Venezuela formally applies to BRICS

Last August 3rd, the government of the Bolivarian Republic of Venezuela formalized its petition to join the bloc BRICS in its efforts to join mechanisms to avoid sanctions imposed by the US and strengthen multilateral relationships in order to leverage on different mechanisms of payment as the Maduro government is still under sanctions to use the dollar and traditional international banks as Washington still has important sanctions against the Venezuelan governmental institutions.

At the same time, its important to point out that other goal to pursue for the Venezuelan government is to expand its oil and energy deals with countries of the BRICS pointing to the growing demand of countries such as India, China and to leverage on the shift to renewables of countries such as Saudi Arabia or the United Arab Emirates for example, members of OPEC, of which Venezuela is member as well.

It is expected that Venezuela could count with the backing of countries such as Brazil for its acceptance into the bloc as well as with the support of Russia and China and which might help Caracas to foster its oil and other fields deals in order to try to boost its economy and private investments from these countries of the bloc as well as to boost the use of alternative mechanism of payments alternative to the dollar, although its certain that the dollar remains relevant and significantly overwhelming the use of other currencies in the local economy despite the efforts by the Maduro government to prompt the use of the local currency, the Bolivar and the euros.

Also another key point to see will be if Venezuela will propose some sort of a military bloc composed by members of the BRICS something similar to that of the Shanghai Cooperation Organization in counterbalance to the NATO ambitions and the repetitive naval exercises led by the United States in the Caribbean along with different Caribbean and central american countries which considering the threats Caracas feels from Washington and the growing military alliances Caracas has had in the last years with countries such as Iran.

With Venezuela joining the BRICS the bloc will incorporate the largest oil reserve in the world, important reserve of natural gas and other raw materials and a key position at the entrance of South America just as Caracas and Washington have been making some steps in trying to normalize their oil relationship, but also its important to consider that with the difficulties facing some of the BRICS countries regarding their economies and currencies and their access to global capital and financial markets such as Russia or China and the current geopolitical context and global oil landcape, for Caracas it will be a tough task to balance its geopolitical and commercial imperatives between the BRICS petition and the recent slight overtures Caracas and Washington have been making over oil deals that definitely would allow Caracas and Venezuelan oil industry to get fresh funds just as President Nicolas Maduro is touring China to relaunch the bilateral relationship seeking for new fresh funds from Beijing and to rekindle a relationship slightly frozen in the last recent years due to different reasons and motivations and where Caracas is calibrating and assessing different options ahead of presidential elections in 2024.

Overall, if accepted by the BRICS bloc, it could be a significant move for Venezuela and for the bloc to further onboarding the largest oil reserves in the world although challenges still remain for the bloc and for Venezuela to calibrate its own economic crisis and strengthen its position in order to elevate its profile within the bloc clearly aiming to comprise and involve the most important emerging global powers and where for haters or lovers, Venezuela for now its not in its best ever position.

Jose Chalhoub
Jose Chalhoub
Political risks and oil analyst with experience in Venezuela oil industry focused on intersection of geopolitical risks and oil markets.