Trump threatens Venezuela's oil licenses; Venezuela responds by threatening Guyana
Six comments on US policy towards Latin America also including tariffs on Mexico and NGO funding issues.
I write about US policy in Latin America every Monday. In today’s newsletter:
Trump threatens Venezuela’s oil licenses
In response, Venezuela threatens Guyana
Comments on NGO and anti-corruption funding in LatAm
Mexico plays hard to win the tariff carnival game
Update on US threats to strike Mexican cartels
The hemisphere swing states in US vs China competition
The first item is free for everyone and the rest are behind the paywall. If your organization needs more analysis on Latin America, please consider paying to subscribe.
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On the first full day of Trump’s second term, I wrote, “There is no clear Venezuela policy. There are multiple competing Venezuela policies coming from different personnel. This is not an administration speaking with one voice on Venezuela.” Six weeks later, that remains correct.
My topline analysis regarding Venezuela policy under Trump right now is “No policy is final.” Whatever is announced this week can change next week. This is a problem because every actor involved is learning this is true. It creates a credibility problem for the US government if everyone believes the policies that are announced or even implemented can and will be changed soon afterward.
Trump announced last week on social media that he would be canceling oil licenses implemented by the Biden administration. Hours later, Trump’s son interviewed Maria Corina Machado on a podcast, an apparent signal that the president still supports Maduro’s opponents.
The announcement of the license cancellation came days after Special Envoy Ric Grenell said the US was not interested in regime change in Venezuela. In this case, it appears the sudden policy change occurred because Grenell said the quiet part out loud. Grenell’s negotiations with Maduro clearly conflict with the Rubio-Waltz hardline policy, but the contradiction did not matter in Trump’s policy world until Grenell’s CPAC comments. The special envoy was allowed to make backroom deals as long as he portrayed it as a policy of “toughness” and never admitted that the deals help Maduro. His Caracas trip was deemed a success because it was portrayed as Maduro making concessions, not the US giving anything in return. As soon as Grenell stepped over that line, admitting the new policies give Maduro a lifeline for survival, the policy hawks saw a chance to push back. That’s why Trump announced the change.
However, Grenell’s dealmaking is not dead yet. Announcing a vague policy on social media is different than implementing the details of it. Despite the fact Elon Musk runs Trump’s cabinet meetings, tweets are still not official policy. The cancellation of General License 41 will not be official until it is published by Treasury. The US government has not published any official changes yet, letting the March 1 automatic renewal occur.
As the policy is written, the license is renewed for six months on March 1, and there is at least a six-month drawdown period from the moment the license is not renewed, meaning there are many months of negotiations and potential policy shifts ahead. Treasury, however, did update the FAQ with the news that new guidance is coming soon, whatever that means. One challenge here is that, despite all the timing written into the current licenses, the president has the authority to simply cut the oil licenses tomorrow and allow market chaos to ensue. With these sanctions, the executive authority is fairly broad. The timing written into the licenses is a “nice to have” legal guidance but can be rewritten at any time for any reason. Once again, nothing is final.
One possible outcome may be that Trump is setting the stage for his own oil licenses or some other workaround to the sanctions. These new agreements would, of course, be marketed as tougher and more “America First” than the ones implemented by Biden, but the result will likely be the same: Maduro gets an economic lifeline. And like everything else in Venezuela policy, even a new Trump-announced oil agreement with Maduro wouldn’t be the end of the issue. It would be up for debate again as soon as the next policy dispute hit.
After Trump announced that GL-41 would be canceled, Venezuela sent a patrol boat to harass an Exxon ship in Guyana’s coastal waters. This is the first time in years that they have done so.
Back in December, I wrote that Venezuela-Guyana tensions would rise in the first half of 2025 for three reasons:
Maduro wants a rally around the flag foreign threat for his military to focus on after his election loss last year.
Guyana has elections this year, meaning it’s a good moment for Maduro to see if he can pressure their government.
The Trump administration is unclear as to how committed it will be to defending Guyana against Venezuelan incursions.
The Trump administration sent a public message this weekend that it will not tolerate Venezuela threatening Guyana’s territorial integrity. But when policy flip-flops are a weekly occurrence, from Venezuela’s oil licenses to Mexican tariffs to Ukraine policy, Maduro has good reason not to believe the statements coming out of DC.
Using a ship to briefly threaten an Exxon vessel in Guyana’s waters is a low cost maneuver to accomplish at least four things for Maduro: