’ll be watching how swiftly these plans move forward in 2023.

Until then, thank you for your readership and thoughtful comments over the course of the year. Feliz Ano Novo!