According to sources familiar with the matter, the Biden administration deal silently approved Chevron Corp. to pay the Venezuelan government hundreds of millions of dollars, so avoiding a license expressly forbidding such transactions. By means of taxes and oil royalties, this secret agreement let Chevron stay compliant with U.S. law while channeling funds to President Nicolás Maduro’s government.
Complementing a November 2022 sanctions waiver, the agreement emphasizes the complicated relationship between U.S.-Venezuela oil trade and Venezuela’s autocratic government. Originally issued by the Office of Foreign Assets Control (OFAC) of the Treasury Department, the waiver let Chevron engage limited oil activities in Venezuela but specifically forbade the company from paying taxes, royalties, or dividends to the Venezuelan government or state-owned companies. But a little-known amendment to the waiver let Chevron make specific payments judged necessary for its operations.
The Part Chevron Played in Venezuela
Following a wave of nationalizations under late President Hugo Chávez in the 2000s, Chevron is the last significant U.S. oil company still in business in Venezuela. Many other operators were driven to leave the nation and pursue compensation via legal channels by these seizures. Tight sanctions during the Trump administration essentially stopped Chevron’s activities in Venezuela. But in 2022, the Chevron-Venezuela agreement allowed Chevron to resume operations in return for Maduro’s promise of democratic elections.
Notwithstanding these pledges, Maduro has reverted on his democratic concessions, excluding opposition candidates from running and declaring himself the winner of most recent elections without offering any credible proof. Over 2,500 people have been arrested under his government’s intensified crackdown on dissent, forcing opposition leader Edmundo González to flee the nation.
The Fiscal Effects
Chevron turned in paperwork to Venezuelan authorities last year disclosing almost $300 million in accumulated taxes. Among U.S. legislators, including Florida Republican Representative Maria Elvira Salazar, who denounced the arrangement and demanded the cancellation of Chevron’s waiver, this disclosure set off indignation.
By injecting much-needed money and lowering inflationary pressures, the payments have given Maduro’s government a financial lifeline, so stabilizing Venezuela’s economy. Critics counter that the agreement has undermined American initiatives toward Venezuelan democracy.
Political Reversals
Both political extremes have harshly objected to the Biden government’s decision allowing Chevron to pay Venezuela. Vocal opponent of the Maduro government, U.S. Senator Marco Rubio charged the government of being “played” by Venezuela.
Rubio said during a Senate hearing, “now they have these general licenses where companies like Chevron are actually providing billions of dollars of money into the coffers, and the regime kept none of the promises they made.”
Leading the Biden administration’s Venezuela policy as senior director for the Western Hemisphere on the National Security Council Juan Gonzalez defended the arrangement, contending that canceling Chevron’s license would only help China and Venezuela.
“Revoking the Chevron license only drives oil sales back towards China on the black market, allowing Venezuela to pocket every dollar,” Gonzalez said. “It helps Maduro and keeps a U.S. company from recovering what it is due. That is dumb.”
The Trump Effect
The Trump administration has also intervened on the matter; former President Donald Trump set a 30-day deadline for Chevron to terminate its joint venture activities with PDVSA, a state-owned oil company of Venezuela. Nonetheless, after strong lobbying by Chevron, the Biden government is apparently ready to stretch this deadline for at least another thirty days.
The extension requires Chevron to direct any taxes and royalties toward financing migrant deportations rather than directly supporting the Maduro government. This action shows the government’s attempt to strike a compromise between its commitment to democracy and human rights in Venezuela and its financial needs.
More General Implications
The deal between Chevron and Venezuela emphasizes the difficulties in applying sanctions while preserving financial interests. On one hand, the arrangement has let Chevron recover some of its Venezuelan investments and gave the nation’s economy some brief boost. Conversely, it has begged issues regarding the efficacy of American sanctions and their influence on fostering democratic changes.
The Chevron case reminds us of the careful line that separates political ideals from economic pragmatism as the Biden government negotiates this challenging problem. The political future of Venezuela hangs precariously, thus the stakes for American policy in the area have never been more important.
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