Petrostate Collapse and Power Politics: Venezuela’s Migration Crisis and Washington’s Contradictory Response

Photo via Council on Foreign Relations

***

Venezuela houses the world’s largest oil reserve, yet has a reputation built on its economic failure, political turmoil, and high rates of emigration in recent years. The Venezuelan refugee crisis is the largest recorded refugee crisis in the Americas with 7.9 million Venezuelan refugees worldwide. The United States only recently became a destination for these refugees. As of 2023, Venezuelan refugees accounted for under two percent of American immigrants. Despite this fact, the Trump administration has recently asked the United States Supreme Court for an emergency order allowing it to strip legal protections from more than 300,000 Venezuelan migrants. Washington’s ambivalent stance toward Venezuelan migrants reflects broader U.S.–Venezuela tensions, where foreign policy interest, sanctions, and oil politics take precedence over the humanitarian needs of displaced people. Is U.S. policy toward Venezuelan migration primarily humanitarian or strategic?

To understand why Washington’s policies toward Venezuelan migrants are so back and forth it’s essential to examine the very forces that pushed millions to flee. During the 80s and early 90s, Venezuelan oil production accounted for over half the countries GDP. However, after Hugo Chavez officially took office in 1999 after two failed coups in 1992, the country’s oil policies were explicitly tied to his Bolivarian Revolution to redistribute wealth under social welfare programs. Chavez’s social programs resulted in massive overspending, though a 2007 spike in oil prices stabilized the economy and allowed Venezuela to pay back its debt to the International Monetary Fund in 2007, 5 years early. 

Venezuela became an example of a petrostate, defined by high dependence on fossil fuel income, concentrated power, and widespread corruption. Just after the oil price peak, Venezuela’s other exports collapsed leaving the economy excessively reliant on the oil industry. In 2013, Chavez’s mentee, Nicolás Maduro, came to power and was met with plummeting oil prices in 2016. Paired with Covid-19, Venezuela’s economy became debilitated. 

Faced with macroeconomic instability and mismanagement, the rest of Venezuela’s economy was also severely disrupted and continues to face challenges today. According to the IMF, non-oil GDP fell by about 56 percent between the first quarter of 2013 and the first quarter of 2019 resulting in the hyperinflation and high crime rates that have caused so many Venezuelans to flee. The crisis has only been worsened by the expanding statist controls. 

In 2024, Venezuela’s economic state was made worse by an election which was neither free nor fair. The Venezuelan government claimed Maduro won a narrow victory despite strong evidence that he lost by a large margin to his democratic opponent. As protests arose in the election’s aftermath, the Maduro administration launched “Operation Tun Tun,” a campaign to suppress dissent that targeted and detained opposition political figures while the government refused to cede power. The widespread criminalization of protest drew strong condemnation from human rights organizations like Amnesty International. 

Since the Biden administration designated Venezuela for temporary protection status in 2021, 607,000 Venezuelans are estimated to have received protection from the US. After the catastrophic 2024 election, social services have collapsed throughout Venezuela. The crisis is characterized by widespread poverty, food insecurity, and the systematic erosion of the public healthcare and education systems. Public services such as water, electricity, and transportation consistently break down. The collapse of currency has led to barter economies. 

Venezuela’s current refugee crisis is second globally following Syria due to these conditions. Neighboring countries such as Colombia, Peru, Brazil, and Ecuador have absorbed the majority of Venezuelan refugees. Columbia is harboring over 2 million Venezuelans, which has led to 6 million internally displaced Colombians due to rising crime rates. Peru is harboring 1.7 million Venezuelans, putting their healthcare system under immense pressure. As neighboring countries become overburdened with the humanitarian fallout, the Venezuelan refugee crisis has grown into a hemispheric challenge, with mounting pressures driving more Venezuelans to seek stability and opportunity in the United States

Record numbers of refugees have been crossing the Darien Gap gap since 2023, of whom many are Venezuelan migrants. Refugees are often exploited by smugglers and criminal networks on this journey, making it extremely dangerous. The perilous trek northward underscores both the desperation of Venezuelans fleeing their homeland and the inability of regional governments to fully absorb the crisis. As the flow of migrants increasingly reaches the US–Mexico border, Venezuelan refugee migration has become a central point of contention in American domestic politics, forcing Washington to confront the tension between its humanitarian commitments and its broader geopolitical strategy toward Venezuela. 

Though Biden’s TPS (Temporary Protected Status) policy for Venezuelans aided over 600,000 refugees in the US, it is currently being discontinued by the Trump administration which has framed their presence in the US as a security threat. Despite rhetorically opposing Maduro’s government and their human rights violations, the Supreme Court has rescinded all Venezuelan protections. The contradiction demonstrates how U.S. refugee policy is less about humanitarian need and more about political expediency. The same dynamic can be seen in Washington’s reliance on oil sanctions and energy politics as primary tools of leverage against the Maduro regime.

Since Russian oil was sanctioned, the Venezuelan oil industry and the Maduro Regime have received support from Russia and China. This support has undermined US sanctions of Venezuelan oil. While these sanctions may weaken Maduro’s authorities, they may also worsen the existing poverty and humanitarian crisis in Venezuela. This duality exemplifies the central tension in U.S. policy: the pursuit of geopolitical leverage through energy politics often comes at the direct expense of addressing the humanitarian catastrophe that sanctions themselves help intensify. The Venezuelan crisis therefore illustrates a larger question, whether U.S. strategy should prioritize destabilizing authoritarian regimes or alleviating the suffering of the populations trapped under them.

Despite pressure from the international community, prospects for political change in Venezuela remain dim. Maduro’s ability to consolidate power after the disputed 2024 election revealed both the weakness of opposition leadership and the limits of outside intervention. Organizations such as the Organization of American States (OAS), the United Nations, and the European Union have condemned the erosion of democracy and called for free elections, yet they lack the enforcement capacity to compel change. As a result, the political deadlock endures, deepening the despair of ordinary Venezuelans who see little chance for reform at home.

The implications of this stalemate extend beyond Venezuela’s borders. The United Nations High Commissioner for Refugees (UNHCR) has warned that if the crisis persists, Venezuelan refugee numbers could reach 10 million within a few years. Such displacement would reshape the demographic and social landscapes of Colombia, Peru, and other neighboring states already straining under the weight of mass arrivals. It would also intensify political debates within the United States, where Venezuelan migration has become entangled with wider disputes over border security and asylum. Migration pressures are not a temporary challenge but a long-term reality that will continue to influence regional stability and U.S. domestic politics alike.

For Washington, the Venezuelan refugee crisis poses a difficult policy dilemma rooted in the failings of Venezuela’s petrostate model. Years of dependence on oil revenue left the country vulnerable to price shocks, corruption, and mismanagement, and the collapse of other industries has only deepened economic fragility. U.S. sanctions were designed to target Maduro’s networks of power, but they have also intensified the suffering caused by a system that relies almost entirely on fossil fuel rents. Meanwhile, Russia and China have stepped in to provide financial and technical support to Venezuela’s oil sector, blunting the impact of sanctions and giving Maduro new lifelines to sustain his rule. This dynamic complicates U.S. strategy: while sanctions may weaken certain state revenues, they risk ceding influence to geopolitical rivals and further entrenching authoritarianism. As a result, American policymakers must weigh humanitarian responsibility against the unintended consequences of sanctioning a petrostate whose oil wealth now binds it more closely to Moscow and Beijing.

***

This article was edited by Ella Keddy and Ayden Suber.