Banning Russian oil and gas: out of the frying pan into the fire

The Biden administration’s willingness to engage with Venezuela, Saudi Arabia and Iran to impose ban on Russian oil and gas is rattling some lawmakers who say the White House should not be cutting off foreign relations with one dictator in exchange for another to stabilize global energy markets.

Officials said no decision has been made about importing oil from Venezuela or Saudi Arabia, but the conversations underscore the difficult position. White House is trying to punish Russia amid concerns at home about soaring gas prices and the potential of further destabilizing worldwide energy markets.

Mark Green, the top Republican on the House Foreign Affairs Western Hemisphere subcommittee, on Monday called for the ban on Russian oil to extend to Iranian and Venezuelan supplies.

“The United States should not be directly or indirectly funding Vladimir Putin’s invasion of Ukraine by purchasing their oil and gas," Green said. 

"At the same time, it would be outrageous to even consider buying oil from Iran or Venezuela. It's preposterous that the Biden administration is even considering reviving the Iran Nuclear Deal,” he said.

“It’s past time for us to take advantage of abundant natural resources of the United States and become energy independent—and it’s time to cut off tyranny and totalitarianism at the knees around the globe."

The White House has faced questions in recent days about whether, in exchange for banning energy imports from the Kremlin, it would be willing to deal with other governments that have been alleged to have committed crimes against humanity and have abysmal track records on human rights abuses.

“I think it’s important to take each of those engagements separately because there are a range of issues that are important in each of those relationships,” White House press secretary Jen Psaki said Monday, the day before President Biden announced he would ban Russian oil imports as further punishment for Russia invading Ukraine.

Psaki said two administration officials — Brett McGurk, coordinator for the Middle East and North Africa, and Amos Hochstein, a State Department special envoy for energy affairs — traveled to Saudi Arabia last month to discuss a range of issues, including the war in Yemen and energy matters.

But relations with Saudi Arabia are a complicated matter given the kingdom’s alleged human rights abuses, particularly the 2018 murder of journalist Jamal Khashoggi. Biden vowed last year to hold Saudi Arabia accountable for Khashoggi’s murder after the US officials determined Saudi Crown Prince Mohammed bin Salman ordered the killing.

Axios reported this week there were discussions about Biden visiting Saudi Arabia later this year, but Psaki said there are no current plans for the President to travel to the kingdom.

Psaki also acknowledged oil was a part of discussions among the US, allies and Iran as they seek to finalize a deal that would prevent Iran from being able to acquire a nuclear weapon. Should the sides reach a deal, sanctions could be lifted that would allow Iranian oil to flow into global markets, providing another source of supply to replace Russian energy.

Meanwhile, Biden administration officials visited Caracas, in a sign that the United States is at least willing to consider supplanting Russian energy purchases with those from other previously sanctioned countries.

The dialogue with officials from Venezuelan President Nicolás Maduro's government could also be part of a diplomatic offensive to cut Russia off from its largest ally in the Western Hemisphere.

Still, the move rattled some of Biden's allies in Congress, including Senate Foreign Relations Committee Chairman Bob Menendez.

“If the reports are true that the Biden administration is brokering the purchase of Venezuelan oil, I fear that it risks perpetuating a humanitarian crisis that has destabilized Latin America and the Caribbean for an entire generation," Menendez said in a statement.

"Nicolás Maduro is a cancer to our hemisphere and we should not breathe new life into his reign of torture and murder. As such, I would strongly oppose any action that fills the pockets of regime oligarchs with oil profits while Maduro continues to deprive Venezuelans of basic human rights, freedoms, and even food," added Menendez.

The White House has made clear it has other interests in talking with Venezuela, specifically about the release of imprisoned American citizens.

“There was a discussion that was had by members of the administration over the course of the last several days. Those discussions are also ongoing. And part of our focus is also on the health and welfare of detained US citizens — while a separate process, still that is part of our engagement with them,” Psaki said Monday. “So, at this point in time, I don’t have anything to predict. It’s ongoing.”

