Venezuela turns to allies to prevent further economic collapse

The Venezuelan government is rushing to talk with its international allies. The precariousness of Venezuela’s finances is compounded by the lack of liquidity caused by Chevron’s departure from the country, uncontrolled prices, and the tightening of sanctions imposed by the Donald Trump administration on Caracas.

During a visit to Moscow, for the Victory Day parade to mark the Red Army’s triumph over Nazism, Venezuelan President Nicolás Maduro signed a series of “strategic partnership” agreements with his Russian counterpart, Vladimir Putin — one of the few world leaders who recognized Maduro as the winner of last July’s presidential elections.

In the conversation with his Venezuelan ally, Putin mentioned that the trade balance between Moscow and Caracas increased by 64% in 2024 “and is expected to continue growing.”

Venezuelan state television reported that the agreement with Russia “will remain in effect for the next 10 years.” The agreement covers areas such as “hydrocarbons, finance, air connections, technology, pharmaceuticals, military cooperation, and security.”

Venezuelan Foreign Minister Yván Gil highlighted the scope of the pact, commenting that “it is the first time a Latin American country has signed a treaty of this magnitude.” “It comes 80 years after the establishment of diplomatic relations between Russia and Venezuela,” he added, a fact the Venezuelan government has repeatedly mentioned. Kremlin spokesman Dmitry Peskov also said that the signed agreement “is a weighty, substantial, and very important framework document.”

Venezuela has made progress in its cooperation with Russia by strengthening its military equipment, jointly producing weapons, and making the Chavista intelligence services undeniably effective. Russian oil investments in Venezuela, however, have not been as extensive as might have been expected, at least so far.

A few days ago, Venezuelan Vice President and Minister of Hydrocarbons Delcy Rodríguez visited Shanghai to follow up on several trade and production agreements with the Chinese government and business leaders, with a particular focus on the oil sector.

Maduro himself has announced “new investments from China.” After a break, Caracas and Beijing signed several productive framework agreements to support another “Strategic Partnership,” which was relaunched in 2023.

This time, Rodríguez met with Dai Houliang, president of the state-owned China Petroleum Corporation (CNPC), which had pulled out of its business in the Caribbean country in 2020, to discuss investment possibilities and joint sales of Venezuelan crude oil.

For years, China supported the Chavista-led Venezuela by providing millions of dollars in loans to fund some of its development projects. A significant portion of this money was squandered and poorly executed, diverted by corruption, leaving projects and agreements half-finished, which eventually angered Beijing toward the end of the last decade.

The Chinese maintained their diplomatic support for Venezuela, but for a time they refrained from investing in the country, waiting for Caracas to begin paying its multi-million-dollar debts, which it has started doing.

The ongoing trade challenges posed by U.S. President Donald Trump, along with the stand-off between the Kremlin and Washington, have opened a space for Maduro to seek refuge and investments from his two major geopolitical allies, while it is isolated from the rest of the world.

Meanwhile, within the country, the Venezuelan economic outlook has darkened again. The exit of Chevron has caused a drop in national revenues, which Asdrúbal Oliveros, director of the firm Ecoanalítica, estimates to be around 50%, higher than initially estimated.

The exchange rate depreciates almost every day. The official dollar is now sold at 91 bolivars. On March 31, it was valued at 69. Experts widely believe that annual inflation will return to around 200%. In 2024, it was 48%, marking the first time in over 10 years that inflation was at double digits.

Venezuela navigated three years of modest economic growth and reduced inflation after the total collapse of its economy in the preceding years. The growth was supported, in part, by the special licenses granted to U.S. and European oil companies to participate in the exploitation of local oil and gas — a lifeline offered by the Democratic government of Joe Biden.

All of this took place within the framework of political negotiations Maduro was engaged in with Washington prior to the fraud allegations regarding the presidential elections on July 28. State-owned oil company PDVSA has slightly improved its internal processes after the production collapse of the previous decade, but it still needs significant money and technology to handle the extra-heavy oil fields it had been partnered with Chevron to manage.

Venezuela now depends more than ever on international investment to increase its crude oil production and stabilize its finances. The Maduro government remains optimistic, announcing increases in non-oil productive sectors, but, in general, the Venezuelan economy remains extremely vulnerable in a scenario where there appears to be no possibility of political change.

In its prime, especially before Hugo Chávez came to power, the state-owned PDVSA was solely responsible for all exploration, exploitation, technical support, research, and sales of oil, gas, and all energy and bituminous derivatives that were refined and exported to all corners of the globe.

In an interview with journalist Román Lozinski on Circuito Unión Radio, Oliveros raised the possibility of a new economic downturn. “The numbers we see for 2025 show a significant decline, and the hardest hit will be those who depend on a salary in bolivars; the elderly and public employees,” he said.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition