Caribbean crisis: US actions in Venezuela threaten India's economy

The Trump administration’s blockade and seizure of “sanctioned” oil tankers linked to Venezuela in international waters represent a new low in the United States’ (US’) foreign policy and raise fresh questions on the principles and ethics of Washington’s recent global leadership. Done without the US Congress’ approval, these actions raise fears of all-out war. The US earlier this month seized two tankers and is pursuing a third, claiming all three were linked to a dark or shadow fleet used by Venezuela, Iran, and Russia to avoid Western sanctions and ship oil mainly to China but also to India. Raising doubts about the veracity of the administration’s motives, at least one of the seized vehicles does not appear on the list of official sanctions. Mr Trump’s declaration that oil from the captured tankers could be sold or added to US strategic reserves adds an element of amorality to US actions.

 

These seizures follow similar interdictions by France and Estonia on the Russian dark fleet in neutral waters. But with Russia demonstrating that it is willing to provide military protection for its shadow fleet, and China, the major oil buyer from these countries, describing US seizures as a serious violation of international law, the potential for a global conflict has never looked closer. The US has also conducted strikes on boats that it claims were used by drug traffickers. In both his terms, Mr Trump has made no secret of his aversion for the ultra-left leaning Nicolás Maduro and desire for a regime change in Caracas. A clumsy attempt to do so in 2020 failed. Though Mr Maduro can by no means be described as a model of governance or a beacon of genuine democracy, sanctions on Venezuelan oil, the country’s principal foreign-exchange earner, have crippled the economy for the past decade. Mr Trump’s claim that Mr Maduro is emptying his prisons and illegally flooding the US with criminal elements and that the country is a major source of drug trafficking lacks foundation. In fact, Venezuela is known to be a minor player in the illegal drug trade, unlike neighbouring Colombia.

 

These ructions in the Caribbean have some impact on India. Indian refiners have been buying heavy crude oil from Venezuela since 2024 and the US sanctions, blockade, and seizures on this relatively cheap source threaten India’s energy security. This apart, state-owned ONGC Videsh, the overseas arm of Oil and Natural Gas Corporation (ONGC), has significant investment in Venezuela’s oil-rich Orinoco basin. The company has a 40 per cent stake in a joint venture for heavy oil and an 11 per cent stake in another oil field. As a result of these sanctions, ONGC Videsh has around $600 million stuck in Venezuela. Mr Maduro had agreed to transfer the operations of these fields from its state-run oil company to ONGC if the Indian corporation acquires waivers from the US. Now, war clouds hang over this process. India’s exports of pharmaceutical products and textiles to Venezuela have dwindled and remain at risk owing to recent developments. Robust criticism by New Delhi of US action in Venezuela has been hamstrung by the delay in concluding a viable trade deal with Washington. But if the US sees fit to extend its policy of chase and seizure across the globe, the consequences for the Indian economy could be adverse.