A full reinstatement of Maduro as a recognized leader in good standing with the United States would be a shocking turn of events.

Not only is Maduro's government not officially recognized as Venezuela's ruling body — the State Department in January refreshed its recognition of opposition leader Juan Guaidó as Venezuela's legitimate leader — but Maduro himself is under indictment in the United States since 2020 as an alleged narco-terrorist.

The Venezuelan overture also quickly spilled over into Florida's 2022 Senate race, where GOP Sen. Marco Rubio is seeking reelection to a third term.

Rubio on Sunday was quick to criticize the move, saying Biden was seeking to "replace the oil we buy from one murderous dictator with oil from another murderous dictator."

Rubio also came out forcibly against purchasing Iranian oil, largely on similar grounds.

The leading Democrat in the primary race to challenge Rubio, Florida Val Demings, said she is "deeply skeptical of the new talks in Venezuela."

"We have multiple strong actions that we can take right now to bring down costs without enriching corrupt and murderous dictators like Nicolás Maduro," Demings said in a statement.

Still, the Maduro regime had embarked on a charm offensive even before Russia's invasion of Ukraine, recruiting a former Ecuadorian finance minister to woo Wall Street as an ally in a push to decrease or lift sanctions against Venezuela.

The pitch before the invasion was essentially that bondholders would recover their investments if they successfully lobbied Washington to lift sanctions. The Russian invasion of Ukraine has added geopolitical and inflation-busting benefits to the mix.

It's unclear whether Venezuela would be able to increase oil production quickly enough to supplant Russia's isolation from the global energy market — Venezuelan oil production dipped from 3 million barrels a day in the 1990s to about a tenth of that following US oil sanctions in 2019.

While production has more than doubled since then, it could still take months or years for Venezuelan crude production to make a dent in domestic US gas prices.

Both Republicans and Democrats are critical of what they call the Biden administration's knee-jerk reaction to seek increased oil production abroad rather than easing conditions to increase domestic production, which would also take time to make a difference when it comes to prices at the pump.

“I find it disturbing that the Biden administration is negotiating with one tyrannical dictator while sanctioning another one. The U.S. is more than capable of producing its own energy. We need to stop relying on adversaries for energy we can produce here at home,” Vicente Gonzalez, a member of the House Foreign Relations Committee, told The Hill.

Can United States afford to ban export of oil and gas from Russia?

The United States may survive cutting off Russian oil and gas imports over Moscow’s invasion of Ukraine, but it would almost certainly strike a massive financial toll.

Political support for banning Russian energy imports is growing in both parties, and the White House said the topic is under discussion — though it said President Joe Biden had not made a decision.  

Oil prices are already skyrocketing, and the Brent crude oil international benchmark hit a 13-year high of US$139 per barrel on fears of a ban after Secretary of State Antony Blinken said the US was engaging in an active discussion about the possibility.

Russia is one of the world’s largest oil producers, with a 12% global market share, according to an analysis by JPMorgan.

Prior to the invasion of Ukraine, Russia was exporting about 6.5 million barrels daily, of which 4.3 million barrels per day were going to Europe and the United States. The US was importing about 600,000 to 800,000 barrels from Russia daily — or about 8% of the country’s supply of crude oil and petroleum products.

Cutting off that spigot will lead to higher prices unless more supply comes from somewhere.

It’s possible that the Organization of the Petroleum Exporting Countries (OPEC) could decide to increase supply, but there has been no indication from such countries that they will produce and export more oil to replace Russia’s, the JPMorgan analysis warned.

“The Biden team is already calling Saudi Arabia, the United Arab Emirates (UAE) and others, I imagine,” said Morgan Bazilian, Director of the Colorado-based Payne Institute for Public Policy. “But their diplomatic leverage on those countries is limited, and they have shown very little appetite to be influenced by Biden and the US.”

Relations between Saudi Arabia and the Biden administration are decidedly chilled following Democratic criticism of the killing of former Washington Post journalist Jamal Khashoggi, who is widely believed to have been murdered by Saudi agents.

