In recent months, illegal immigrant deportations from the United States have emerged as a serious humanitarian and economic problem for Latin America, especially for countries like Venezuela with eroded democracy and serious economic issues.

Following the expulsion of 177 Venezuelan migrants from the United States to their home country, the complexity of the case has prompted serious concerns about the impact on those targeted and the long-term ramifications for both countries.

The political background of the Venezuelan migration crisis

According to a Statista estimate dated September 2023, at least 545,200 Venezuelans migrated to the US.

In recent years, these numbers might have doubled.

Driven by economic, political, and social crises, millions of Venezuelans have chosen to emigrate during the two terms of President Nicolás Maduro, who first took office in 2013 and assumed a controversial third term on January 10.

His new term is followed by widespread allegations of electoral fraud, casting further shadows over his leadership and prompting serious concerns about the country’s future.

In the wake of the disputed elections held on July 28, opposition candidate Edmundo González and prominent leader María Corina Machado have asserted that they won with 70% of the vote.

However, the National Electoral Council failed to release official results, leading to skepticism both domestically and internationally.

The United States and many regional governments have openly challenged Maduro’s claim to victory, with some acknowledging González as the legitimate president.

Amidst reports of arrests and human rights violations, a sense of instability permeates the political landscape in Venezuela.

This dire situation has prompted many, including individuals like Maite, to consider leaving their homeland in search of safety and better opportunities elsewhere.

The ongoing turmoil highlights the pressing need for change and the yearning of countless Venezuelans for a more stable and equitable future.

Humanitarian concerns

The return of deported Venezuelans has caused fury and alarm among human rights activists.

Many of these people were fleeing desperate conditions in Venezuela, such as poverty, political repression, and violence.

The US government’s decision to deport them back to a country in economic decline is concerning.

When these migrants return, they frequently find themselves in a country that has been devastated by a humanitarian crisis.

The Venezuelan economy is currently undergoing a two-digit inflation which makes it difficult for returnees to reintegrate into society efficiently.

Economist Aldo Contreras recently commented on the status of deportees returning to Venezuela, saying, “The issue of deportees is still not statistically significant.”

This demonstrates the relatively minor impact that current returnees have on the overall economy- for now- especially given the enormous number of nearly 8 million people who have left the country.

President Nicolas Maduro declared upon their arrival that “these are not criminals (…) they came due to the impact of US sanctions, and we must welcome them back as productive members of society.”

One of the top concerns of Venezuelan leaders is the future that these deportees might face upon their arrival to Venezuela, as most of them are persecuted by the government due to political reasons.

“Now those who were in Guantánamo have arrived in Venezuela. The (Venezuelan) regime will protect anyone who is a member of the Tren de Aragua and those who are innocent; however, they will imprison the dissident military members or volunteers from July 28th, and we may never hear from them again, as has already happened with many from the first group” said David Smolansky, an opposition leader exiled in the US and a spokesperson of the Venezualan migrants, commenting on the new wave of Venezuelan deported.

Financial implications

The repatriation of Venezuelans may appear to be a political tactic, but it has major financial consequences for the already suffering country.

The flood of deported people might add to the strain on an economy that is already suffering from a devastating crisis.

With roughly 80% of the population living in poverty, the unexpected return of the people in large numbers might exacerbate existing problems in the long term.

While some efforts are being made to assist these returnees in starting enterprises and generating income, Contreras remains cautious.

He underlined that, while Maduro’s government announced a $10 million fund for these returnees, information regarding how the amount will be used is scant, leading many to question the usefulness of such initiatives.

He also stated that: “We must wait in the coming days to see if the number truly increases significantly.”

The possible increase in returnees may need economic initiatives by the Venezuelan government to accommodate them.

This issue is exacerbated by the US government’s recent plans of termination of the Temporary Protected Status (TPS) for about 600,000 Venezuelans, leaving many people in limbo.

A divided response

Both governments’ responses have been very different. While the US government has presented deportations as a law enforcement problem, Venezuelan officials call them unjust and detrimental.

Venezuelan officials stated on Friday that one of the 177 Venezuelan immigrants who returned from the United States after being incarcerated in Guantanamo is wanted by Interpol for an alleged crime committed in Ecuador.

This raises worries about the possible difficulties and consequences of reintegrating these people into society, as the government attempts to navigate the complexity of their legal position and public safety.

Invezz’s request for comments from Venezuela’s Foreign Relations Ministry was unanswered at the time of publishing.

