Venezuela’s vaccine deal runs into early challenges

Venezuela's political agreement to access Covid-19 vaccines is running into early challenges, tempering hopes that the deal would forge a wider path out of the country's protracted crisis.

With the mediation of the Pan-American Health Organization and Unicef, Venezuela's government and the US-backed political opposition last week agreed to purchase and distribute vaccines through the public-private Covax mechanism designed to ensure equitable international vaccine distribution.

The deal was the first sign of practical cooperation in a long battle for political control in Caracas. Despite extensive US sanctions that have thwarted Venezuelan oil sales, President Nicolas Maduro remains firmly in power.

As challenges come to light, the agreement seems unlikely to meet expectations for swift relief from the surging pandemic that Venezuela is ill-equipped to handle.

Neither the government nor the opposition — which considers itself an interim government — has acknowledged each other's role in the agreement. And in a familiar pattern, both sides are blaming the other for Venezuela's severe health crisis.

Executive vice president Delcy Rodriguez says the AstraZeneca vaccine is not authorized for use in Venezuela, cutting off one of the main supply options. Venezuela's close international allies have not provided much help, although China early on provided medical supplies, and more recently Russia delivered some token doses of the Sputnik V vaccine.

The main opposition led by Juan Guaido blames the government for "genocide" by blocking vaccines. Caracas is not part of Covax, partly because the international community is divided over who is the country's legitimate authority.

The opposition, whose ambitious political aspirations have largely faded since declaring an interim government in January 2019, is only beginning a bureaucratic process to secure $30.3mn in Venezuelan government funds frozen in the US to pay for vaccines and associated refrigeration.

According to the parallel National Assembly headed by Guaido, the proposed outlay includes $18.2mn to acquire 12mn vaccine doses and $12.1mn for cold chain equipment. Argus has learned that agreement would be implemented in various tranches.

The access requires a license from the US Treasury Department's Office of Foreign Assets Control (Ofac) which administers sanctions.

The opposition's embassy in Washington told Argus yesterday that "The Ofac license has not been requested yet because the Central Bank of Venezuela (BCV) must go through a prior process." But the interim government authorities have had "informal conversations" with Ofac to grant this license "as soon as possible, once the BCV approves the issuance of funds that was agreed by the National Assembly. The financial team is working on it."

Ofac declined to comment, but US officials say privately they are moving as quickly as they can.

Cold chainless Because of Venezuela's chronic fuel scarcity, it will be difficult to establish and maintain the cold chain required by most vaccines and distribution networks. Although oil reserves are still plentiful, Venezuelan state-owned PdV's crippled refining system produces limited volumes, and quality is poor. Before the US imposed oil sanctions in January 2019, PdV imported finished gasoline and components from US refiners.

While gasoline has long been scarce, diesel had been widely available mainly because of PdV's crude-for-diesel swaps with India's Reliance and EU firms Repsol and Eni. As part of its "maximum pressure" campaign, the previous US administration cut off the swaps, creating the conditions for diesel shortages as well, especially low-sulfur grade that is critical for the power generation that will be needed to keep vaccines cold. The swaps are among the elements of the sanctions that are currently under review by the new US administration.

On the ground, a lack of trust could be the biggest challenge. The opposition lacks faith in the government's willingness to ensure impartial, internationally monitored vaccine distribution. International aid organizations working in Venezuela regularly come under pressure from the government.

By Patricia Garip

Related News