Saudi Crown Prince Mohammed bin Salman, who is the day-to-day ruler of Saudi Arabia, also recently told The Atlantic in an interview, “I do not care whether Biden misunderstood things about him.”

Senior US officials also took a rare trip to Venezuela, another OPEC member, this weekend for talks about potentially easing sanctions on oil exports from that country.

Another option to take the pressure off a ban on Russian oil would be to increase US shale production, although that growth would be limited by the necessary labor and infrastructure demands, according to the JPMorgan analysis.

It is more expensive to produce oil from shale fields in West Texas than Saudi Arabia. The higher international prices could lead to increased production in the US given the economics, though relief at the pump would be a bigger question.

“Saudi Arabia is known for having the cheapest, sweetest crude oil — it takes the least amount of additional refining, very cheap to process, and it's very cheap to get out of the ground,” Gernot Wagner, a climate economist and visiting professor at Columbia Business School, told The Hill. “West Texas crude is a lot harder to get out of the ground.”

It costs less than US$10 per barrel to extract Saudi Arabian oil, whereas digging up West Texas crude costs about US$70 per barrel, according to Wagner.

“So it only really pays to get it out of the ground if the oil price is well above those US$70,” he said.

Bazilian warned that a ramp-up in domestic production would face a variety of hurdles, such as the time it takes to start pumping, financial restrictions imposed by Wall Street and an insufficient workforce.

Another wild card that could help fill the gaping hole left by Russia poses its own set of complications, Iran.

If the 2015 Iranian nuclear deal is restored, it could lead to the waiving of US sanctions, enabling Tehran to ramp up its crude supplies by one million barrels per day over the next two months, the JPMorgan analysis stated.

Bazilian described as deeply flawed the notion that cutting off Russian oil could lead to energy independence.

What would be more sensible, he argued, would be to focus more on energy security — a mix of supply, demand, markets and institutions — while finding a way to entice the US industry in the short to medium term.

“That will be tough for an administration who has climate change as a top tier priority,” Bazilian said. “Of course, that priority is not top tier today.”

Echoing these sentiments, Wagner likened a pivot away from Russian oil sources to a switch from a fast-food hamburger to a highly caloric vegan burger.

“It still produces CO2 emissions,” Wagner said. “It's still going to give you a heart attack. It might even be worse for you right at the end of the day because we don't really know what eating vegan burger does to you.”

And that sense of uncertainty is dominating global energy markets right now — in large part, Wagner explained, because we don’t know what Putin’s going to do next. But from a purely economic perspective, he said, there are certain advantages to cutting off Russian oil altogether.

“You basically rip off the risk premium,” Wagner added. “Suddenly, there's no uncertainty about what Russia will do next because it doesn't matter.”

Cold war is still going on, though of another type

According to many analysts, 20th century ended with a unipolar world. The United States developed the complacency it had eliminated its enemies, but the start of the 21st century proved it wrong and the cold war is still going on.

The fight against communism might be over, but the communist countries from the east began to respond to the US, in their own way. Two leaders from the east, Putin and Xi Jinping are constantly challenging the US hegemony through proxies, trade and diplomacy.

Although, the main US enemy during the cold war was Russia, one more was added to the list in the new cold war, China. The dawn of the 21st century brought rising China.

Its military might and economic progress posed a threat to US dominance. China began to capture the world through trade and investment. It caused the US, to take some unconventional steps against China. The US imposed economic sanctions on China and China responded accordingly. Hence, the trade war started.

The US also shifted its Asia Pacific policy to Indo-Pacific. The initiative New Silk Road, the establishment of Quad, more military presence in the South China Sea, military assistance to Taiwan, and support for Hong Kong are some manifestations of the new cold war.

Rising Russia

Putin strengthened the disintegrated Russia, which gave birth to the new phase of the cold war, and also made Russia stronger to give a befitting response to the US at every front.

Putin with political acumen and strong nerves has brought Russia to the level to compete with the US at the international chessboard more firmly and robustly.

