Targeting Venezuela’s oil lifeline

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MYRNA BROWN, HOST: It’s Thursday the 18th of December.

Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Myrna Brown.

MARY REICHARD, HOST: And I’m Mary Reichard.

Up first: Tensions rising in the Caribbean.

On Tuesday, President Trump declared a naval blockade against Venezuela…to block sanctioned oil from getting in or out of the country.

This, after the U.S. Coast Guard seized an oil tanker off the coast of Venezuela. The ship was running oil from Iran to Cuba. It was previously sanctioned by the U.S. for ties to Russia.

BROWN: Joining us now to talk about it is Gil Guerra, he’s an Immigration Policy Analyst for the Niskanen Center. He researches Latin America and foreign policy.

REICHARD: Gil, good morning.

GIL GUERRA: Good morning, Mary.

REICHARD: Let’s start with the players involved here, The Wall Street Journal reported last week that around 1.8 billion barrels of oil are out at sea on ships like the one the U.S. captured last week. What do we know about the so-called “shadow fleet” and this particular tanker?

GUERRA: This is really an interconnected nexus of a number of different American adversaries. Obviously, the main one that we are concerned with here is Venezuela, which, as you mentioned, it does make most of its illicit income from oil shipments. But there are two other countries that really rely on Venezuela shadow fleets and have a connection to the operations that it pursues, those being Iran and Russia, each of which have their own sanctioned oil that they use Venezuela to essentially get around some of those sanctions. So the so-called blockade on the tanker that we have announced, that President Trump announced, as well as the specific tanker that we seized, is a good example of how all this works.

So the tanker itself, despite being flagged under a different country, is crude, apparently mostly by Russians, according to reports, and was transporting oil to Cuba, another U.S. adversary to eventually make its way on to Eastern markets, most likely China. So the oil that Venezuela helps to evade sanctions, or helps move around. Sanctions really sits at the nexus of a lot of the interests of different U.S. adversaries. So this move is important not only because it creates a lot of pressure on the Maduro regime, which uses oil as a lifeline, it also creates pressure on the financial income sources of countries like Cuba, which relies very heavily on Venezuelan oil exports in order to fuel its own domestic industry, as well as countries like Russia and Iran that use Venezuela to get around existing U.S. oil sanctions.

REICHARD: Gil, you used the phrase “so-called blockade.” Why?

GUERRA: Well, I think that the President himself obviously used that word. And I think that many, both supporters and critics of the policy will be using that word as well. But I actually think the policy itself is not nearly as dramatic as the fanfare on it suggests. I think the President is using that word because he wants to make it seem like we are exerting a lot of pressure on Venezuela. And obviously this is an escalation of that step, but if you actually look at the policy of what we're doing, we're basically just enforcing our pre-existing policy, which is stopping sanctioned oil from Venezuela, which has been in place since 2019.

Obviously we haven't actually been seizing tankers or enforcing that policy to quite this extent as we have before. But it's important to note that this is only with sanctioned oil and with sanctioned tankers. And the latest estimates as of this week—this could change if we designate more tankers, but it's estimated that only about 40% of the so-called shadow fleet that Venezuela uses to actually transport this sanctioned oil is currently designated in a way that it could be seized. So this isn't a blockade that is stopping things like food or other shipments coming into Venezuela. It's actually only targeting illicit oil that is already under U.S. sanctions, and even then, not even at this point, a majority of sanctioned oil.

REICHARD: What does this blockade mean for President Maduro and his allies?

GUERRA: This is another way for the U.S. to really put the screws on the Maduro regime. I think that we have been trying to do that without success, obviously, until very recently, I do think our ultimate aim in Venezuela is to have a transition towards a democratic government. I think it's important to realize that the Maduro regime is currently occupying the government in Venezuela after having stolen elections. The entire reason why the Maduro regime has been able to hold on to power and has been able to suppress domestic uprisings and domestic protests and domestic dissents in Venezuela is because of the oil revenue and diplomatic support that it receives from China, from Russia, from Iran and from Cuba in different ways.

And so unfortunately, it doesn't seem to me that there is a way to actually dislodge the Maduro regime unless we also take an active role, and especially if we also start to put pressure not only on Maduro, but also on the foreign backers and countries that support his illegitimate rule. So this is one way to actually start to put the screws on the regime by depriving them of that really essential income that they have, and also starting to hurt their partners that are supporting them, whether that's China, Cuba, Russia or Iran.

REICHARD: Gil, wrapping up here, is there anything else we ought to be watching for here?

I think it'll be interesting to see what the Venezuelan reaction is, and essentially how long they can actually withstand this. One of the reasons why the regime has turned towards criminality is because they simply did not have enough legitimate income for Maduro to bribe and pay off high ranking military generals in order to keep them aligned to him. So if this goes on for more than a month or so, I do think that if oil revenue falls in Venezuela, we will start to see more people who are authority generals who essentially support Maduro out of self-interest and not out of personal love, potentially start to crack.

REICHARD: Gil Guerra is an Immigration Policy Analyst researching Latin American foreign policy at the Niskanen Center in Washington. Gil, thanks so much!

GUERRA: Thank you very much.

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