China is the only international actor capable of nonviolently compelling Venezuela towards productive international engagement. It could also push it towards confrontation. It remains to be seen what will be chosen.
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The dramatic bombing of a Venezuelan drug boat by the United States after the mobilization of millions of Venezuelan militiamen is the latest in a long saga of political acrimony. The standoff is, on one level, unsurprising. Venezuelan American tensions are decades old. In 2019, Venezuela and the U.S. broke off diplomatic relations after a row over the recognition of Venezuela’s opposition leader as its legitimate president. Relations only continued to tank when, in 2020, American mercenaries attempted to overthrow the Venezuelan government in an amateurish scheme. Relations reached their nadir when, in the winter of 2023-2024, Venezuela seemed poised to invade its eastern neighbor, Guyana.
On the other hand, continued hostility with Caracas was not inevitable. Since Russia invaded Ukraine in 2022, many in Washington have entertained the notion that Venezuelan oil could ease international energy prices and blunt the Russian war machine. The U.S. has proven willing to loosen sanctions in exchange for Venezuela’s at least nominal respect for the political opposition and democratic principles, only for the government of Venezuelan President Nicolas Maduro to backtrack, resulting in the re-tightening of sanctions. With Venezuela seemingly unresponsive to the promise of the open market, we must turn to China, which imports roughly 90% of Venezuelan oil, to find answers for what Caracas is thinking and clues as to this standoff’s resolution.
At the glut of Venezuelan oil production, huge amounts of energy infrastructure were abandoned and allowed to decay. In the city of Maracaibo, one abandoned facility began to tilt into the sea.
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A Once Booming Industry
Much of Venezuela’s initial development under Hugo Chavez was tied to the oil industry, accounting for 90% of all exports and more than half of the country’s revenue. A reliance on the sector is no surprise given that Venezuela boasts the world’s largest proven crude oil reserves, but being so heavily invested in one commodity makes it very susceptible to energy price fluctuations.
When oil prices plunged from 2014 to 2016, Venezuela was thrown into chaos. Mismanagement, corruption, and violence within the government of Nicolas Maduro, amidst the price collapse, resulted in hyperinflation, scarcity, and instability that crippled the country. The Venezuelan government’s violent response to subsequent protests led Western powers like the United States, the United Kingdom, and the European Union to issue stringent sanctions that remain in place. China never partook in these sanctions.
Because of oil’s importance to the economy, much of Venezuela’s professional and technical class is tied to the industry. When these same classes led protests against Maduro’s government and then emigrated, the subsequent purges, which capped off over a decade of cronyism in Venezuela’s state-owned oil company, ended up with an oil-dependent state that could barely produce and export oil. Venezuelan oil production has still not reached its 1998 high despite vast proven reserves and plenty of interest. According to the Statistical Review of World Energy, published by the Energy Institute, the present rate of Venezuelan oil production is less than one-third of what it was in 2013.
The United Socialist Party of Venezuela (PSUV), led by Maduro, maintains power through electoral manipulation, currently controlling the presidency, parliament, and the vast majority of governorships and mayoral positions. Officially, the U.S. State Department disavows the 2024 Venezuelan elections, which they claim are fraudulent, and sees the government as illegitimate. This makes the repeated attempts to engage with Venezuela and loosen sanctions in exchange for more oil exports all the more astonishing.
Marco Rubio (pictured in 2022) has long been a hawk regarding American actions towards various left-friendly Latin American governments in Venezuela, Cuba, Nicaragua, and elsewhere. His new position as Secretary of State provides him an opportunity to act.
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Squandered Opportunities for Venezuela
After Russia invaded Ukraine, the Biden administration tried to induce Venezuelan cooperation with sanctions relief. In late 2023, the Biden administration drastically scaled back sanctions, only to reimpose them a year later after Venezuela backtracked on its obligations. Venezuela claims the U.S. did not live up to its side of the Barbados Agreement. When Venezuela began ratcheting up tensions against Guyana in mid-2024, the Biden administration again alternated between carrots and sticks.
This alternating strategy is futile. The U.S. would likely be better served by either committing to engagement and some form of détente or wholesale isolation and pressure. Right now, Washington reaps the worst of both worlds.
Jenaro Abraham, Assistant Professor at Gonzaga University and expert on Venezuela and U.S.-Latin American relations, states:
“Washington’s mix of sanctions and concessions doesn’t build confidence in Caracas — it breeds mistrust. The Barbados Accords made that clear: the U.S. framed pressure to reinstate María Corina Machado as democratic fairness, while Caracas saw it as foreign interference. When each side interprets the other through different assumptions, immediate punishments [or rewards] don’t deter; they only give Maduro cover to renege and deepen suspicion.”
Trump, hardly a personal fan of Maduro, has largely followed the same pattern: attempting concessions only to change course after no detectable change is seen in Caracas. In February 2025, Trump re-tightened some sanctions that Biden didn’t. A few months later, Trump loosened the exact same set of sanctions and permitted Chevron to again operate in Venezuela. Only one month on, U.S. warships began patrolling international waters off Venezuela’s coast, ostensibly to target drug cartels, but realistically to pressure Maduro after Venezuelan threats against Guyana accelerated again with Guyanese elections being imminent.
China To The Rescue?
Venezuela is dependent on China. Maduro has increasingly turned to China as a major supplier of his military, while China has lent Caracas approximately 60 billion dollars, more money than every other Latin American country combined. For China, Venezuela is a political project more than merely an oil well. It is a vital toehold in Latin America and a conduit for Beijing’s regional efforts. This is why China upgraded its relationship with Venezuela in 2023 and now opposes sanctions designed to punish those, mainly China itself, who purchase Venezuelan oil.
Yet, there are limits to Chinese generosity. Ideological fellow traveler Cuba was the first to discover this. When China was faced with bailing out Havana, the Chinese balked, citing in an exquisite piece of historical irony Cuba’s lack of market reforms. While China is eager to cultivate international allies and compete with the United States, it is also unwilling to throw money into a bottomless pit.
Venezuela has thus far been able to utilize its oil reserves as leverage, portraying itself not merely as a worthy recipient for Chinese aid and an instrument to harass Washington, but rather a strategic asset for Beijing. Nevertheless, there are signs that the Venezuelan-Chinese partnership is already fraying.
In 2019, at the glut of Venezuelan oil production, China made a simple offer to Venezuela: oil for aid. That deal has not materialized, mostly because Chinese investments were mismanaged by Venezuelan actors. Venezuela may send 90% of its oil to China, but that still represents a small volume. Since 2023, China has also ceased military exports to Venezuela despite repeated Venezuelan claims of deep strategic collaboration.
Beyond Venezuelan incompetence, American pressure and fears of uncontrollable escalation may be driving Chinese caution. The damage being done to Chinese refiners via punitive tariffs for doing business with Venezuela would not be worth marginal gains. Venezuela may represent an opportunity for China, but on a strategic level, it is a bridge too far: a remote and essentially indefensible outpost whose strategic exports are replaceable. Such a strategic liability carries another grave risk: that the ability to control escalation moves from Beijing to Washington or Caracas.
China can rescue the Venezuelan oil industry or its wider economy, and it holds all the cards. China could induce Venezuela to behave more responsibly on the world stage or engage in productive economic reforms. Past failures and repeated disappointments have left China unimpressed. It is far more likely that rhetoric, rather than resources, is all that is to be delivered to Venezuela.