In 2015, Russia launched airstrikes in Syria to back Bashar Al-Assad, the US was too keen to topple. Failed Trump had to announce the withdrawal of troops from Syria. Subsequently, Russia won Asad, the ruler of an important country in the Middle East.

Furthermore, Russia’s meddling in the US 2016 elections which boosted Trump candidacy, proved Putin a great strategist. Trump’s policies ‑ withdrawal from the Paris Climate Accord, cancellation of Iran nuclear deal, Mexico border wall, a travel ban on some Muslim countries, recognition of Jerusalem as the capital of Israel etc. brought criticism to the US.

By bringing Trump into power, Russia succeeded in minimizing its enemy’s role in international politics and tarnishing its image at an international forum.

Russia and China also enjoy good relations with Iran. Both Russia and Iran are also major allies in Syria, a country that was once America’s ally. Closer to home, Russia is also trying to play its card in the Afghanistan conflict.

The US had to invite Russia to arrange the Moscow conference, which was arranged on 20th March, to bring peace to Afghanistan. After fighting the longest war, the US is defeated and facing humiliation, because of Russia’s support to Taliban. Now Russia would surely win an important stake in Afghanistan’s political leadership.

Falling United States

Moreover, Turkey has also gone from the US hands. The US sanctions over Turkey against buying the S-400 missiles system from Russia have brought the relations between former allies to a historic low.

Turkey, under Erdogan, chose to preserve its sovereignty by pursuing an independent policy. Hence, the country, which once allowed the US to deploy nuclear weapons against USSR now has warm relations with Russia and is no more on Uncle Sam’s payroll.

In Latin America waves of the cold war were also seen following the Venezuela crisis. The US has thrown its support behind Venezuelan opposition leader Juan Guaido and declared him the interim president while Russia sent two military planes carrying about 100 Russian personnel arrived in Caracas in the support of President Maduro.

The US officials have told CBS News that the influx was unusual for its size, has fuelled tensions between Russia and the United States as China was also supporting Maduro. Hence, the 21st century has ignited the cold war between Russia and United with new a new vigor.

It was thought that Biden, the seasoned politician, who was known for his support to democratic values, would not put through the world into an abyss of another cold war, but his first foreign policy speech proved it wrong.

Why Joe Biden is following collision policy?

There are ample evidences that the foreign policy of United States under Joe Biden is not any different from that of Donald Trump. These include maximum pressure campaign against Iran, sanctions on Venezuela, bombing of Syria, no change on Yemen and the list can continue. From the outside world the behavior and tough talk of US officials can be termed juvenile. It demonstrates lack of knowledge, wisdom and strategy.

The United States will take an uncompromising stance in talks with China in Alaska, officials said at the first face-to-face meetings between senior officials from the two rivals, but Beijing called for a reset to ties. Then, after days of viciousness against China, it finally dawned on Blinken that he needs China's help. Why, should China be kind to United States?

The same aggressive behavior is also evident towards Russia. Baseless accusations of Russian election interferences are followed with more sanctions and threats topped off with Biden calling Russia's President Putin a 'killer'. Why Biden can’t be called a killer, he ordered bombing at Syria.

Last week the French forces, issued an open letter to NATO General Secretary Jens Stoltenberg in which it accused him of having acting solely in the interest of the US during the development of his NATO 2030 plan. The details show how NATO and the US have caused the bad relations with Russia.

It says the United States is using a fictional 'Russian threat' to pressure NATO countries into morphing into a global force, under its command and independent of the United Nations, to then use it against China. The real threat to Europe emerges from the US interferences in the Middle East and North Africa. The US led NATO is thereby becoming a danger for Europe.

The accusations France against the US go beyond anything one might hear from Moscow or Beijing. The next 'allied' nation that will have sound reason to turn hostile towards the US might well be Germany.

The Biden administration stepped up its rhetoric against a gas pipeline between Russia and Germany, calling on all those involved in the project to ‘immediately abandon’ their work.

