The United States exerts significant economic leverage over Venezuela through sanctions and oil licenses, but it does not control the country’s internal governance. While the U.S. Treasury Department regulates Venezuela’s access to global markets, President Nicolás Maduro maintains domestic power through military loyalty and institutional control, according to reports from the International Crisis Group and the U.S. State Department.
The question of who holds the “reins” in Venezuela remains a central point of geopolitical contention. For years, the Maduro administration has claimed that U.S. “imperialism” dictates the country’s fate, while Washington has used financial warfare to attempt to force a change in leadership. This dynamic has created a paradoxical state where the U.S. can freeze the assets of the Venezuelan state but cannot compel the government to hold transparent elections or step down from power.
The current tension centers on the aftermath of the July 28, 2024, presidential election. The National Electoral Council (CNE) declared Nicolás Maduro the winner, though it has failed to release detailed precinct-level results. Conversely, the opposition coalition, led by María Corina Machado and candidate Edmundo González Urrutia, published tally sheets showing González won by a significant margin. The U.S. Department of State has stated that the available data indicates González is the legitimate winner.
How US Sanctions Shape the Venezuelan Economy
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) manages the primary tools of influence in Venezuela. By imposing broad sectoral sanctions, the U.S. has effectively cut off the Venezuelan state-owned oil company, Petróleos de Venezuela (PDVSA), from the U.S. financial system. This mechanism does not grant the U.S. administrative control over Venezuela, but it acts as a financial valve that can be opened or closed based on political behavior.
These sanctions contributed to a catastrophic economic collapse. According to data from the International Monetary Fund (IMF), Venezuela experienced one of the worst economic contractions in modern history outside of wartime, with GDP shrinking by more than 75% between 2013 and 2021. Hyperinflation reached levels that rendered the national currency, the bolívar, virtually worthless, forcing a widespread, unofficial adoption of the U.S. dollar for daily transactions.
The U.S. government uses “General Licenses” to selectively allow certain trades. This strategy creates a dependency where the Maduro government must negotiate with Washington to keep its oil flowing to specific markets. When the U.S. eased some sanctions in 2023 to encourage electoral concessions, oil production saw a modest increase. However, the U.S. reimposed several of these restrictions following the disputed 2024 election results, demonstrating that the “reins” are financial, not political.
The Role of Oil Licenses and the Chevron Exception
The most concrete example of U.S. economic leverage is the case of Chevron. For years, the U.S. government granted Chevron a specific license to operate in Venezuela and import its oil. This arrangement allowed the Maduro government to receive critical hard currency and maintain some oil infrastructure, while the U.S. maintained a strategic presence in the region’s largest oil reserves.
Industry analysts note that the Chevron license served as a diplomatic carrot. By allowing one major U.S. firm to operate, Washington signaled that sanctions were a tool for negotiation rather than a permanent blockade. According to reports from Reuters, this created a direct line of communication between the White House and Miraflores Palace, the presidential office in Caracas.
However, the reliance on these licenses reveals a limitation of U.S. power. While the U.S. can stop Chevron from operating, it cannot stop the Maduro administration from selling oil through “dark fleets”—tankers that disable their tracking systems to sell crude to China or Iran at a discount. This “shadow market” reduces the effectiveness of U.S. financial pressure and provides the regime with a survival fund that bypasses Western banking systems.
Who Maintains Domestic Control in Caracas?
Despite the crushing weight of U.S. sanctions, the Maduro government retains absolute control over the internal apparatus of the state. This control is rooted in the loyalty of the Fuerza Armada Nacional Bolivariana (FANB), the Venezuelan military. The military is not merely a security force but a business entity; high-ranking officers control key sectors of the economy, including mining, food distribution, and customs.
The Venezuelan government has integrated the military into the state’s economic survival strategy. By granting generals control over the distribution of subsidized food and medicine, the regime ensures that the military’s interests are tied directly to Maduro’s survival. This institutional arrangement makes it difficult for U.S. sanctions to trigger a military coup, as the leadership views a change in government as a direct threat to their own wealth and legal immunity.
