One hundred years ago, U.S. companies dominated Venezuela’s oil industry. President Donald Trump seems intent on recreating that chapter, starting with an oil deal negotiated in secret with a country under duress. The president has previously mused about turning Venezuela into America’s 51st state; with this deal, that’s coming true in all but name.
On Friday, Trump announced a “historic” deal for the United States to revive Venezuela’s demolished oil industry. According to a White House fact sheet, the U.S. would take a direct stake in 17 Venezuelan oil fields, said to possess 65 billion barrels of crude through North American Blue Energy Partners — a private company helmed by Alejandro Betancourt, a controversial businessman with ties to interim Venezuelan President Delcy Rodríguez. The U.S. government would then enjoy privileged access to a large portion of the ensuing Venezuelan oil production at favorable prices — and tap these fresh supplies to replenish the U.S.’ own dwindling stockpiles, as the president stated recently.
The U.S. president should be careful though: History is littered with instances of nascent oil agreements that didn’t come to fruition.
If the deal materializes, the U.S. would end up with a state-backed champion in the Venezuelan oil industry, and the Pentagon would add profit-maxing to its mission, putting it in the same league as Cuba’s military-run business conglomerate.
Rodríguez cast the agreement as a victory that would net the Venezuelan government about $209 billion in new tax revenue and unlock private investments.
“It’s no use having our oil reserves underground, only to appear in statistics or bookkeeping,” she said in a brief speech over the weekend, adding, “Venezuela retains ownership and sovereignty over its resources.”
Notably, not all the key details shared by the two sides are matching up. Rodríguez said the oil agreement would last 25 years, while the White House presented it as a century-long endeavor. Rodríguez isn’t named in the fact sheet either, with only “Venezuelan interim authorities” listed as the designated authority blessing the agreement.
But though Rodríguez isn’t named in the deal, it would temporarily shore up her repressive apparatus.
“The Venezuelan government is getting a very sweet bailout deal,” Javier Corrales, a professor of Latin American political science at Amherst College, told me. He observed that the U.S. has “greater stakes” in the survival of Venezuela’s authoritarian regime, which could delay future democratic elections.
The U.S. president should be careful though: History is littered with instances of nascent oil agreements that didn’t come to fruition. Take Iran, now the scene of Trump’s Middle Eastern fiasco.
In March 1946, Iran reached a deal with the Soviet Union that granted Moscow a 50-year concession to develop oil fields in exchange for withdrawing Soviet troops from Iranian territory within six weeks. The agreement would have established a joint oil company: 51% controlled by the USSR, the rest by Iran.
It’s not far-fetched to imagine another Venezuelan government — perhaps one that’s, gasp, established by a popular vote — deciding Trump’s deal is not in its national interest.
The Soviets stuck to the bargain and pulled out their military. The Iranians reneged. The country’s Parliament overwhelmingly rejected the deal in a 102-2 vote. With his troops already withdrawn, Soviet leader Josef Stalin had little choice but to abandon his desire for a foothold in the Iranian oil industry and accept he got played.
Throughout the years, U.S. oil giants, such as ExxonMobil and ConocoPhillips, have dragged their feet on re-establishing a presence in Venezuela. The “interim” government is populated with the leftovers of former President Nicolás Maduro’s regime, and legal disputes about past expropriation of oil equipment and facilities under former President Hugo Chávez are still unsettled. Chevron is the sole American oil company still operating in the country. The Texas-based oil firm is poised to announce expanded drilling operations on two large oil fields in Venezuela’s Orinoco Belt.
There isn’t much transparency either. Secretary of State Marco Rubio is effectively managing the country as a 21st century viceroy, with a five-star Marriott hotel in Caracas serving as the temporary U.S. Embassy. Call it gilded imperialism.
It’s not far-fetched to imagine another Venezuelan government — perhaps one that’s, gasp, established by a popular vote — deciding Trump’s deal is not in its national interest. Resource nationalism is written into the Venezuelan constitution: It plainly states that hydrocarbon and mineral deposits within its territory belong to the state and cannot be transferred to any individual or private institution, much less a foreign power.
It serves to deepen a disconnect between Venezuelans and hopes for a new government.
“For centuries we have become accustomed to perceiving that laws have nothing to do with life,” Venezuelan playwright José Ignacio Cabrujas once said.
To Trump, who has acted like the oilman in chief as much as a commander in chief, this legacy is merely a nuisance that can be cleared away with U.S. military and economic might. Earlier this year, U.S. Marines conducted a military drill within Caracas that involved two Osprey aircraft.
At a rally in Nevada last month, he talked about doing things “the old-fashioned way” in Venezuela. “To the victor belong the spoils, right?”
The course that the Trump administration is pursuing will all but certainly stiffen resolve in Cuba to hold out against the ongoing Trump-led pressure campaign to replace the aging communist regime.
On Tuesday, Trump expressed satisfaction with the leadership he installed.
“We are very happy with the president-elect that we have right now, the people that are running it,” he told reporters.
Many in Congress, though, are still pushing the return of democracy in Venezuela and the removal of an unelected Rodríguez.
“The Venezuela model, as the president and the Secretary of State has stated, has to end with elections,” Rep. Mario Díaz-Balart of Florida, a Republican lawmaker who has influenced U.S. policy in Latin America, told me in May.
Democracy is taking a backseat for now. The course that the Trump administration is pursuing will all but certainly stiffen resolve in Cuba to hold out against the ongoing Trump-led pressure campaign to replace the aging communist regime and perhaps even inspire another generation of leftist strongmen across the region.
“This is going to give credibility to some of the most radical strands of Latin American nationalist thinking,” Corrales said.
The American flag won’t be getting another white star under the Trump administration, but that won’t stop the U.S. president from taking ownership of Venezuela’s oil. And Venezuela is bound into a form of statehood without any of the benefits and all of the humiliation.
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