The Final Blow: Uncertainty of the Venezuelan Transition from the Interim Presidency
The 2015 National Assembly decided to “eliminate the interim government,” according to the new transition statute published on January 3, 2023. From a legal perspective, the National Assembly approved disbanding the interim president, creating in its place an "interim parliamentary government."
This decision dramatically modified core premises regarding the Venezuelan transition, which were considered in 2021 when the Unitary Platform (UP) and the Maduro government signed the memorandum of understanding in Mexico. Now, there is a legal vacuum regarding the recognition of the Venezuelan government in the United States and the United Kingdom, impairing the capacity to control external assets and, as a result, the performance of the 2022 Social Agreement by the UP. This vacuum also aggravated the debt crisis's risks, which in 2023 could head a perfect storm. From a broader perspective, the disbanding of the interim president could also reduce the incentives for the Maduro government to advance in genuine negotiations when the time to implement the reforms for the 2024 presidential election is running out.
Creating an Interim Parliamentary Government
The National Assembly did not eliminate the interim government—rather, it created an interim parliamentary government. The assembly justified the new statute on the need to end the “interim government” due to its failure to advance in the transition and the decay of international recognition.
If the transition strategy adopted in 2019 failed, it was a collective failure of the 2015 National Assembly. It was the National Assembly that approved the 2019 statute, exerting control over all the decisions adopted by the speaker. To that point, different deputies acted as presidential commissioners. And the few countries that recognized the interim president were the same that supported the National Assembly, despite the expiration of its mandate in 2020. Therefore, if the intention was to move forward with the 2019 transition, the National Assembly should have ended its mandate on January 5, 2023.
But despite this failure, the National Assembly decided to extend its mandate one more year. However, the new statute eliminated the interim president, the special attorney, and the ambassadors, among other bodies. It preserved, however, the three leading organizations of the so-called interim government: the ad hoc boards of Petróleos de Venezuela, S.A. (PDVSA), the Central Bank of Venezuela (BCV), and the Expenses Council, transformed into the Asset Council.
Hence, the National Assembly did not eliminate the interim government. It should be clarified that the interim government is not a legal entity but a general and common expression to refer to the bureaucracy created under the scope of the 2019 statute. The assembly preserved the core of that bureaucracy, but now, under its control, as a “parliamentary government.”
Consequently, the main change in the statute is substituting the interim president as the holder of the presidency by the National Assembly. While the interim president had a clear basis in Article 233 of the Venezuelan constitution, the constitutionality of the National Assembly acting as the president of Venezuela is dubious.
The Recognized President of Venezuela
As the Roman adage says, consummatum est. The disbanding of the interim president cannot be undone. Now is necessary to determine its legal consequences in the United States and the United Kingdom.
Until 2023, the de jure president of Venezuela, recognized as such in the United States and the United Kingdom, was the speaker of the National Assembly acting as interim president, according to Article 233 of the Constitution. As a result, the legal representation of the Government of Venezuela shifted from the government of Nicolás Maduro to the interim president and the officials appointed by him, including the special attorney general, in charge of the judicial representation of the government of Venezuela.
However, that representation decayed because of the new statute. On January 3, 2023, the U.S. government published a statement that did not mention the interim president, as was ratified on January 9, when the general license number 31 was modified to suppress all references to the interim president. The UK government issued a similar statement on January 12. Certainly, those governments endorsed the 2015 National Assembly as the last democratic institution in Venezuela. But this is a political statement and not a legal certification to recognize what polity can exert the constitutional authority of the president of the Republic of Venezuela.
To clarify: Maduro is still deemed as a de facto government. However, for legal purposes, what is relevant is what polity can have the legal title of president of Venezuela. And the speaker of the National Assembly does not have that title anymore.
According to the rulings issued by the United States and the United Kingdom, Maduro was prevented from controlling Citgo (a petroleum company) and the BCV's assets because there was a de jure interim president. Without that legal title, Maduro could regain control over external assets even as a de facto government. This will have significant implications regarding the representation of PDVSA as Citgo's shareholder and the representation of the BCV regarding the deposits at the Bank of England.
In late January, the National Assembly began to discuss a resolution to transform the Asset Council into an executive body to continue the international representation exerted by the defuncted interim president. Despite this late effort, legal representation in the United States and the United Kingdom remains in peril.
Venezuela's Representation and the Crisis of the External Debt
The new statute also creates additional risks regarding the litigation triggered by the external debt default, which could be estimated at approximately 140 billion USD. The six-year lapse of New York's statute of limitation, that applies to the financial debt, could expire in 2023. To preserve their rights, creditors must file a complaint or enter into a tolling agreement with Venezuela to extend the prescription lapse.
The solution to that debt crisis should be addressed in the political negotiations. However, currently, nobody can legally represent Venezuela or PDVSA in the United States. Nicolás Maduro is a nonrecognized president. At the same time, the National Assembly speaker has not the title of interim president. Despite the political support of the National Assembly, the Asset Council has not been recognized as the de jure president of Venezuela. And the special attorney general was also suppressed by the new statute, which means there is a vacuum in the Venezuela judicial representation regarding creditors’ claims.
