(Bloomberg) -- Over the course of a decade, Venezuelan President Nicolás Maduro has held tight to power despite mass protests, widespread poverty and despair, tough US sanctions, and an international attempt to recognize an alternate government. His survival instincts are kicking in again.

Maduro’s regime ordered the arrest this week of key aides to his top political adversary, testing the patience of American officials who temporarily relieved sanctions because Venezuela promised free and fair presidential elections next year. He’s also been slow to meet US demands for the release of detained citizens. 

And he’s rattled even regional allies in recent days by calling for a large chunk of land claimed by neighboring Guyana to become a Venezuelan state, threatening to shut down oil producers who do business there. While Venezuela’s assertion of rights to the territory known as the Essequibo date back more than a century, Maduro’s choice to escalate the dispute now is adding to the sense of chaos in Caracas.

There is a certain logic to the machinations of Maduro, 61, who at this point has ruled longer than his predecessor Hugo Chávez, the inspirational leader of Venezuela’s brand of socialism who died in 2013. With slim chances of winning an open election, Maduro is pulling almost every lever at his disposal to rally domestic support and ensure he extends his presidency.

Maduro is “spiraling,” said Christopher Sabatini, senior fellow for Latin America at Chatham House, a policy institute in London. “He doesn’t want to have free and fair elections. Now that there’s a remote possibility for political change that didn’t exist before, all the commitments they agreed to suddenly look really scary.”

The risk is that Maduro goes too far, alienating the US and other global powers and sending Venezuela’s economy reeling. Thus far the US has shown tolerance, since the Biden administration would like nothing more than to open the spigots of the world’s biggest oil reserves and slow the exodus of Venezuelan migrants northward. But every new affront by Maduro chips away at the argument that the sanctions relief is steering the country toward democracy and international cooperation.

Read more: Secret Talks, Oil Sanctions: Inside a US-Venezuela Breakthrough

To be sure, Maduro has proven adept at maintaining control of the levers of power even in times of crisis. His military leadership remains loyal, and he’s built his own version of Chavismo, replicating his predecessor’s legendary hours-long televised speeches but sprinkling in some moves toward capitalism. His crackdowns on dissent have thus far kept opponents in check despite his unpopularity. 

Polls show Maduro losing badly to opposition candidate María Corina Machado if elections were held freely. This week the government’s public prosecutor charged three of Machado’s aides with treason, conspiracy and money laundering, saying they were plotting to sabotage a referendum that was designed to whip up support for a takeover of the Essequibo. 

“Maduro acts in a moment when he needs to rescue internal connections with the population and raise popularity and mobilization capacity,” said Luis Vicente León, head of local pollster Datanalisis. “I don’t think he intends to advance beyond this. Although, of course, when you engage in these strategies, you don’t know when someone is going to go out of hand.”

Sanctions Snapback

Machado is currently banned from holding office, though Venezuela has outlined a legal path to restore her eligibility, under pressure from the US. In exchange for reaching an agreement with some opposition leaders, the US Treasury eased oil sanctions last month, allowing foreign companies including Chevron Corp. to expand operations in the country and increase exports, providing Venezuela with much-needed  revenue. 

These licenses, however, are set to expire in six months, meaning sanctions could be put back in place if negotiations for free and fair elections don’t make progress. The US has also said it could pull the licenses before then if Venezuela doesn’t keep its commitments.

The belligerence toward Guyana is also putting a strain on Maduro’s recently restored relationship with Brazil, by forcing longtime ally President Luiz Inacio Lula da Silva to mediate the conflict between his northern neighbors. In a phone call Saturday, Lula told Maduro to avoid unilateral measures that could deepen the crisis, according to a note from Lula’s press office. 

“If there’s one thing we don’t want in South America, it’s war,” Lula had said Thursday.

Following Saturday’s talks, Venezuela’s government said in a statement that “high level” negotiations with Guyana will be announced in the next few days.

Read more from Bloomberg Opinion’s Liam Denning: Desperate Venezuela Teases an Oil Shock in Guyana

Many observers believe a military escalation against Guyana is highly unlikely, and that Maduro is saber-rattlingto secure support from his socialist base. He could also use a tense situation to consolidate power.

“Maduro is trying to save an emergency card he could use in case elections become a severe danger for him,” León said. “He could use it to delay the election, even moreso if he hasn’t achieved a negotiation that reduces his exit costs.”

Renewal Risk

Even if Maduro manages to maintain stability, the fragile democratic process at home and the hostility at the border are cause enough for investor concern. The renewal of US licenses after the six-month initial period “is already at risk,” Wood Mackenzie analyst Luiz Hayum said, warning that restrictions could even be reimposed sooner. 

Oil production is expected to grow by 25% if foreign companies continue to ramp up operations in the country by the end of 2024. If US oil licenses are reversed, Venezuela’s estimated growth of 9.7% would decrease by more than half, according to economist Asdrubal Oliveros, and an estimated $8 billion in revenues will evaporate.

“This is telling of the country’s economic fragility,” said Oliveros, head of local financial analysis firm Ecoanalitica. “Changes in just a few licenses can drastically impact the economic performance of Venezuela.”

(Updates to add potential talks in the 13th paragraph)

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