On June 28, the Maduro government celebrated 46 years of “fruitful” and “unbreakable” diplomatic relations between Venezuela and China, praising the Chinese government for its defense of Venezuelan sovereignty. This came just a few weeks after Nicolás Maduro, in the face of heightening pressure from the United States, publicly thanked allies including China, Russia, Iran, and Cuba, referring to those countries as Venezuela’s “true friends in the world,” for their efforts to provide assistance to mitigate Venezuela’s humanitarian crisis and the COVID-19 pandemic.
While Venezuela’s crisis has been a contentious geopolitical issue for several years, polarization around the right way to approach the crisis has only intensified in the wake of the Trump administration’s ‘maximum pressure’ campaign and the COVID-19 pandemic. Since the onset of the pandemic in March, the U.S. has faced significant criticism for upholding its sanctions policy in Venezuela, where the pandemic is expected to aggravate the already dire humanitarian emergency. Several of the U.S.’s geopolitical rivals—including China, Russia, Turkey, Cuba, and Iran—have openly criticized U.S. sanctions policy and have solidified their alliances with the Maduro government, providing key humanitarian and medical assistance in the wake of the global health crisis.
Given the important role that Maduro’s international allies have played in his continued hold on power, it’s worthwhile to assess the true role of Russia and China in Venezuela, and how these relationships have changed and/or progressed in recent years.
Trade, Debt, and Sanctions Evasion
Russia and China have long been allies to Venezuela, though the Maduro government’s failure to repay its debts to the two countries has strained these relations over the years. With Venezuela’s state-owned oil company PDVSA in approximately $34.5 billion of debt, and the Maduro government failing to pay interest on its past loans, Venezuela’s national debt is now higher than its GDP, with the two biggest creditors being Russia and China. In 2017, Russia and Venezuela agreed on a restructured debt payment plan to assist the Maduro government in repaying its debts to the country.
With the Venezuelan government increasingly unable to pay its debts in the face of economic catastrophe and crippling U.S. sanctions, Maduro has had greater difficulty in securing new loans or investments from Russia and China in recent years, and neither Russia nor China issued new loans to Venezuela in 2019. However, both countries continued to import Venezuelan oil as a form of debt repayment. In 2019, China imported an estimated 292,000 barrels per day from Venezuela, while Russian state oil firm Rosneft imported 503,100 barrels per day, approximately 62% of Venezuela’s total oil exports for the year.
China and Russia have also continued to trade food, medicine, and other goods that are otherwise scarce in Venezuela in exchange for oil, in many ways profiting off of the country’s humanitarian crisis. Russia provided Venezuela with over 250,000 tons of grain in 2018, and 600,000 tons in 2019, most of which was distributed in subsidized food packages. Russian pharmaceutical companies have also benefited; in 2019, Venezuela signed a contract with Russian pharmaceutical company Gerofarm to allow for the regular purchase and import of insulin to Venezuela.
Similarly, in 2019, nearly 40% of Venezuela’s food imports came from entities in China selling goods such as milk, cooking oil, and meat, most of which was traded in exchange for oil. Additionally, since the onset of the COVID-19 pandemic, China has sent a total of 300 tons of humanitarian aid to Venezuela, including hundreds of quick COVID tests, millions of face masks, personal protective equipment, and ventilators.
In the face of Venezuela’s growing relationships with China and Russia, the Trump administration administered new sanctions on February 18, 2020 on Russia’s Rosneft Trading for its dealings with PDVSA. Following this designation, Rosneft officially terminated its operations with Venezuela and sold its assets to another undisclosed state-owned company. While at first this was perceived as a sign that Russia was pulling investments out of Venezuela, in May those assets were sold to private Russian security firm Roszarubezhneft, which has been linked to Rosneft, indicating that Russia has no intention of actually suspending its operations.
Russia has also continued to play a key role in helping Maduro to evade U.S. sanctions while continuing to import Venezuelan oil through other means. Since 2019, Russian tankers have taken action such as turning off transponders while en route to Venezuela or changing the flags on their vessels to avoid detection and conceal the source of transported oil. Russian oil company Rosneft has acted as a strategic middle man to assist in shipping Venezuelan oil to other countries: India, the UAE, and Turkey are among those who have purchased Venezuelan crude using joint ventures and offshore subsidiaries of Rosneft.
China has similarly evaded U.S. sanctions, often with the assistance of these Russian subsidiaries. Though the state-owned China National Petroleum Corporation (CNPC) slowed and eventually stopped directly purchasing Venezuelan oil by the end of 2019 to avoid secondary sanctions, China continued to import Venezuelan crude from PDVSA with the assistance of a Geneva-based subsidiary of Rosneft. Investigation by Reuters found that this subsidiary assisted China to transfer oil between tankers and conceal the true origin of these shipments, making it appear as if the oil was coming from Malaysia rather than Venezuela. China reportedly received 18 shipments of Venezuelan crude in this manner in 2019—more than 5% of Venezuela’s exports for the year—with shipments continuing into 2020.
Political and Military Support
In addition to economic assistance, Russia has provided important political support to the Maduro government. In fact, following the uprising on April 30, 2019, U.S. Secretary of State Mike Pompeo claimed that Maduro was prepared to flee to Cuba but reversed his plan after Russian authorities convinced him otherwise. Additionally, Russia blocked a U.S.-backed resolution in the UN National Security Council in February 2019 which would have recognized Guaidó as interim president and called for the holding of new elections.
