Venezuela oil-for-food idea tests opposition

A controversial proposal that would allow Venezuela to sell some oil in exchange for humanitarian aid is taking shape in New York this week.

Francisco Rodriguez, an expatriate Venezuelan economist on the fringe of the Opec country’s political opposition, is preparing to launch Oil for Venezuela, a non-governmental organization aimed at attenuating the impact of US sanctions and averting a full-blown humanitarian crisis.

Rodriguez recently left Wall Street investment bank Torino Capital to help in «the design of solutions to Venezuela’s humanitarian and economic crisis.»

The work of the new group is «non-partisan and apolitical,» Rodriguez told Argus. «It aims to create a broad consensus among key political actors on the need for measures that mitigate the effect of economic sanctions on the most vulnerable groups of Venezuelans.»

The new proposal is «designed to avoid the pitfalls» that discredited the Iraqi oil-for-food program of the early 2000s. Under the UN-sponsored program for Iraq, the government of Saddam Hussein, which was the country’s only recognized political authority, was allowed to select the oil buyers, creating the conditions for kickbacks, Rodriguez said.

In contrast, the Venezuela proposal would incorporate three supervisory bodies comprised of representatives of the country’s rival political authorities: the government of President Nicolas Maduro, from whom the US and most Western countries withdrew recognition starting in January, in favor of Juan Guaido, the head of the National Assembly whom they consider interim president.

The proposal’s details are still subject to discussion and will be released in a forthcoming White Paper, Rodriguez said. But he envisions that the program could kick off with one or more of Venezuelan state-owned PdV’s joint ventures with foreign oil companies, effectively establishing a sanctions-free «enclave» that would be allowed to sell oil into the US market and access capital goods to restore the country’s battered production. The oil sales revenue would be deposited into an escrow account for the purchase of food and medicine. The supervisory bodies would oversee sales, procurement and distribution.

Rodriguez said the proposal would not necessarily require the endorsement of Maduro’s international patrons China and Russia, or even a resolution from the divided UN Security Council. Beijing and Moscow could indirectly benefit from more stable Venezuelan production, but Maduro should not be allowed to channel any incremental output for his own benefit, he says. «The solution really involves the US and Venezuela — both Maduro and Guaido.»

The White House is so far holding fast to the Venezuela sanctions, periodically ratcheting up the fine points while preaching patience and brushing aside any possible military intervention. But a former senior US government official warns that the sanctions could lead to an overwhelming humanitarian and migrant crisis, with implications for regional stability. That scenario could be averted by an oil-for-food program with an international component to help ensure its integrity. «The impact of the sanctions will be dramatic absent any mediating action» such as oil-for-food. Longer term, the program would sow the seeds of a «national unity government» that would finally break Venezuela’s standoff, the official said.

Fear and loathing in Caracas

Members of Juan Guaido’s administration are loath to consider any such proposal that implies cooperating with the «usurper» Maduro whom they have been vowing to dislodge since Guaido declared his interim presidency in January. They argue that oil-for-food would be exploited by Maduro to stay in power and would further weaponize food distribution in his hands. But privately, some technocrats in Guaido’s parallel administration say a properly designed program would be worth considering, especially because few had expected the standoff — and the sanctions — to last this long. Some quiet discussions with Rodriguez have taken place. But the opposition fears looking weak as much as helping to keep Maduro in power.

Maduro routinely blames US sanctions for his country’s economic debacle as he persecutes dissidents, many of whom have been forced into exile to avoid imprisonment. He has rebuffed overtures at Norwegian-sponsored talks with the opposition in Barbados to step down to make way for new elections, without personal guarantees and a lifting of sanctions. Last week he accused Guaido and his advisers of treachery over Venezuela’s historical territorial claim to part of neighboring [Guyana])https://www2.argusmedia.com/en/news/1969904-maiden-oil-platform-arrives-in-guyana?backToResults=true).

Rodriguez acknowledges the challenge of establishing incentives for both sides to work together in what is now a zero-sum power struggle. His oil-for-food initiative is only endorsed by two Venezuelan political parties, Avanzada Progresista and Cambiemos, which are deeply distrusted by Guaido’s mainstream political coalition as accommodating to Maduro. But Rodriguez remains hopeful that «their support is the first step in the process of building a consensus that reaches across the whole Venezuelan political spectrum.»

The political debate in Venezuela cannot be limited to whether Maduro stays or goes, he says, urging his countrymen to consider realistic alternatives to ward off a looming famine. «If someone can show me a better idea, then I am all for it,» Rodriguez said.