Maduro's Pivot to Xi amid Global Strains
The commentary was originally published in Spanish in El Nacional on September 20, 2023.
Given the slim chances of securing a third presidential term in a free, fair, competitive, and verifiable election, Venezuelan president Nicolás Maduro aligns himself closely with China's most powerful leader since Mao Zedong, Xi Jinping. During Maduro's recent week-long visit to China, the bilateral relationship upgraded to an "all-weather, enduring strategic partnership"—a status only Pakistan shares. It indicates that the bond between the two nations remains unaffected by external factors or temporary challenges, regardless of geopolitical, economic, or diplomatic shifts.
From China's viewpoint, this unwavering relationship offers a reliable ally for global diplomatic and strategic support. The partnership benefits China in geopolitics, in regional balance of power, and in international organizations. It offers the opportunity to pursue joint economic projects and investments that integrate into China's Belt and Road Initiative, further intertwining the economies of the two countries. It also helps to counter rival nations' influence in specific regions and to promote cultural, educational, and interpersonal exchanges.
This relationship appears as a firm ledge of support from Beijing, however, it also suggests a deep dependency on China for Venezuela. It could lead to the latter’s economic and political future being increasingly beholden to the Chinese Communist Party (CCP). In this connection, it is worth noting that investments which will flow from agreements in the energy and electricity sectors will be made in the Chinese currency, renminbi (RMB). This decision seeks to bolster the RMB's stature against the U.S. dollar. Furthermore, the funds will be monitored by Beijing through its corporations. Repayments for these debts will be guaranteed against daily crude oil sales by Venezuela's Petróleos de Venezuela, S.A. (PDVSA) to China's National Petroleum Corporation. It contrasts with prior projects financed by Venezuela's state development bank, Bandes, from 2007 to 2015.
By bringing Venezuela into China's orbit, China gains access to vast resources and a staunch ally in its geopolitical standoff against the United States and the broader Western world. As the CCP aims to reshape the global order, nations like Venezuela become pawns in China's strategy to encircle the United States and exert more influence in the American hemisphere, akin to moves in the traditional Chinese game of Go.
This mutual relationship also benefits Maduro. As he challenges Washington, he celebrates the "dawn of a new world order" alongside China, undermining Western values such as individualism, liberalism, freedom, constitutionalism, human rights, the rule of law, democracy, free markets, and the separation of church and state.
Maduro's pivot to this enduring relationship with China serves as a lifeline, especially after his alliance with Vladimir Putin waned post-2020, following the exit of Russian oil company Rosneft from Venezuela. It was after the U.S. Treasury sanctioned and froze assets of Rosneft Trading, S.A., and its president for collaborating with Maduro's regime.
In the first year of these sanctions under the Trump administration, Rosneft supported Maduro's regime by handling over 60 percent of Venezuela's total oil exports, directing them to refineries in India and China, as these countries had ceased direct Venezuelan crude imports.
Additionally, in 2022, funds from various Venezuelan ministries deposited in Russian banks were withheld by Putin's government when the West decided to freeze $300 billion of the Russian Central Bank's gold and currency reserves in response to the invasion of Ukraine.
Since the assumption of Joe Biden as president in 2020, U.S.-Venezuela relations have been recalibrated. The current U.S. administration's approach toward Venezuela's political, social, and economic crises emphasizes semi-free, semi-fair, semi-competitive, and semi-verifiable presidential elections. For over a year, both parties have engaged in direct negotiations, with Maduro's regime receiving incentives such as releasing his relatives from prison and providing Chevron a license to produce and sell Venezuelan oil.
The Biden administration is contemplating easing economic sanctions on PDVSA and releasing frozen assets back to the Venezuelan regime in the hopes Maduro might contribute to an electoral solution to the country’s crisis. However, Maduro recognizes that winning the election is a significant challenge. He needs billions of dollars, which Xi did not provide during his recent visit.
Nevertheless, Maduro leans heavily on China's new emperor, hoping to retain China’s diplomatic support amid Western isolation. He hopes to replicate his 2018 election victory despite the fact that countries like the United States, the United Kingdom, Canada, and those part of the European Union do not recognize him as the legitimately elected president. Maduro also counts on Chevron to continue providing legal foreign exchange until Chinese corporations' resume investing RMB in Venezuela. After 2024, he will remain a pawn of the CCP, awaiting the day the courageous Venezuelan people break free from his oppression.
Antonio De La Cruz is a senior associate (non-resident) with the Americas Program at the Center for Strategic and International Studies in Washington, D.C.