Raphael John-Lall

The lat­est round of sanc­tions will cost Venezuela bil­lions of dol­lars in rev­enue and could re­sult in a new flow of il­le­gal mi­grants, which could cause se­ri­ous eco­nom­ic and so­cial prob­lems in T&T and oth­er neigh­bour­ing coun­tries.

On March 4, Colom­bian Pres­i­dent Gus­ta­vo Petro lament­ed the de­ci­sion of the Pres­i­dent of the Unit­ed States, Don­ald Trump, to elim­i­nate Li­cense 41, which al­lowed US oil and gas com­pa­ny Chevron to op­er­ate in Venezue­lan ter­ri­to­ry.

“Venezuela is re­turn­ing to pover­ty and the more pover­ty there is in the South­ern coun­tries, the more mi­gra­tion to the North­ern coun­tries. I think the caus­es of mi­gra­tion have not been un­der­stood,” the Colom­bian Pres­i­dent said through his X ac­count.

While mil­lions of Venezue­lans now live in Colom­bia and in oth­er coun­tries re­gion­al­ly, thou­sands more live and work in T&T as a re­sult of Venezuela’s eco­nom­ic col­lapse over the last decade.

Al­though Venezuela’s econ­o­my has seen a re­bound in the last two years, some ex­perts be­lieve that the dark days of Venezuela’s eco­nom­ic con­trac­tion could re­turn with heavy mi­gra­tion flows to oth­er coun­tries, in­clud­ing T&T, giv­en the lat­est round of sanc­tions.

Ecoanalíti­ca, a Cara­cas-based con­sul­tan­cy, es­ti­mates Chevron’s li­cence yield­ed up to US$4.5 bil­lion in rev­enue for Venezuela’s Gov­ern­ment last year, and that with­out it, Venezuela’s pro­ject­ed growth this year would fall from 3.2 per cent to 2 per cent.

Ac­cord­ing to Bloomberg, Chevron, the on­ly US oil pro­duc­er left in Venezuela, is cur­rent­ly pump­ing about 240,000 bar­rels a day, or near­ly 23 per cent of the coun­try’s over­all pro­duc­tion, rep­re­sent­ing around US$6 bil­lion in rev­enue. That lev­el of out­put is sim­i­lar to what the com­pa­ny pro­duced in 2018, be­fore Trump first hit Venezuela with sanc­tions.

Venezue­lan econ­o­mist Fran­cis­co Ro­dríguez who now teach­es eco­nom­ics at the Uni­ver­si­ty of Den­ver in the Unit­ed States, on his X ac­count pro­ject­ed that the can­celling of Chevron’s li­cence will lead to the Venezue­lan econ­o­my con­tract­ing by 9.6 per cent in five years, in­creas­ing pover­ty and the mi­gra­to­ry flows.

“Sanc­tions have re­al hu­man­i­tar­i­an con­se­quences. If the goal is to sta­bilise the re­gion and re­duce mi­gra­tion, this pol­i­cy moves in the op­po­site di­rec­tion,” he said on X.

Last Tues­day in a re­port on the pos­si­ble im­pact of Chevron leav­ing Venezuela, the Wall Street Jour­nal stat­ed that Venezuela’s na­tion­al oil com­pa­ny, Petróleos de Venezuela, known as PDVSA, is al­ready work­ing to take over the op­er­a­tions af­ter for­eign com­pa­nies pull out.

“Oil ex­ports ac­count for near­ly all of the Maduro gov­ern­ment’s rev­enue, but it will be dif­fi­cult for PDVSA to sus­tain pro­duc­tion, part­ly be­cause Venezuela’s heavy crude re­quires blend­ing with im­port­ed dilu­ents to make it flow. Chevron has been sup­ply­ing most of that feed­stock. Plans are un­der way to bring in al­ter­na­tive sup­ply from Al­ge­ria, an in­dus­try source said.”

That Wall Street Jour­nal ar­ti­cle al­so re­ferred to an in­ter­view done with Ro­dríguez who said many more Venezue­lans could now leave as the lo­cal econ­o­my ab­sorbs the blow of Chevron’s im­mi­nent with­draw­al.

Oth­er for­eign oil and gas com­pa­nies are al­ready say­ing that they refuse to do busi­ness in Venezuela be­cause of the lat­est U.S. sanc­tions.