A spokeswoman for the Department of Homeland Security stated that 126 of the deportees had criminal charges or convictions, including 80 who were allegedly associated with the Venezuelan group Tren de Aragua.

The official said that 51 had no criminal history.

The National TPS Alliance and seven Venezuelans have filed a lawsuit against the Trump administration over its decision to revoke Temporary Protected Status (TPS) for approximately 350,000 Venezuelan immigrants by April 7.

TPS allows individuals to legally live and work in the US if returning to their home country is unsafe. The revocation could result in mass deportations of Venezuelans currently under this protection.

The complaint, filed Wednesday night in San Francisco’s U.S. District Court for the Northern District of California, alleges that Homeland Security Secretary Kristi Noem unlawfully revoked an 18-month extension granted by the Biden administration just before President Biden left office.

Most of the Venezuelan legal migrants in the United States were strong supporters of Trump during his campaign in the hope he would strongly address the Venezuelan crisis and promote a change in government, but after his recent decisions to deport people, many of these voters feel betrayed and hopeless.

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According to World Bank estimates, remittances to low- and middle-income countries reached $685 billion in 2024, up from $647 billion in 2023.

With remittances approaching $905 billion globally, it raises the question of whether they are a lifeline for struggling families or a trap that hinders sustainable economic growth.

Countries with the biggest inflows of remittances

Statita said that India received $129 billion in inflows, followed by Mexico and China with $68 billion and $48 billion respectively.

To understand the significance of these data, it’s important to consider their background.

Remittances can be a large share of overall economic performance in smaller and poorer economies.

A notable example of this is Tajikistan, which recorded an astounding 45.4 per cent of GDP remittance inflows in 2024.

The reliance on remittances is a common trend in developing countries, where the home economy relies heavily on expatriate workers for financial stability.

Humanitarian assistance has a considerable impact on economic resilience and sustainability, especially in fragile governments.

Fragile economies and excessive reliance on remittances

Statista data shows that the least resilient economies rely heavily on inbound remittances.

According to the OECD, three of the top four countries with the biggest share of GDP from remittances were also the most fragile.

In Nicaragua, remittances are 27.2 per cent of GDP.

The wave has largely been fueled by persistent economic and political turmoil that has prompted many Nicaraguans to leave, mostly for the US.

Also, in another illustrative example of how changing fragility ratings can have microeconomic consequences through remittances, the situation in Honduras highlights this point.

Honduras was once classified in a “high fragility” context but has since been downgraded evidence of the fluidity of economic stability, but also the changing migratory and remittance dynamics of the region.

According to World Bank data, remittances sent to Venezuela contributed only 3.7% of the GDP in 2024, totalling $3.8 billion, representing an 8.6% increase over 2023 levels.

Why do we have this increasing need for migrant workers?

OECD analysts also partly attribute the increase in remittances to the strong demand for migrant workers in the biggest economies.

To address the prevailing issue of labour scarcity across multiple sectors, numerous nations now find themselves in search of external workforce remedies.

This, in turn, deepens the linkages between the sending and receiving corners of the world, and remittance flows react directly to the demands of labour markets.

In this context, remittances are not just transfers; they are economic activity and indicators of endurance.

They allow families access to spend money on schooling, healthcare, and enterprise, all of which offer upward mobility pathways that could otherwise be inaccessible.

Broader economic context

Advancement in the field of technology has also led to the development of the remittance sector.

Remittances have been a powerful driver of growth in recipient countries, and digital payment platforms have made it easier for migrants to send money home.

While these financial inflows may sustain the economy to some extent, it does prompt further questions about longer-term economic impacts.

Are those economies many of which rely on remittances investing enough in their future? Or will they become too reliant and repeat the vicious circle of economic fragility that may be aggravated by the global economic recession or fluctuation of immigration?

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It seems as though China’s imports of sanctioned oil are rebounding amid trade tensions with the US. 

Immediately after Shandong’s shipping ban and the US sanctions on tankers involved in Russian and Iranian trade, Shandong teapot refiners (the primary buyers of discounted sanctioned oil) decreased refinery runs, even during the Spring Festival travel rush preparation period, according to Vortexa. 

At the same time, Shandong’s onshore crude inventories rapidly declined, as teapots predominantly continued to use sanctioned oil despite port discharge slowdowns at state-run Shandong Port Group (SPG) terminals, said Emma Li, senior market analyst at Vortexa.

“To circumvent the restrictions, independent oil terminals at key ports outside Shandong—such as Dalian, Shanghai, Zhoushan, and Huizhou—began accepting sanctioned oil, including cargoes delivered by sanctioned tankers,” she added in an update. 

