The political environment in Venezuela following the 3 January capture of Former President Nicolás Maduro by US security forces defies easy interpretation. Commonly, companies assume the country is either a US client state rapidly opening to foreign capital or a repressive authoritarian regime with an ingrained left-wing ideology. In reality, the situation is more complex and no less challenging for investors to assess in the aftermath of a devastating earthquake that took place in the country on 24 June.
In our work supporting organisations assessing opportunities in Venezuela, we are typically hearing several misperceptions about the political environment that obstruct effective decision-making. By addressing these, investors can more accurately identify risks and opportunities, design scenarios and plan for any future engagements in the country.
1.The earthquakes pose an immediate threat to Rodríguez’s hold on power
The tragic twin earthquakes that struck Venezuela’s northern coast on 24 June have caused over 5,540 deaths and nearly 17,000 injuries according to official reports as of 25 July. The real number of causalities is almost certainly much higher, in part due to an ineffective government response. The security forces and state institutions have been largely absent from La Guaira state, the epicenter of the damage, leaving civilians to organise their own rescue missions. This situation is fueling public anger at the already-unpopular Rodríguez government. Her disapproval rating increased 5pp to 63.6%, according to a Bloomberg survey released on 3 July and protests broke out across several states in the weeks following the disaster.
This situation has led many to portray the earthquake as an imminent threat to Rodriguez’s grip on power. But while the political fallout from the disaster will be profound, in the short-term it is likely to reinforce Rodríguez’s grip on power. The interim government will use the disaster as a pretext to centralise control of reconstruction and deepen authoritarian tactics, aligning more closely with hardliners in the security apparatus to stamp out dissent. Washington is likely to accommodate this shift. The disaster will reinforce Trump’s preference for political stability over accelerated democratic reforms, as illustrated by his rebuff of Machado in late June. The earthquakes will ultimately make it more difficult for Rodríguez to build organic support for Chavismo’s continuation in power. But it could very well extend the day of reckoning further into the future.
Investor takeaway: While the earthquakes have intensified public dissatisfaction with the government, they are unlikely to drive immediate political change. Companies should instead anticipate greater state intervention, tighter political controls and a more security-focused operating environment in the coming months.
2.The opposition is united behind María Corina Machado
Machado united Venezuelans of diverse backgrounds and won widespread global support - capped by her 2025 Noble Peace Prize - for her brave campaign in 2024 to unseat Maduro via elections. She is often portrayed as the natural, inevitable leader of a post-Chavista Venezuela. But her role within Venezuela’s diverse and often fractious opposition has always been more ambiguous. Machado has long staked out extreme, uncompromising positions, rejecting any engagement or dialogue with Chavismo. This stance, and her perceived stubbornness, is a source of resentment among other opposition leaders, exacerbating divisions among moderates and hardlines. These fractures have been adeptly exploited by Chavismo during its more than a quarter century in power.
The current context is reinforcing, rather than reconciling, these fissures. Washington’s preference for a prolonged transition that prioritises stability clashes with Machado’s insistence on a rapid elections timeline. This disconnect was on stark display in the aftermath of the twin earthquakes on 24 June when the Trump administration effectively blocked Machado’s return to Venezuela. Washington has since backed negotiations between the Chavista-led National Assembly and the opposition-aligned 2015 Assembly (the remnants of the last democratically elected legislature) led by Dinorah Figuera. Machado will not participate in the talks, set to begin on 1 August. She risks becoming a symbolic leader with diminishing influence over negotiations on political and institutional reform.
Investor takeaway:These dynamics underscore the likely pathway to a post-Chavista Venezuela: prolonged and complex multi-party negotiations rather than a big-bang democratic transition. The influence of Chavista institutions and power brokers will persist over the coming years.
3.Chavismo is on the brink of internal collapse
The weeks after the US capture of Maduro were rife with speculation of an imminent fracture within the ruling party, Chavista hardliners, led by Interior and Justice Minister Diosdado Cabello, were widely viewed as an inevitable roadblock to the liberalising reforms, economic concessions and political alignment demanded by Washington.
But the hardliners were never as uncompromising as portrayed. Self-interest has long replaced ideology as the abiding concern among Chavista elites. Even Cabello has curried favour with US officials, positioning himself as a guarantor of stability and security amid protests by student groups and unions in recent months. Policy shifts and internal purges, far from a signal of distress, have been central to the regime’s ability to retain power through multiple crises and intense international pressure.
Sources from across the political spectrum agree that different factions within the ruling party remain united behind Delcy and Jorge Rodríguez. They see no imminent threat to their authority. Washington’s actions have, for the time being, engendered a greater level of stability within Chavismo than at any point in the last two years. The earthquake fallout, while a major political challenge for the interim government, is likely to reinforce these trends, as discussed below. These dynamics mean that in a future election against a divided opposition, a Chavista candidate could be competitive.
Investor takeaway: Investors should not base market-entry decisions on expectations of an imminent split within Chavismo. The ruling coalition remains broadly united and Chavista actors are likely to retain significant influence over Venezuela's political and regulatory environment for the foreseeable future.
4.The business environment is now predictable and investor-friendly
Both cheerleaders and critics of Washington’s actions coincide in the view that Venezuela is rapidly opening to foreign investment. The past six months have seen the dismantling of policy, regulatory and compliance barriers to investment in Venezuela. The interim government has reformed the oil and gas, electricity and mining industries to prioritise private participation after decades under a state-led model. Washington has responded by issuing dozens of OFAC special licenses allowing US and European companies to participate in a range of otherwise sanctioned commercial activities in Venezuela’s energy, mining and financial sectors.