Uncertainty of the Social Fund
During the last rounds of negotiations in Mexico, the Maduro government and the UP signed the second social agreement that included the creation of a social fund to protect the Venezuelan people. The fund will administer the "frozen assets" of Venezuela. Although some news reported that the fund's value was $3 billion, there is no written agreement on this value. As Gerardo Blyde explained, the agreement is just a preliminary framework.
Additionally, the agreement has ambiguous language that does not clarify what are "frozen assets" are. In any case, the UP should work with the Maduro government to identify external assets that have been frozen or blocked to adopt all the actions needed to unblock and transfer those assets to the social fund. And to fulfill that task, the UP will require some legal capacity over external assets.
However, that legal capacity is at risk because the new statute disbanded the interim president, the only authority recognized as the de jure president of Venezuela to exert property rights over assets, according to the UK Supreme Court and the press release issued by the U.S. government on Section 25B of the Federal Reserve Act.
Not surprisingly, after the new statute was approved, Jorge Rodríguez declared that the UP breached the agreement and that, as a result, Maduro government should not resume negotiation. Under the authority of the interim president, it could have been possible to achieve an agreement with the Maduro government regarding some assets of the BCV. But now, it is unclear whether the UP has legal capacity regarding external assets.
New Strategy toward Presidential Elections
The democratic statute was enacted in 2019 when the expectations for a democratic transition were high. Those expectations never materialized, so a new strategy was needed, as this author explained at Yale University in 2022.
As political scientist Abraham Lowenthal recently concluded, the Mexico negotiations could be this new strategy, with the primary goal of improving Venezuelans' daily lives and prospects. Also, among other objectives, negotiations could pave the way for electoral reforms, considering the presidential elections scheduled for 2024 and the reforms recommended by the European Union’s Electoral Observation Mission (EOM).
Negotiations need incentives, and for Maduro, the main incentive is the sanctions. Despite widespread criticism, sanctions have fulfilled a relevant objective, creating negotiation incentives. For instance, the relief of sanctions through Chevron's license was a reward for the social agreement, which means that, without oil sanctions, that agreement may never have been signed.
It is unclear if the new statute creates incentives for the negotiations. The first and foremost sanction against Maduro was not the executive orders issued by the U.S. government but the international recognition of the interim president. To regain control over assets, Maduro needed to eliminate the interim president. Now the interim president is gone, not because of an agreement in Mexico but as a decision unilaterally adopted by the majority of the 2015 National Assembly's deputies. Without any significant concession, Maduro is one step closer to regaining control over some external actions.
Considering this scenario and the strong divisions among the Venezuela opposition, Maduro could have a best alternative to a negotiated agreement: sit down and wait because time seems to be on his side. What should have been a new strategy towards the Venezuelan transition could end in the final blow if Maduro decided that he is better off now that the threats of the interim president have disappeared.
Particularly, Maduro does not have clear incentives to negotiate genuine electoral reforms regarding the 2024 presidential elections. Regardless of the electoral conditions, it seems that the UP will participate in those elections with the candidate selected in the primaries. And in any case, the "opposition" is so broad that Maduro (or the candidate chosen by the United Socialist Party of Venezuela, or PSUV) will compete with several other candidates. Also, despite the electoral conditions, Maduro could be confident that he will be accepted as the president of Venezuela for the term that will begin on January 10, 2025. This time, there will be no interim president.
Getting Back on Track
The interim president's disbanding could be a significant change in the transition strategy adopted since the election of the 2015 National Assembly. Without a new strategy, this change could favor the stability of Maduro, pushing away the expectation of a transition from the complex humanitarian emergency that Venezuela faces.
The opposition needs to avoid that risk. To preserve the Mexican negotiations as a genuine venue to advance in the transition and not as an appeasement, incentives should remain in place. There are two possible ways to get back on track.
First, it is urgent to find legal pathways that prevent Maduro from regaining control over external assets because of the decision of the majority of the 2015 National Assembly to disband the interim president. The Venezuelan people and the human rights victims should be at the center of this strategy. For instance, the recent fund for Afghanistan is an example of how to protect external assets without a recognized government, favoring the people.
Second, sanctions should remain in place, subject to genuine advances in the negotiations. For that purpose, it is necessary to have a clear schedule of specific advances that could be rewarded with sanctions relief, focusing on the Venezuelan people. To create credible incentives, there should be a clear signal that, without those steps, sanctions will not be reviewed. Consequently, measures that reduce the pressure without genuine concessions should be avoided.
These are essential and urgent tasks; time is not on the side of Venezuelan democracy.
Jose Ignacio Hernández is a non-resident senior associate with the Americas Program at the Center for Strategic International Studies in Washington, D.C.