The Biden administration will reimpose oil and gas sanctions on Venezuela after President Nicolás Maduro failed to comply with a U.S.-backed agreement to allow opposition candidates and parties to run in July elections, the State Department said in a statement Wednesday.

A six-month general license, issued in October as part of a deal between Maduro and the Venezuelan opposition signed in October, is scheduled to expire at midnight Wednesday and will not be renewed, the officials said. The Treasury Department on Wednesday issued a new, limited license allowing businesses operating in Venezuela, including international oil companies, until May 31 to wind down their operations there.

The decision comes amid U.S. election year concerns that both global oil prices and the number of Venezuelan migrants seeking U.S. entry may increase as restrictions are reimposed on the primary source of Venezuela’s income.

The Biden administration’s temporary license allowed buyers from around the world to purchase Venezuelan crude and pay for it in U.S. dollars for the first time since former president Donald Trump’s maximum-pressure policy — with increased sanctions repeatedly upped during his administration — effectively removed it from the international market. China, which ignored the U.S. sanctions, became Venezuela’s main buyer and Iran its main supplier of chemicals needed to dilute and produce the country’s heavy crude oil.

The revocation of the six-month general license does not affect the oil giant Chevron, which maintains significant operations in Venezuela and is allowed to extract oil and sell it in the United States under a separate license.

The Treasury Department is encouraging other companies to apply for “specific” licenses to continue or begin operations in or with Venezuela or engage in non-monetary swaps for oil, according to senior administration officials who briefed reporters in advance of the official statement on the condition of anonymity under White House rules. Unlike general licenses, the existence or terms of special licenses do not have to be made public.

“The administration is leaving the door open for U.S. and other Western companies to maintain a footprint in Venezuela,” said Geoff Ramsey, a senior fellow at the Atlantic Council focused on Venezuela. “It’s a delicate balance, but one that ensures that the White House retains leverage.”

From an oil industry perspective, “this should do the job,” said an adviser to energy companies engaged in the Venezuelan oil sector, who spoke on the condition of anonymity to protect the confidentiality of clients. While more cumbersome to regulate, the individual licenses would allow specific companies to sell Venezuelan oil on the open market and help prevent “sending Venezuela back into the hands of the Chinese, Iranians and Russians,” the adviser said.

But another industry expert, former Obama administration coordinator for international energy affairs David L. Goldwyn, said that “unless specific licenses really alter what is permitted, China will benefit from cheap crude, Iran will benefit from increased product sales to Venezuela.” Western companies, India and others who purchased Venezuelan heavy oil under the now-expired temporary license would “all be negatively affected,” he said.

The U.S. could still decide to issue a new, more restrictive license or other types of sanctions relief at a later point if the Venezuelan government takes certain steps in the coming days, according to one person familiar with ongoing negotiations.

Any flexibility in the sanctions is likely to encounter blowback from lawmakers.

Seven Republican U.S. senators last week sent a letter to President Biden urging the administration to reinstate and “fully enforce all U.S. sanctions” against the Maduro government. “History has proven time and time again that appeasing dictators does not work,” the senators wrote.

The Biden administration debated taking less drastic steps to show its displeasure with Maduro — including the possibility of a more restrictive general license to replace the existing one that would have allowed foreign trade under certain circumstances. But the choice was “fundamentally based on the actions and non-actions of Venezuelan authorities,” one official said.

“Despite delivering on some of the commitments made … Maduro and his representatives prevented the democratic opposition from registering the candidate of their choice, harassed and intimidated political opponents, and unjustly detained numerous political actors and members of civil society,” State Department spokesman Matthew Miller said in the statement.

Although Maduro’s government “upheld certain aspects” of the agreement — including setting the date for the presidential vote and taking initial steps to allow international electoral observers — his government “has not followed through on the most critical” parts, another senior official said.

Chief among them is Maduro’s disqualification of the leading opposition candidate, Maria Corina Machado, who a series of polls have indicated would easily beat Maduro, running for his third term as president. The government also refused to allow Machado’s chosen substitute, 80-year-old philosophy professor Corina Yoris, to register.

Amnesty International this week condemned a “spike in arbitrary detentions, enforced disappearances, misuse of criminal law, violations of due process and fair trial guarantees, stigmatizing campaigns, and possible acts of torture against people perceived as critical of Nicolás Maduro’s government.”

In apparent violation of the Venezuelan constitution, the government has also placed restrictions on allowing absentee ballots for millions of Venezuelans living abroad, ruling that they must have permanent residency wherever they are living and a Venezuelan passport. Many of the migrants who have left the country for economic or political reasons in recent years have neither.

Delegations from the European Union and the Carter Center met with Venezuelan officials this week to discuss their electoral monitoring missions, but it is unclear whether they will be allowed access to independently assess the vote.

U.S. officials and Maduro representatives met multiple times since the agreement was signed to find a path forward. In Mexico City last week, the Biden administration continued to demand that Machado, or at least Yoris, be allowed to run and that Maduro release political prisoners, as agreed in the October deal signed by his government and opposition leaders in Barbados.

Maduro, in a national broadcast Monday night, accused the United States of failing to follow through on its commitments to lift all sanctions.

“We are going to keep moving forward with a license or without a license,” Maduro said. “We are not a gringo colony, we are not your colony.”

The opposition, meanwhile, is still scrambling to unite around a candidate who might be allowed to run against Maduro. Only three were allowed to register ahead of a deadline last month — Edmundo González, a former diplomat with minimal name recognition; Manuel Rosales, the 71-year-old governor of the state of Zulia; and Enrique Márquez, a former electoral official.

Rosales, who is seen by some as close to “chavismo” — the left-wing, populist ideology tied to former president Hugo Chávez, who died in office and was replaced by Maduro in 2013 — registered without opposition backing at the last minute. Since then, he has suggested that he would agree to step aside and offer his slot to a different candidate.

The fractious opposition parties have until Saturday, under election rules, to suggest a single substitute candidate on a unified platform. The question is whether they will be able to overcome their differences to agree to one person — and whether the Maduro government would allow that candidate to run.

“If they do not put another candidate, I will continue with the Venezuelan flag held high to be the next president of Venezuela,” Rosales said during a speech in Maracaibo in March. “There are two options here: either they appoint a candidate, or they support me. Without that support I will not run for president.”

Machado has since offered to meet with Rosales and look for a solution.

Schmidt reported from Bogotá, Colombia. Ana Vanessa Herrero in Caracas, Venezuela, contributed to this report.

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