“The Department reiterates its warning that any entity involved in the Nord Stream 2 pipeline risks US sanctions and should immediately abandon work on the pipeline,” Secretary of State Antony Blinken said in a statement.

Nord Stream 2 is of vital importance to Germany's energy security. The German public was rather hostile to President Trump and Biden's victory was seen with relief, but when it sees how Biden pursues the same policies, and with a similar tone, it will turn on him. A more general 'anti-Americanism' would then arise.

The uncompromising and ever aggressive behavior the United States shows towards competitors as well as friends will not strengthen its position in the world. These rushed attempts to prevent the ending of its unipolar moment will only accelerate the move towards a new multilateral global system.

OPEC is dead, long live OPEC plus

OPEC has been the most important factor in global oil markets with the ability to influence prices for decades. The shale revolution in the United States has brought much uncertainty for traditional producers due to the vast amounts of oil and gas that are flowing from the American energy heartland in a short period. 

The looming threat is so big, that the traditional competitor Russia agreed to align its policies with that of cartel. Moscow seems eager to squeeze all it can from the agreement, leaving little for Saudi Arabia in particular who risks losing much more due to the particular phase of the country’s economic development.

Over the years, geopolitical and economic developments have transformed the power balance between the organization’s members. One factor that determines influence more than any other is production capacity. In this context, Saudi Arabia has been the undisputed king for decades.

The level of professionalization of national oil company Saudi Aramco has made it into a formidable energy king that controls the world’s second-largest conventional oil reserves. While Venezuela's reserves are bigger, Aramco's low production costs continued Western, in particular the US political support, and relative political stability have gradually increased and maintained OPEC’s largest production capacity.

Influence is not only derived from how much one can produce but more specifically from how much one chooses not to produce. Spare capacity is the defining factor behind leverage over price development. In this area, none is bigger than Saudi Arabia. The geography and type of wells make it possible for Aramco to ramp up and bring down production relatively quickly. On average, the Arab country has usually kept 1.5 - 2 million barrels per day (mbpd) of spare capacity on hand, which is 1.5 – 2 percent of global oil demand before the Covid-19 pandemic.

The unprecedented threat of the US shale industry drove Moscow and Riyadh into each other’s arms in 2016. The first time an agreement was struck, the participants agreed to cut production by 1.8 mbpd (1.2 from OPEC and 600,000 from non-OPEC). Despite some friction and disagreements, the OPEC+ format has survived for years.

However, the disparity in interests and share of dependence on oil revenues is a continuous source of instability. According to Ronald Smith, a Moscow-based analyst at BCS GM, “as long as oil is US$45/barrel or below, it is pretty easy to get everyone in OPEC+ on the same page and cut production. And when it is US$65-70, everyone agrees it is time to put oil back on the market. But between US$50 and US$60, that is where the interests diverge.”

The price of oil currently is hovering around US$55, which means that Riyadh finds the alliance with Russia more important than the other way around. The IMF estimated that Saudi Arabia's fiscal breakeven oil price for 2021 is at US$68. Russia, in contrast is US$46. Furthermore, a larger share of the Saudi production is exported while Russians consume more of their produce domestically. Also, the economy of the latter is more diversified which gives it another trump in its negotiations with Riyadh.

Another advantage in the hands of Russian producers and the Kremlin is the weak ruble. While the riyal in Saudi Arabia is fixed against the US$, oil is traded internationally in US$ meaning the export from Russia earns producers a handsome fee when exchanged into rubles. Saudi Arabia does not enjoy the same benefit and won’t any time soon either.

The low production costs in the Arab country give it an advantage over competitors such as shale producers in the US. Riyadh expects demand for oil to return later this year when vaccination against Covid-19 kicks-in. Therefore, policymakers in the Kingdom think they'll claw back customers when oil becomes scarcer.

Recently, Saudi Crown Prince Mohammed bin Salman announced that Aramco may offer additional shares to the market in the next dew few years. This shows the necessity for Riyadh to voluntarily lower production by one mbpd while Russia will increase by 130,000 bpd. Saudi Arabia is in a rush to modernize and diversify the economy by earning much-needed petrodollars while it still can.