Furthermore, the government utilizes a sophisticated system of social control. The “Carnet de la Patria” (Fatherland Card) is used to distribute government benefits and food boxes. Reports from human rights organizations indicate that these benefits are often tied to political loyalty, effectively using hunger as a tool of governance. This internal grip is a domestic reality that U.S. sanctions cannot reach.
The 2024 Election Dispute and International Recognition
The events following the July 2024 election highlight the gap between U.S. influence and U.S. control. While the U.S. and several other Western nations recognized Edmundo González as the winner based on opposition-provided tally sheets, this recognition did not translate into a change of power on the ground. The Maduro administration responded with a crackdown, arresting thousands of protesters and detaining opposition figures.
The opposition’s strategy of publishing “actas” (tally sheets) was intended to provide an irrefutable evidence base for the international community. According to the Reuters news agency, the opposition claimed to have more than 80% of the total tally sheets, showing a landslide victory for González. Despite this, the CNE’s declaration of Maduro as the winner remains the official legal status within Venezuela, backed by the Supreme Tribunal of Justice (TSJ).
This deadlock shows that while the U.S. can delegitimize a leader internationally, it cannot remove them without the cooperation of the internal security forces. The “reins” of the state—the courts, the police, and the army—remain firmly in the hands of the Maduro administration.
The Influence of Russia, China, and Iran
The U.S. is not the only global power attempting to influence Venezuela. The Maduro government has strategically pivoted toward an “axis” of partners—Russia, China, and Iran—to offset U.S. pressure. These relationships provide the regime with diplomatic cover at the United Nations and technical assistance to evade sanctions.
China has historically been one of Venezuela’s largest creditors, providing billions of dollars in loans in exchange for oil shipments. While China has scaled back some of its lending due to Venezuela’s defaults, it remains a critical trade partner. Russia has provided military hardware and technical advisors, while Iran has supplied fuel and oil-refining expertise to help PDVSA keep its aging plants operational.
This geopolitical competition means that whenever the U.S. tightens the screws, Maduro can turn to Moscow or Tehran for survival. This multi-polar support system prevents Venezuela from becoming a “colony” of any single power, instead turning it into a theater where global powers compete for influence over the world’s largest proven oil reserves.
Comparison of U.S. Influence Strategies
The approach to Venezuela has shifted significantly across different U.S. administrations. The following table contrasts the two primary strategies used in recent years:
| Strategy Component | “Maximum Pressure” (2017–2020) | “Calibrated Pressure” (2021–2024) |
|---|---|---|
| Primary Goal | Regime collapse / Immediate removal | Negotiated transition / Oil stability |
| Sanctions Approach | Broad, sweeping sectoral bans | Targeted sanctions with specific licenses |
| Oil Policy | Total blockade of PDVSA | Selective licenses (e.g., Chevron) |
| Diplomatic Tone | Public condemnation / Isolation | Back-channel negotiations (Barbados Accords) |
What This Means for the Global Economy
Venezuela’s instability is not merely a regional crisis; it has global implications for energy security and migration. The UN High Commissioner for Refugees (UNHCR) reports that over 7.7 million Venezuelans have fled the country, creating a migration crisis that spans the entire Western Hemisphere. This displacement is a direct result of the economic collapse fueled by both government mismanagement and the impact of sanctions.
From a business perspective, the “reins” of Venezuela are currently held by those who can navigate the gray market. Companies that operate in Venezuela today often do so through complex webs of intermediaries to avoid U.S. sanctions. This has created a distorted economy where transparency is nonexistent and corruption is institutionalized.
The global oil market also remains sensitive to Venezuela’s status. With the world’s largest oil reserves, any sudden transition to a transparent, U.S.-aligned government could potentially flood the market with high-quality heavy crude, impacting prices and the strategic calculations of OPEC+ members.
The next confirmed checkpoint for the political crisis is the ongoing review of the July 28 election data by international observers and the potential for further U.S. sanctions targeting individual members of the CNE and the Maduro inner circle. These actions are expected to continue as the U.S. maintains its stance on the legitimacy of the election results.
Do you believe economic sanctions are an effective tool for democratic change, or do they primarily harm the civilian population? Share your thoughts in the comments below.