This trend is real and positive for the business environment. Still, regulatory reforms remain incomplete and tentative, while the proliferation of licenses - each with their own terms and conditions - creates new compliance challenges for companies. Hydrocarbon legislation remains opaque with regulators retaining significant discretion over tax and economic terms. Meanwhile, the sanctions regime is still largely in place, meaning that companies depend on OFAC licenses to operate. These licenses come with strings attached: US law must govern contractual terms in the oil and gas sector, including interpretation, performance obligations, payment and termination, while dispute resolution must occur in the US, UK, France or Singapore. Ensuring compliance with these conditions over the life of project represents a major challenge given the elevated regulatory and political uncertainty in Venezuela. Successful market entry requires a robust plan to manage compliance under different future scenarios.
Investor takeaway: Venezuela's investment opening is creating new opportunities, but companies should expect continued regulatory uncertainty, complex compliance requirements and sanctions-related constraints that require careful planning and ongoing risk management.
5. Washington's Venezuela policy is driven by personalities, not strategy
Prevailing wisdom holds that Washington’s actions in Venezuela have been determined by the personal interests and preoccupations of key figures in Trump world. A Politico report from June documented how a network of oil interests and right-wing influencers lobbied for a rapprochement with Maduro, only to be overruled by Secretary of State Marco Rubio, a committed antagonist of leftist governments across the region. Trump’s ultimate decision to authorise the special military operation - despite considerable risks of US causalities - has been widely attributed to personal animus after military pressure failed to force Maduro to negotiate.
Personal interests and individual agendas are certainly a driver of US decision-making. But this framing conveys a misleading perception that Venezuela’s opening is subject to reversal on the personal whim of White House officials. Venezuela’s reintegration into global financial and commercial flows is likely to continue, if unevenly, in the coming years.
The current approach to Caracas is grounded not only in personalities but in growing, bipartisan concerns over energy security, access to critical minerals and controlling migrant and narcotic flows. A change of power in Washington is unlikely to bring about a reversion to “maximum pressure” against Caracas - a policy the Democrats traditionally opposed. Especially if new US investments materialise in the coming months, incentives for stakeholders in Washington and Caracas to support the current trajectory will continue to grow.
Investor takeaway: Investors should not assume that Venezuela's reopening is dependent on the preferences of a handful of US policymakers. Growing US interests in energy security, critical minerals, migration and counternarcotics are creating broader incentives to sustain engagement with Caracas over the coming years.
Key issues we are monitoring for our clients:
Political risk
- The extent of US influence over political decision-making in Venezuela and what this means for political stability and the trajectory of the transition
- How the earthquakes and the resulting social discontent could affect political stability, government legitimacy and the risk of unrest
- The role Machado is likely to play in a future transition and whether her influence is increasing or diminishing
- How realistic a post-Chavista transition is in the short-term, including elections and what different political scenarios could mean for investors
- What an effective "exit strategy" or contingency plan for Venezuela should look like if the political or operating environment deteriorates
- The outlook for foreign investment and which sectors are likely to present the greatest opportunities and risks over the next 12-24 months
- Operational challenges on the ground, including travel, logistics, infrastructure, energy reliability and crisis response capabilities following the earthquakes
Regulatory risk
- Whether the US is likely to fully ease sanctions or continue relying on general and specific licenses as exceptions to the broader sanctions regime
- Whether the regulatory and policy changes introduced over the past six months truly improve the investment environment or create new compliance and operational challenges
- Whether recent reforms provide sufficient legal certainty for investors, including contract enforceability, dispute resolution mechanisms and protections against future policy reversals, as well as whether the current opening to international business is sustainable or vulnerable to political shifts in Caracas or Washington
- Whether the current political environment provides sufficient guarantees for long-term investments and capital commitments
- How property rights, concession agreements and contractual stability are likely to evolve under different political scenarios
- The likelihood that future governments could revisit or modify recently approved investment frameworks
Security risk
- How the security landscape is evolving, particularly in the mining sector and the implications for companies operating in high-risk regions
In practice: Re-entering Venezuela’s energy market
A major oil and gas company was evaluating a potential re-entry into Venezuela following Maduro’s capture and the issuance of OFAC licenses for the energy sector. The company sought to better understand the political outlook, the likely trajectory of Venezuela's transition and the key risks and opportunities that could affect its investment strategy and operations in-country.
In particular, the client wanted to identify individuals and groups wielding real influence over decision-making in the oil and gas sector, beyond formal government structures and official titles. They were interested in understanding how political, commercial and industry actors shaped decisions in practice, the relationships between these actors and whether their influence was likely to increase, remain stable or decline over time under different political scenarios.
To support the client's decision-making, Control Risks conducted political and regulatory analysis, scenario planning and a detailed stakeholder power-mapping exercise covering key government officials, regulators, industry leaders and other influential actors in Venezuela's energy sector.
Leveraging insights from multiple Control Risks sources with deep familiarity and direct access to political, regulatory and industry stakeholders in Venezuela, we assessed each stakeholder's interests, relationships, attitudes toward foreign investment and likely trajectory of influence, while also identifying reputational, integrity and sanctions-related risks.
In parallel, Control Risks developed a comprehensive security and contingency framework to support executive travel and future operational activity in Venezuela. This included security risk assessments, crisis management protocols, evacuation planning, protective security measures, and incident response procedures.
The project enabled the client to evaluate market-entry opportunities, engage stakeholders more effectively and prepare for a range of political, regulatory and security scenarios.
This Article is written by:Theodore Kahn & Manuela Jimenez.