Colom­bian oil com­pa­ny Ecopetrol has ruled out any pos­si­bil­i­ty of do­ing en­er­gy busi­ness with Venezuela as long as Venezuela is un­der sanc­tions.

“We will re­frain from look­ing in­to busi­ness with Venezuela,” said its CEO Ri­car­do Roa, dur­ing an in­ter­view, while em­pha­sis­ing that Ecopetrol will not un­der­take any type of busi­ness with Cara­cas while there are re­stric­tions by the Of­fice of For­eign As­sets Con­trol of the Unit­ed States (OFAC).

Eco­nom­ic im­pact

So­cial re­searcher Dau­rius Figueira, who has au­thored sev­er­al books on T&T’s en­er­gy re­la­tion­ship with Venezuela, told the Busi­ness Guardian that Trump was forced to make the de­ci­sion to with­draw the Chevron li­cences be­cause of in­ter­nal US pol­i­tics.

“Trump 2.0 has re­vealed that the as­sault on Chevron in Venezuela arose from first­ly, Maduro’s fail­ure to ho­n­our the deal he made with Trump’s del­e­gate who vis­it­ed Venezuela.

“Sec­ond­ly, the slim ma­jor­i­ty of just two Re­pub­li­can votes in the U.S. House of Rep­re­sen­ta­tives to pass his bud­get was ex­ploit­ed by three Re­pub­li­can Cuban emi­gres from Flori­da who threat­ened to vote against his bud­get if he did not can­cel all Biden li­cens­es, which in­cludes Drag­on gas and Man­akin-Cocuina cross bor­der gas fields to dis­able the en­er­gy trade with Venezuela. Trump is in­debt­ed to big USA oil es­pe­cial­ly the Tex­an oil patch, hence three Cubans linked to Ru­bio are at­tack­ing Trump and US big oil in­ter­ests in Venezuela.”

He then ex­plained how this will fu­el il­le­gal mi­gra­tion to neigh­bour­ing coun­tries like T&T as he ar­gued that these mi­grants will no longer be look­ing at the Unit­ed States as an op­tion.

“With­out Chevron, Venezuela’s oil pro­duc­tion fal­ters, the rev­enue base takes a dire hit, the Bo­li­var, which is the Venezue­lan cur­ren­cy, weak­ens and the dis­lo­ca­tion in­ten­si­fies. There will be no mass mi­gra­tion to the USA this time as it is now US$12,000 for the ser­vices of a coy­ote from Mex­i­co in­to the US per per­son in cash up front.

“Those who can­not pay will be cleaned up as Mex­i­co is pay­ing a grave price for al­low­ing their bor­der to be porous with Amer­i­ca and the coy­otes have got the mes­sage. The flow from Venezuela to T&T and the rest of the Caribbean has al­ready ac­cel­er­at­ed, where we will soon reach the point of sat­u­ra­tion with grave, deep-seat­ed so­cial dis­lo­ca­tion where there will be in­creased calls for the El Sal­vador Pres­i­dent Bukele so­lu­tion ap­plied. “

Figueira al­so point­ed out that the po­ten­tial neg­a­tive so­cial im­pacts, which ac­com­pa­ny hu­man traf­fick­ing and il­le­gal mi­gra­tion.

“This il­lic­it mi­gra­tion will in­ten­si­fy the war be­tween transna­tion­al or­gan­ised crime busi­ness mod­els as those il­le­gal­ly en­ter­ing T&T will bring with them the con­flicts rag­ing in Colom­bia, Ecuador, Pe­ru and Venezuela. Learn from Haiti to­day which is a con­flict in­volv­ing the two busi­ness mod­els at war in the is­land of His­pan­io­la and now Puer­to Ri­co. The Caribbean will then be­come jump off points for hu­man smug­gling to Eu­rope and the USA es­pe­cial­ly as Trump 2.0 shuts down Mex­i­co and the US bor­der with Mex­i­co. The jam­ming has now start­ed.”

Econ­o­mist Dr An­tho­ny Gon­za­les told the Busi­ness Guardian that less rev­enue for Venezuela means that Venezue­lans will look for eco­nom­ic op­por­tu­ni­ties in oth­er coun­tries.

“Yes, new sanc­tions would re­duce in­vest­ment, both lo­cal and for­eign, in Venezuela and that would cause both in­come and em­ploy­ment to de­cline. As a re­sult, more Venezue­lans will seek op­por­tu­ni­ties abroad. I would ex­pect that some more would come to this coun­try.”