United States having inflicted hunger around the world faces the same fate

In July of 2013, Rose Aguilar wrote a wonderful article for al-Jazeera, discussing the dire hunger crisis prevailing in the United States. In her article, she brought back a memory of something people had long forgotten, an event that so outraged the American public that the government was temporarily forced to respond with more humane policies. That event was a 1968 CBS special hour-long documentary called Hunger in America, in which viewers literally watched a hospitalized child die of starvation. The then president, Nixon responded because the public outrage left him no choice, but Reagan quickly dismantled those improvements.

When Reagan came to power in 1980, there were 200 food banks in the US; today there are more than 40,000, all overwhelmed with demand and forced to ration their dispersals. Before 1980, one out of every 50 Americans was dependent on food stamps. Today, it is one out of four. Before Reagan, there were 10 million hungry Americans; today there are more than 50 million and the number is increasing with the passage of time.

A substantial part of the Great Transformation included not only tax cuts and other benefits for the wealthy, but a simultaneous massive reduction in budgets for social programs – in spite of the fact that Reagan and the secret government were creating the conditions that would desperately require those same social programs.
That 50 million hungry Americans today includes the 25% of all children in the US who go to sleep hungry every night. About 25% of the American population today cannot buy sufficient food to remain healthy, with most of these being hungry for at least three months during each year. It is so bad that many college students have resorted to what is called “dumpster-diving” – looking in garbage bins for edible food.

According to a WFP and FAO investigation, food shortages and food insecurity deteriorate in areas affected by conflict. The most critical situation is recorded in Yemen, plagued by wars and epidemics. Syria and Lebanon are also of concern. Food insecurity and famine in conflict-affected countries, especially in the Middle East, continue to worsen in the face of growing problems in the delivery and distribution of aid to the population.

The latest report prepared by the UN agencies focuses on food insecurity in 16 countries in the world: Afghanistan, Burundi, Central African Republic, Democratic Republic of Congo, Guinea-Bissau, Haiti, Iraq, Lebanon (Syrian refugees), Liberia, Mali, Somalia, South Sudan, Sudan, Syria, Ukraine and Yemen, in addition to the Lake Chad Basin. The joint FAP-WFP survey shows that in over half of these nations, a quarter or more of the population live in crisis situations or in levels of emergency regarding hunger.

Economically destroyed, socially unstable and now hungry, Venezuela is undergoing turbulent times. Known as “Saudi Arabia” of South America, today Venezuela more closely resembles Syria. Economically destroyed and socially unstable, the country is now fighting an ever more alarming specter hunger. In the slum of Petare in the metropolitan area of the capital, Caracas, refrigerators remain empty, supermarket queues grow longer and the necessity of procuring something to eat drives young people to violence. 

Many come together in armed gangs, plunder houses and shops, rob food from passersby and are paid in foodstuffs. Unsustainable inflation has caused prices to double week after week; today, nine out of 10 Venezuelans do not feel they have the sufficient resources to buy food. For some time now the government has been trying to remedy ‘Clap plan’, which distributes food to civilians. But this does not seem to be enough and hunger is now one of the greatest threats to Venezuela’s fragile national security.

United States wants global oil industry to support its foreign policy agenda

According to a Reuters news, U.S. Secretary of State, Mike Pompeo has urged the global oil industry to work with President Trump administration to promote U.S. foreign policy interests, especially in Asia and in Europe and to punish the “bad actors” on the world stage. He was addressing the participants of a conference in Houston, where U.S. oil and gas executives, energy luminaries and officials of the Organization of the Petroleum Exporting Countries (OPEC) gather annually to discuss global energy development.

Pompeo said, “Washington would use all its economic tools to help deal with the situation in Venezuela, which is mired in a years-long economic crisis and where socialist President Nicolas Maduro is maintaining power despite being disavowed by the US and about 50 other countries”.

