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Juan Guaido, president of the National Assembly, during a press conference.
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Maduro further muddies Venezuelan waters

Regime’s attempt to seize parliamentary control creates yet another fracture in troubled Latin American nation

Venezuela’s political power tussle took a drastic New Year’s turn following an attempt by President Nicolas Maduro to seize control of the opposition-held National Assembly (NA)—the country’s parliament and the last remaining democratic foothold to which the opposition lays claim.  

Security forces on 5 January barred opposition leader Juan Guaido from entering the NA as the legislature body voted in new parliamentary speaker Luis Parra, a former opposition ally subsequently expelled on corruption charges. Guaido later held a rival vote among loyalist MPs outside the offices of an opposition-backed newspaper, before claiming more formal re-election the following day when his supporters finally forced their way into the parliament building.  

“The NA is still opposition-led and is the body that grants Guaido’s legitimacy as interim president,” says Lucia Caamano Stanek, principal analyst Americas at risk consultancy AKE. But she cautions that, “should he lose this position, it would be harder to argue that he can still [effectively] claim the presidency”. 

Maduro may be gambling on the US and its allies eventually having bigger fish to fry, in particular with Iran

Guaido declared himself acting Venezuelan president last January—endorsed by US and European allies—accusing Maduro of electoral fraud and de facto dictatorship in the wake of his disputed 2018 re-election. 

Ulterior motives 

Venezuela is now in the unique position of having three parliaments—the portions of the NA backing the rival presidential claimants and the National Constituent Assembly (ANC), a legally hazy body established by Maduro after the Supreme Court stripped the NA of its parliamentary powers in 2017. 

In Maduro’s ideal scenario, the attempt to impose a more friendly NA speaker is another step towards his ultimate goal of reclaiming control of the body through a national election this year that would be ‘clean enough’ to neutralise international opposition and give him a freer hand to operate. 

Absent any international recognition of the ANC, Maduro need[s] to renew control of the legislature, not only to neutralise the opposition but also because parliamentary approval may be required for deals with foreign actors and for financing and investment modifications to the country’s oil framework,” says Eileen Gavin, senior Americas analyst for political risk consultancy Verisk Maplecroft. 

The NA is the only body with legal hegemony to grant investment deals or allow foreign companies to increase stakes in joint ventures with national oil company Pdvsa. 

“The government is hoping to exchange unpaid bonds for shares in joint ventures, which cannot be done without legal changes to existing requirements,” says Jill Hedges, deputy director of analysis, Latin America at consulting firm Oxford Analytica. 

Russia’s Rosneft and China’s CNPC would be the most likely beneficiaries. Both are still heavily involved in the country’s declining oil sector, following the exit of most international oil companies (IOCs) wary of provoking US sanctions. 

Maduro's attempt to impose a more friendly speaker is another step towards his ultimate goal of reclaiming control of the assembly

US firm Chevron could also profit from the situation with a greater share of their current joint ventures, albeit in the potentially unlikely event of a US administration recognising the legitimacy of an election that returned the NA to Maduro’s hands. The firm has a stake in five projects, with two in the Orinoco belt, but for much of last year was forced to convert its upgraders into blenders, due to shortages in diluent. Chevron’s immediate future in Venezuela depend on whether the firm is granted another waiver to remain in the country—with its current exemption set to expire on 22 January.     

Waiting game 

Lack of international recognition of any legal powers for the ANC has thus far largely blocked any chance for contractual changes in favour of Russian and Chinese companies. It is difficult to see the disputed NA speaker election giving any greater heft to potential joint venture amendments. Admittedly, Russia acknowledged Parra’s selection, but China has failed to respond and few other influential international actors are likely to endorse him as parliamentary speaker. 

Nor is it clear how Maduro could massage the December 2020 election that would return the NA MP slate he prefers in such a way as to gain international acceptance of the result. He could seek NA approval for a new national electoral council (CNE)—who he might then be able to influence to change the electoral dynamics in his favour— but, according to Verisk Maplecroft, he would need to obtain a two-thirds NA majority for his preferred CNE. 

278,000bl/d – 2019 oil production collapse

The only way to get this majority would seem to be a lock-out of opponents—and thus Parra’s ‘election’ might be seen as a test of these particular waters. But Maduro would then be asking for international acceptance for a poll expressly gerrymandered by a body he had to sideline large parts of Venezuela’s legitimate executive to appoint.   

While that may currently seem unlikely, Maduro may be gambling on the US and its allies eventually having bigger fish to fry, in particular with Iran. “At present it seems unlikely that the US will extend sanctions in the near term—there is talk of eventual further sanctions but, at present, the US is far too focused on the Middle East to give it close attention,” says Hedges.    

Interestingly, while oil production dropped by over 330,000bl/d between the first quarter of 2019 and September, according to secondary sources in Opec’s monthly oil report, to a low of under 645,000bl/d—the trend has reversed somewhat in October and November. Crude production recovered slightly in both months—to 685,000/bl and over 695,000bl/d, respectively—as Indian customers, including Reliance Industries, paid less attention to US sanctions and resumed shipments after a four-month hiatus. 

Opponents of Maduro’s dictatorial regime both at home and abroad must hope that this is not a harbinger of a more general blind eye to its lack of legitimacy on the grounds of more pressing evils elsewhere.

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