A Last Chance to Advance Negotiations in Venezuela

Two years after a formal dialogue between the government and the Venezuelan opposition began, many are beginning to wonder how much longer it takes to declare the process a failure. But there is perhaps a more urgent question: how can this dialogue succeed if there is no clear plan to support the partial agreements that have already been reached in the process?

Hopes for a negotiated solution in Venezuela were high in August 2021, when representatives of Nicolás Maduro's government and the Venezuelan opposition met in Mexico City. There they signed a broad agreement to begin negotiations that, in the words of the signatories, can "establish clear rules of political and social coexistence, with absolute respect for the National Constitution." The process was designed to help the parties reach a series of "partial agreements" that would generate momentum toward a comprehensive agreement to restore democracy in Venezuela.

After more than a year of behind-the-scenes dialogue, the parties reached a significant achievement on 26 November 2022. They once again arrived in Mexico City and signed a partial agreement that would channel some resources frozen abroad by U.S. sanctions into a fund to be administered by the United Nations. These funds would go toward prioritizing health care, nutrition, and restoring basic infrastructure, all of which are urgent needs contributing to a migration crisis that has forced more than seven million Venezuelans to flee their country.

This agreement was celebrated as a "historic" milestone and received widespread media attention at the time. And for good reason. If implemented, this fund would represent a major boost to the humanitarian response to the crisis in Venezuela. The UN is appealing for $720 million in assistance in 2023, of which only 18% (or $130 million) has received to date, meaning there are still millions of Venezuelans in need of assistance.

However, more than eight months later, this fund still does not exist. The humanitarian deal, originally thought of as the "low handle" in a series of growing deals that could end in a comprehensive deal before the presidential election in 2024, has stalled over a combination of factors.

After the agreement was signed, it took the U.S. government six months to assure the U.N. that the fund could exist within the U.S. financial system, and thus minimize the risk that creditors could seize it with legal claims against the Venezuelan government's debt. This dealt a severe blow to the implementation of the agreement and raised doubts about its future. But in May 2023, U.S. diplomats finally assured the U.N. that implementation of the deal could move forward, finally giving it the green light.

Since then, the main obstacle to implementation has been the UN's internal bureaucracy. Understandably, the organization is concerned about the reputational risk of implementing an initiative that has drawn comparisons to Iraq's controversial oil-for-food program, a program that was plagued by mismanagement and corruption. However, UN transparency standards have improved significantly in recent years.

Given these strict standards, and in light of both sides' interest in moving forward with the UN framework, there is no excuse for delay. Postponing the implementation of the humanitarian agreement only serves the interest of the Maduro government, which has used this delay to try to bolster its narrative that sanctions, and not years of mismanagement and corruption, are the sole cause of Venezuela's economic collapse.

This is the main finding of our new report published by the Atlantic Council's Adrienne Arsht Center for Latin America (AALAC), in which we provide five key recommendations for the U.S. government and UN diplomats to move forward with the implementation of the humanitarian agreement.

First, it is essential to recognize that the fund does not need to exist for the sanctioned money to be channeled into the UN humanitarian response. There are large amounts of money in frozen assets held in financial institutions around the world that could be transferred to United Nations agencies efficiently and securely, even before the fund is established. The United States can and should make it clear that it is ready to do so by putting the ball in Maduro's court.

A clearer level of coordination with the multiple stakeholders involved, including Venezuelan political actors, countries in which sanctioned funds are frozen, and associated financial institutions, is also needed so that there are clear expectations on how to proceed. Support for the agreement and the details of its implementation must be clearly communicated.

In parallel, the UN should be encouraged to build on its success in managing multi-donor trust funds (MDTFs) over the past thirty years. While Venezuela's humanitarian deal is not without risk, the UN has built the necessary systems to manage these funding mechanisms with transparency and accountability.

The UN Multi-Partner Trust Fund Office currently manages nearly 100 pooled funding mechanisms, representing more than 95% of all funds channelled through UN-administered programmes. This experience must be harnessed to ensure that this historic opportunity is not wasted.

In addition, the United States must ensure that valid legal claims by creditors do not impede assistance to the Venezuelan people. Some creditors have already stated that they will not claim the Social Fund, a positive gesture that should be applauded. Ultimately, valid creditor claims must be addressed but kept separate from efforts to resolve the humanitarian crisis.

Finally, the U.S. and international allies must commit to a coordinated communications strategy. The July meeting of EU and Latin American diplomats with Venezuelan negotiators in Brussels, and the conference on Venezuela in Bogotá in April, demonstrate that when the international community is on the same page, it can send a powerful message in support of negotiations.

The truth is that the window of dialogue cannot be left open forever. Maduro must understand that he faces significant costs if he leaves the table, and both the U.S. and its allies must be ready to ratchet up pressure if necessary. But by the same token, every opportunity must be given to ongoing negotiation efforts to succeed. Failure to implement this humanitarian agreement would not only mean less assistance for the long-suffering people of Venezuela, but would jeopardize the future of the Mexico City dialogue process. In the interest of all those advocating a peaceful and democratic solution in Venezuela, the fate of the humanitarian agreement cannot be left up in the air.

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