Throughout 2019, as Maduro’s leadership faced challenges from the Guaidó-led opposition coalition, Russia continued to offer support to the Maduro government and significantly increased its presence within Venezuela. Following Guaidó’s proclamation of an interim government in January 2019, Moscow heightened its military presence in Venezuela, sending a military technical contingent and up to a hundred Russian military specialists to Caracas. Additionally, Rosneft reportedly became more involved in the day-to-day operations of Venezuela’s state-owned oil company in 2019, providing maintenance and technical expertise to PDVSA refineries.
Reports emerged in May 2019 indicating that, ahead of a meeting between Secretary of State Mike Pompeo and Vladimir Putin, the Russian president was interested in negotiating with the U.S. to propose an exchange of sorts: the U.S. government would back off support for Ukraine, which the U.S. has supported since Russia invaded in 2014, and Russia would in exchange cut support for Venezuela. U.S. officials swiftly rejected this possibility, refusing to abandon a NATO ally to use Venezuela as a geopolitical bargaining chip.
Russian authorities have also met publicly with Maduro several times in recent years. Nicolás Maduro himself met with Putin in Moscow in September 2019 in lieu of attending the 2019 session of the UN General Assembly. In February 2020, shortly after Guaidó made a surprise appearance at the State of the Union in Washington D.C., Russian Foreign Minister Sergey Lavrov visited Caracas in a demonstration of support to the Maduro government, openly denouncing the U.S. pressure policy towards Venezuela.
While the Maduro government’s struggles to repay its debts, coupled with the ongoing U.S. sanctions campaign, makes Venezuela a particularly high-risk trading partner and political ally, the Russian government has consistently supported the Maduro regime. This is in part because Venezuela is an extremely strategic political and economic partner that presents opportunities for Russia to advance its long-term goals as a global superpower. For Moscow, Venezuela presents not only an ideological foothold in the Western Hemisphere, but a source of massive crude reserves that can help Russia to advance its long-term goals in expanding throughout Latin America and the world as a major global energy supplier.
Though Putin has publicly supported attempts at dialogue between Maduro and the opposition, including the most recent round of talks in September 2019, the Russian government has considerable incentives to continue to support Maduro and stall a negotiation process. As long as a Chavista government is in power, Russia’s investments are protected and they can advance their role as an energy supplier in the Americas. Under an opposition government, Russia’s future in the country is not so secure. Venezuela’s opposition coalition has continuously criticized the Russian government for its support to the Maduro regime, and in January called on the U.S. government to increase sanctions on Russia for its role in enabling PDVSA.
While China too has been a critical political ally to the Maduro government, the Chinese government has different incentives in Venezuela and has generally been less outspoken than Russia in its support for Maduro. However, as a permanent member of the UN Security Council, China has been firm in its stance against UN interference in Venezuela’s crisis, and also rejected the U.S.-backed resolution proposed in February 2019. Additionally, China played a key role in helping Venezuela to win a seat on the UN Human Rights Council in October 2019, a decision that was hotly contested given the Maduro government’s record of human rights abuses.
China has also provided the Maduro government with technological assistance and intelligence to implement systems to track and monitor citizen behavior. In fact, Venezuela’s carnet de la patria, a ‘homeland card’ connected to a database that tracks daily activities such as buying gasoline, food, and medicine, was inspired in part by China’s own ‘social credit’ system. The same Chinese telecom giant, ZTE Corp, that created China’s system of social control was hired in 2018 to build what is now the carnet de la patria. Since its conception, the carnet de la patria system has been heavily denounced by human rights activists as a system designed to control social and political behavior and deepen citizens’ dependency on the regime.
In early 2019, following the rise of the Venezuelan opposition under Guaidó, there was reportedly deep concern within Beijing about investments in Venezuela and the Maduro government’s failure to repay its loans, and in February reports emerged that China had been holding talks with Guaidó’s opposition to ensure that its investments would be protected under a new government. In April of the same year, Guaidó personally published an op-ed in Bloomberg in which he assured that China’s investments would be safer under a democratically-elected government, and encouraged the Chinese government to use its influence to encourage a negotiated process.
Throughout 2019 and into 2020, China appeared relatively well-poised to support a negotiation process and transitional government—until COVID-19 hit. The COVID crisis had a significant impact on politics both within Venezuela, where Maduro is now more popular due to his swift response to the outbreak, and on Venezuela’s relationship with China. In March, the Maduro government opened talks with China to seek financial support and humanitarian assistance amid the pandemic. Since then, China has sent 6 shipments of medical supplies to support Maduro’s COVID-19 response, and Chinese officials have openly spoken out against the U.S.’s decision to uphold sanctions on Venezuela amid a global health emergency.
Given the global and geopolitical changes of recent months, and an opposition coalition within Venezuela that is more divided and less popular than ever, China stands firmly behind the Maduro government. However, the relationship between Venezuela and China is primarily an economic one, and is therefore subject to change depending on external factors. While Russia’s alliance with Venezuela is rooted deeply in ideology, China is believed to be primarily concerned with financial stability and the government’s ability to repay its outstanding debts. China would likely be supportive of a democratic transitional government when the opportunity presents itself—as long as its investments are safe.