A force fed agreement in Mexico

The Venezuelan opposition delegates met the chavista's ones in Mexico, in a supposed restart of negotiations interrupted months ago. A curious thing was that they went all the way to Mexico city to sign a document already negotiated behind closed doors in Caracas. So Mexico was an expensive show, they could have stayed in Caracas.....

This agreement started a storm in Venezuela even though people do not have access to all the information, even though it was already announced as a restart of negotiation, something far, very far from being a done thing.  The Venezuelan public is at the same time so polarized and so divided (schizo?) that little else could be expected. Chavistas wondered how come the opposition delegation was not in jail, the Venezuelan opposition reaction was worse. For them if the delegation does not include who they support and does not address their favorite cause then it is worthless, traitorous even.  That the good folks in tweeter let their ire run free is one thing but it is frightening when a leader of the opposition like Maria Corina Machado partakes in that lynching mood. 

Qué puede salir de una Mesa de “Negociación” que en la práctica ha sido una mesa de extorsión?
Una buena tajada para cada uno de los representados, incluyendo la ONU.
Quién representa allí a los venezolanos? Nadie.
Qué obtiene la gente? Nada.

— María Corina Machado (@MariaCorinaYA) November 27, 2022

There she says that those in Mexico are going to split the monies negotiated, and that even the UN will get its take. I'll stop .....

In front of such histeria it is important to go back to the plain facts. First, the content of the agreement. 3 billion dollars of frozen assets (mostly in the US?) will be given PROGRESSIVELY to the UN that will use them to try to alleviate the suffering of the Venezuelan people. The US oil giant Chevron will be allowed to operate in Venezuela on very limited objectives, namely to restart some of its production capacity and sell its oil only in the US without giving much to Venezuela. The oil to be produced by Chevron will be considered as repaying the debt Venezuela has toward them. That will last up to 6 months if the Venezuelan regime keeps its promises AND continues to negotiate AND advances toward free and fair elections in 2024.

That is all. No need to go berserk.

To understand better it is necessary to recap some of the current political and geopolitical situation. The Ukraine war has changed everything. In addition of trying to help the Chevron lobby, Biden is trying to find new sources of oil. Venezuela, on paper, could multiply by 4 its current production and place at least 2 million barrels on the market. That also explains why France's Macron sat in Paris the two sides and obtained from them to go back to Mexico to sign on what they had already agreed upon. 

The Maduro regime is in trouble. Its Russian ally and now its Iranian and Chinese ones are teetering and certainly in no mood to have Venezuela demand further attention. Cuba is flat broke and in much trouble of its own. And Maduro desperately needs money to grease his repression machinery. Nevermind that the "bodegonomics" miracle of partial dollarization of the country has reached its limits (1). Finally it downed in them that it may well be the last chance to negotiate before something collapses nastily. 

The Venezuelan opposition is cool. It has played the sanction card rather well (note: sanctions are taken by the US and Europe, NOT by the Venezuelan opposition whose role is advisory at most). Thus the promise of alleviating some of the sanctions in agreement with the US is a nice carrot for the regime. It is testimony of the obtuseness and corruption of the regime that they held so late before agreeing on something, a something rather insignificant if you ask me.

Yet, even though the agreement is small and should not be hard to abide by all the parts, there are many dark clouds on it.  First, the fast restart of oil production is a mirage. In the current situation of the country Chevron cannot hope to increase by much more than 30% its output for 2023. Significant increases will have to wait for the war in Ukraine may well be long over by the time Venezuela replaces part of Russian oil.

Second, organizing the humanitarian help will take time. This help was certainly pressed on by the US to try to stem the flow of immigration that apparently is now reaching 7 million Venezuelans! But the UN needs to decide on what to do, then set it up, and then get the providers, and more important establish adequate controls to protect that help from being stolen by the regime as was the case in previous attempts.

Do not expect any visible improvement in Venezuela until 2024 if all goes well. In fact already the divisions of chavismo are playing as Diosdado Cabello who has nothing to gain from any settlement, stated that it was going to be the regime that decides how the help will be shared. Within the regime many are scared at the idea of Cabello deciding on such things. 

At any rate the opposition is ready to bail out of this agreement as soon as the regime makes a move to undercut it. After all this time around it is the regime which has more to lose. 

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1) More than two years ago the regime with a damning hyperinflation decided to allow limited use of US dollars for import of goods that should be resold in Venezuela in dollars. This resulted in some economic improvement, made visible by the apparition of bodegones, stores specialized in selling outside of any price control and in US dollars. But the amount of dollars available for imports has not increased since the rest of the economic policies of the regime remain and these aim at controlling any free enterprise still in existence. Consequently for the past few months we start observing a stagnation of sorts that could only be avoided by increased production. Which I do not see happening in the near future.