Their impact is still limited because of the relatively small storage capacity and the additional cost of transporting barrels between provinces.

Consequently, these ports have not been able to completely clear the backlog of tankers waiting offshore.

On January 7, China’s SPG had instructed its ports to ban vessels sanctioned by the US Office of Foreign Assets Control. 

In late January, Shandong Port Group transferred its stake in key terminals under Dongying Port, the primary ESPO receiving hub in northern Shandong, to private entities. 

Iranian cargoes offload into Shandong

This strategic move allowed for continued cargo discharges, including those from at least two sanctioned tankers, and resulted in increased crude inventories at Dongying Port, according to Vortexa. 

During the same period, other Shandong terminals experienced operational slowdowns.

Although Dongying was able to quickly adapt, its ability to manage Iran’s very large crude carriers (VLCC)-dominant cargos is limited because its berths are designed for 100,000-ton-size tankers, Li said. 

Furthermore, the primary Iranian oil receiving ports complied with SPG’s ban.

The decline in Iranian crude imports into Shandong to below 800,000 barrels per day in January, the lowest since February 2023, with significant discharge gaps mid-month, was due to these constraints.

In late January, calls were made for unsanctioned VLCCs to assist in offloading stranded cargoes. 

At least eight VLCCs that were either recently added to the dark fleet or idle since early 2024 have surfaced to facilitate Malaysia-to-China STS transfers, Li said. 

As a result, China’s Iranian crude discharge rebounded to 1.3 million barrels per day between February 1-20, with Shandong-bound volumes surpassing 1 million barrels per day, slightly exceeding the 2024 average, according to Vortexa’s estimates.

Russia shifts strategy

Russia has also rapidly reestablished a non-sanctioned fleet for its primary Far East ESPO crude, allowing Kozmino Port loadings to completely rebound in February, Vortexa said.

Between January 11 and February 20, at least 17 non-sanctioned Aframax/LR2 or Suezmax tankers entered the ESPO trade, according to the ship-tracking agency. 

These tankers either diverted from other sanctioned crude routes, particularly the Russia Baltics, or shifted from clean product transport. 

This influx of vessels has facilitated a rapid recovery in ESPO exports. 

February loadings are expected to reach 920,000 barrels per day, matching the 2024 average, and exceeding January’s 860,000 barrels a day, data from the agency showed.

“As Russia prioritises ESPO trade for its easier access to loyal Chinese buyers, more non-sanctioned vessels are ballasting towards Kozmino, reinforcing a fully non-sanctioned supply route and ensuring continued stability in Russia’s Far East crude exports,” Li said. 

The heightened focus on ESPO has drastically reduced the availability of non-sanctioned Aframax tankers for other Russian routes, causing a significant increase in crude oil volumes held on sanctioned tankers, according to Vortexa. 

This issue is particularly noticeable near ports under Western scrutiny, where sanctioned tankers are now holding unprecedented volumes of crude oil with limited chances of acceptance by Asian buyers.

China may revert to Russian urals

Although they were relatively minor buyers of Russian Urals and Arctic crude (averaging 270,000 barrels a day in 2024 compared to Indian refiners), China’s oil majors quickly secured alternative supplies after the US imposed sanctions to hedge against shipping risks.

“These purchases include late Jan/Early Feb-loading US WTI, February-loading Kazakhstan CPC Blend and UAE Murban crude, with the combined volume set to fully offset any potential losses from long-haul Russia barrels in the coming months,” Li said.

Due to Beijing’s 10% retaliatory tariff on US crude imposed in early February, China is likely to return to purchasing Russian oil barrels soon, according to Li. 

Additionally, Russian long-haul barrels remain cost-competitive due to the narrowing Brent-Dubai spread since mid-January and Middle Eastern OSP hikes.

Preliminary flow data from Vortexa suggests that Russian Urals and Arctic crude arrivals could rebound to over 350,000 barrels per day in March and April.

“While China continues to dominate Russian Far East crude imports, refiners are expected to uphold strict non-sanctioned tanker requirements despite initial US-Russia dialogue,” Li added. 

Demand for Russian long-haul barrels is likely to remain subdued, as teapot refiners still favour deeper discounted Iranian crude.

Market sentiment has not been significantly affected by concerns over a potential renewal of maximum pressure on Iran, especially after flows resumed.

However, the likelihood of a further rise in Iranian exports remains low, as current purchase costs are already testing the affordability threshold for key buyers.

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