Venezuela at a crossroads: economic and political challenges facing key elections

The current economic pragmatism observed in Venezuela under the government of Nicolás Maduro has raised various questions and sparked debates about the long-term viability of these measures. Francisco Monaldi, a renowned expert in the Venezuelan energy sector, has stated in an interview with EL PAÍS that this shift in the country's economy is mainly due to the ongoing electoral cycle and does not necessarily represent a sustainable solution for the deep crisis facing the South American nation. The collapse of the Venezuelan oil sector has been one of the most dramatic events in the country's recent history, leading to a sharp decline in oil production and exports. Monaldi emphasizes that in order to revitalize this industry and bring it back to its full potential, an annual investment of between 8,000 and 10,000 million dollars for at least eight years would be required. Despite the global transition towards clean energy, Venezuela, as the possessor of the world's largest oil reserves, could still find an opportunity if it manages to establish the necessary conditions to attract private investments. Amidst this panorama, the upcoming elections in Venezuela this Sunday represent a crucial point for the country's future. Monaldi points out that if there is a high voter turnout, President Maduro would face a serious challenge, as his initial strategy of legitimizing himself through these elections has been compromised by the advantage held by the opposition candidate. The expert notes that while the current economic pragmatism may have certain short-term benefits, it is not a sustainable policy and appears to be motivated by electoral interests. The partial dollarization of the Venezuelan economy, driven by the need to control inflation, has been accompanied by the signing of oil contracts with foreign companies such as Chevron, Maurel & Prom, Repsol, and Jindal. However, the viability of these agreements is limited by the lack of licenses to operate in the sector, which reduces the ability of private entities to effectively participate in oil production and sales in the country. Monaldi's analysis of the possible scenarios that could unfold after the elections reflects the uncertainty and complexity of the Venezuelan political and economic landscape. From a possible victory for Maduro through high abstention to a rejection of the results by the opposition, to an internal negotiation within chavismo for a transition, the possibilities are diverse and the outcome still uncertain. Regarding Venezuela's position in the context of the global energy transition, Monaldi warns of the challenges the country faces due to the nature of its extra-heavy crude and potential future penalties for carbon dioxide emissions. Despite the current demand for this type of crude, there is concern about Venezuela's long-term competitiveness in a scenario transitioning towards cleaner energies. In summary, the current political and economic situation in Venezuela poses significant challenges and requires fundamental strategic decisions to achieve a sustainable recovery in the oil sector and the economy as a whole. Uncertainty prevails in the face of the elections and the possible post-election scenarios that could unfold, leaving the country at a crucial point in its history where the decisions made will have a decisive impact on its future.