Venezuela Pres. Risks Regional Tensions Amid Potential Annexation Push

Following the passage of a referendum on 3 Dec, Venezuelan President Nicolas Maduro has ordered state-run oil company PDVSA to “immediately” proceed “to grant operating licenses for the exploration and exploitation of oil, gas and mines in the entire area of our Essequibo.” The Guayana Esequiba region covers ~60% of the territory of neighbouring Guyana, has long-standing Venezuelan claims over its ownership, and is rich in oil and other natural resources.

• Following Maduro's claims on the region there is a low-probability, high-impact scenario in which Venezuelan forces enter Guyana in order to claim the territory and allow PDVSA to begin exploration activities. This would risk a notable regional conflagration.
• On 5 Dec, Brazil's armed forces announced that they would be reinforcingtheir northern border given the risk of a Venezuelan attempt to annex Guayana Esequiba. The main road from Venezuela to Guayana Esequiba runs through Brazil, with the Brazilian senior diplomat for the region warning against aggressive action.
• Maduro's referendum risks a broader backlash. Having recently signed agreement with the opposition, the US has in exchange offered sanctions relief on PDVSA, which is coming up for renewal in April. Any aggressive action would end the prospect of a continuation, risking ~USD5-6bn in 2024 according to estimates.
• It also risks relations w/other countries in the region. The gov'ts of Colombia, Brazil, Peru, Bolivia, Mexico, and Chile are all of the political left and generally less inclined to back the US. The act of annexing a neighbouring region could damage this socialist 'alliance'.