The US has imposed harsh sanctions in the past several months on two major world oil producers, Venezuela and Iran. Washington re-imposed oil sanctions on Iran to curb its nuclear, missile and regional activities. “We’re committed to bringing Iranian crude oil exports to zero as quickly as market conditions will permit,” said Pompeo.

He went on to the extent of saying, “We need to roll up our sleeves and compete – by facilitating investment, encouraging partners to buy from us, and by punishing bad actors.” He also declared, “U.S. oil and gas export boom had given the country the ability to meet energy demand.”

Referring to a natural gas pipeline expansion from Russia to Central Europe, Pompeo warned, “We don’t want our European allies hooked on Russian gas through the NordStream II project, any more than we ourselves want to be dependent on Venezuelan oil supplies.”

Pompeo also met with top oil executives for about an hour to try to persuade energy companies to help the administration’s efforts to boost crude exports to Asia and to support its policy of isolating Iran. The US seems adamant at making significant progress on a Middle East security alliance over the next few months. The alliance is an attempt to form a US-backed bloc of Sunni Muslim countries including Saudi Arabia, the United Arab Emirates and Kuwait as a bulwark against Shi’ite Iranian influence in the Middle East.

Pompeo criticized China for “blocking energy development in the South China Sea through coercive means,” which he said prevents Southeast Asian countries from accessing more than US$2.5 trillion in recoverable energy reserves.

Pompeo also termed Russia’s invasion of Ukraine an attempt to gain access to the country’s oil and gas reserves.

United States Godfathering Mutiny in Venezuela

According to a Reuters report, United States is holding direct communications with members of Venezuela’s military, urging them to abandon President Nicolas Maduro and is also preparing new sanctions aimed at increasing pressure on him.

The Trump administration expects further military defections from Maduro’s side, despite only a few senior officers having done so since opposition leader Juan Guaido declared himself interim president last month, earning the recognition of the United States and dozens of other countries.

One of the officials accepting US offer said, “We believe these to be those first couple pebbles before we start really seeing bigger rocks rolling down the hill. We’re still having conversations with members of the Maduro regime, with military members, although those conversations are very, very limited.”

The official declined to provide details on the discussions or the level at which they are being held, and it was unclear whether such contacts could create cracks in the Venezuelan socialist leader’s support from the military, which is pivotal to his grip on power.

With the Venezuelan military still apparently loyal to Maduro, a source in Washington close to the opposition expressed doubts whether the Trump administration has laid enough groundwork to spur a wider mutiny in the ranks where many officers are suspected of benefiting from corruption and drug trafficking.

Members of the South American country’s security forces fear they or their families could be targeted by Maduro if they defect, so the U.S. would need to offer them something that could outweigh those concerns, said representative of an American think tank in Washington.

The U.S. government also sees European allies as likely to do more to prevent Maduro from transferring or hiding Venezuela government assets held outside the country.

Major European countries have joined the United States in backing Guaido but they have stopped short of the sweeping oil sanctions and financial measures that Washington has imposed.

At the same time, the Trump administration is readying further possible sanctions on Venezuela.

Previous rounds have targeted dozens of Venezuelan military and government officials, including Maduro himself, and last month finally hit the OPEC member’s vital oil sector. But the administration has stopped short of imposing so-called “secondary” sanctions, which would punish non-U.S. companies for doing business with the Venezuela government or the state oil monopoly PDVSA.

It is believed that Washington is using all available tools to apply pressure on Maduro and his associates to accept a legitimate democratic transition.

The U.S. government is also weighing possible sanctions on Cuban military and intelligence officials accused of helping Maduro remain in power.

Maduro’s government has accused Guaido of staging a U.S. directed coup.

Guaido has actively courted members of the military with promises of amnesty and preferential legal treatment if they disavow Maduro and disobey his orders, and Washington this week raised the prospect of dropping sanctions on senior Venezuelan officers if they recognize Guaido.

Maduro still has the support of the military high command, and now routinely appears in pre-recorded events at military bases where officers stand behind him and chant triumphal slogans such as “Loyal always, traitors never.”