ByJose Chalhoub– Mar 04, 2025, 5:00 PM CST
- US sanctions on Venezuela have failed to achieve political change while harming American bondholders, who face heavy losses from Venezuela’s $150 billion debt default.
- A shift in US strategy toward re-engagement and foreign investment could boost oil production and. facilitate debt repayment to US creditors.
- By putting American interests first, the US could not only help check adversaries but also alleviate the suffering of millions of Venezuelans.
In an interview with The Epoch Times last Saturday, Richard Grenell, Presidential Envoy for Special Missions, said that Donald Trump is committed to doing everything in his power to make the American people stronger and more prosperous.
This unwavering focus on national interest is precisely the approach the US should take with Venezuela—putting its strategic priorities above the lobbying of foreign diplomats and local interest groups.
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For years, the Venezuelan government has been embroiled in a cat-and-mouse game with economic sanctions imposed by the White House.
President Biden was credited with freezing sanctions on the nation’s energy sector in October 2023 under the Barbados Agreement, only to reimpose them in April the following year, bowing to hardline neoconservatives.
Now, the Venezuelan government and its key officials remain heavily sanctioned by the US, alongside the state-owned oil and gas company, PDVSA.
The US Office of Foreign Assets Control (OFAC) uses licenses and case-by-case exemptions to allow certain oil projects to proceed under strict conditions. These licenses, however, are not a free pass; they require private companies to take full control of crucial aspects of oil production, export, and revenue management.
Related: Trump’s Tariff To Hike Prices at the Pump for US Drivers: Gas Buddy
A more pragmatic alternative would be to re-engage with Caracas on new terms, allowing oil to flow in exchange for hard currency that could be used to stabilize Venezuela’s economy and, crucially, facilitate debt repayments.
Years of trial and error show that economic sanctions have done little to achieve the desired political changes, while Venezuelans have suffered a humanitarian catastrophe.
From an American financial perspective, US bondholders and creditors have paid a heavy price for Venezuela’s exclusion from international capital markets.
The country’s default on over $150 billion in debt has left US investors with significant losses while blocking much-needed capital that could support Venezuela’s recovery.
Yet rather than facilitating a solution, US sanctions have only deepened the deadlock.
Restrictions prevent any direct financial engagement with the Maduro government, while Venezuela’s isolation from global markets means it cannot leverage its vast oil wealth to meet its obligations.
With limited exceptions, such as Chevron’s narrowly licensed operations, investors remain shut out from traditional, regulated oil sales. This leaves bondholders with a bleak choice: endure costly and uncertain legal battles or attempt to seize assets.
Meanwhile, preventing Venezuela from reintegrating into energy markets serves no real purpose. It undermines US strategic interests—not least by hamstringing American businesses and consumers.
As the Trump administration looks to realign Venezuela policy, the door is wide open for a major shift in strategy—one that could turn the page on the current situation.
Re-engagement through carefully managed foreign investment could both boost oil production and facilitate debt repayment to American creditors, providing a route to recover some of the losses.
Failure to seize this opportunity would not only continue to harm US bondholders but could also play directly into the hands of antagonistic regimes like China, Russia, and Iran.
These nations are already seeking to expand their influence in the Western Hemisphere, and Venezuela has been a key target for their ambitions.
By putting American interests first, the US could not only help check adversaries but also alleviate the suffering of millions of Venezuelans—a move that would, in turn, curb the economic migration crisis in the region.
It’s a win-win situation, where strategic self-interest also aligns with broader national security goals. The alternative would be watching Venezuela’s cycle of dysfunction continue, with countries like China stepping in to fill the void.
Back in November, US oil executives and bondholders were pressuring then-President-elect Donald Trump to part ways with the “maximum pressure” strategy aimed at removing Maduro, proposing a pragmatic deal instead.
Early signs show that Trump is already seeking détente. At the beginning of February, Grenell negotiated the return of US prisoners held in Venezuela. This was followed soon after by a deportation agreement, announced by President Trump himself.
Even as the White House shifts toward a realist foreign policy, US creditors are still waiting for repayment. The only viable path forward is to revive Venezuela’s oil market, but the clock is ticking. This window of opportunity won’t stay open for long.
By Jose Chalhoub for Oilprice.com
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