The abduction and rendition of Venezuelan President Nicolás Maduro is supposed to be about the illicit drug trade, but it’s really about oil. Venezuela is not a major drug supplier to the United States, especially where the administration’s main worry, fentanyl, is concerned. President Donald Trump gave the game away during his January 3 press conference by saying the word “drugs” four times and the word “oil” more than 20 times. “You know, they stole our oil,” Trump said. “We, we built that whole industry there. And they just took it over like we were nothing. And we had a president that decided not to do anything about it.”
Trump didn’t name this do-nothing American president. Actually, Venezuela nationalized its oil industry not once but twice. Both expropriations occurred while Republicans occupied the White House. The first was 50 years ago, on President Gerald Ford’s watch. The second was 19 years ago, on President George W. Bush’s watch.
Neither Republican president did much to fight Venezuela’s nationalizations, in Ford’s case because the energy crisis made it an unpropitious moment, and in Bush’s case because he was already at war with an entirely different petrostate, Iraq. The lesson of that conflict was that, yes, military intervention can open foreign oil spigots, but at an unacceptable price in blood and treasure. At Saturday’s press conference, Trump said, “It won’t cost us anything because the money coming out of the ground is very substantial.” If Trump thinks that’s true, he’s even dumber than I thought.
Before we proceed, let me clarify that the realpolitik discussion to follow is not premised on any notion that America’s invasion of Venezuela was legal and proper. It was no more in accordance with domestic or international law than President George H.W. Bush’s similar invasion of Panama in 1989 to arrest Manuel Noriega on drug charges. There’s a standing indictment against Maduro for providing diplomatic cover and other assistance to ship cocaine to the United States, much as there was a standing indictment (and subsequent conviction) against Noriega for racketeering and cocaine trafficking. But the only reason Noriega’s prosecution wasn’t thrown out was that the courts refused to consider the constitutionality of the Panama invasion that brought Noriega to the United States. They refused to consider it because if they had considered it they’d have had a very hard time ruling it constitutional. That’s likely to be the case again here, because courts don’t like mucking around in anything related to presidential war powers.
Another parallel with Noriega is what you might call the “good riddance” factor. Like Maduro, Noriega was not the elected president of Panama. Like Maduro, Noriega seized power in defiance of an election. Noriega barred the duly elected Guillermo Endara from taking office as president; Maduro did the same to the duly elected Edmundo González Urrutia (known popularly as Edmundo González).
But that’s where the similarities between Maduro and Noriega break down. To broadcast to the world that the United States was pro-democracy, Poppy Bush arranged for Endara to be sworn in as president on the day of the invasion. Trump, by contrast, is allowing Maduro’s Chavismo vice president, Delcy Rodríguez, to govern the country (despite some impudent back talk), and for multiple members of Maduro’s government named in Maduro’s indictment to remain in power. Trump isn’t even pretending he has the Venezuelan people’s interests at heart. It’s almost as if Trump were trying to advertise he is not pro-democracy.
The popular opposition leader and Nobel Peace Prize–winner María Corina Machado, whom Maduro barred from participating in the presidential election, is calling for González, currently exiled in Spain, to take power. Given that González ran as a proxy for Machado, who remains in Venezuela, it might make sense for Machado herself to become president. But Trump dismissed that possibility at the press conference, saying, “Oh, I think it would be very tough for her to be the leader if she doesn’t have the support within, or the respect within the country. She’s a very nice woman, but she doesn’t have the respect within the [inaudible].”
The explanation for Trump’s distaste for Machado, as cited by The Washington Post, is so deranged that it has to be true; nobody would have the nerve to make it up. I’ll quote the Post at length because if I paraphrased it you would doubt me:
Two people close to the White House said the president’s lack of interest in boosting Machado, despite her recent efforts to flatter Trump, stemmed from her decision to accept the Nobel Peace Prize, an award the president has openly coveted.
Although Machado ultimately said she was dedicating the award to Trump, her acceptance of the prize was an “ultimate sin,” said one of the people.
“If she had turned it down and said, ‘I can’t accept it because it’s Donald Trump’s,’ she’d be the president of Venezuela today,” this person said.
Our president, it has been observed, is unwell. Now, back to oil.
“We built that whole industry there,” Trump said at the press conference. Actually, the colonial power present at the creation of Venezuela’s modern oil industry was Great Britain, through its oil multinational Royal Dutch Shell, then the second-largest oil company in the world (after John D. Rockefeller’s Standard Oil). The precipitating event was what Venezuelans remember as El Reventón—the violent eruption, on December 14, 1922, of a Shell oil well called Los Barrosos II, on Venezuela’s Lake Maracaibo. It was, one chronicler later wrote, “one of the biggest blowouts the world had ever seen. Oil covered the trees, coated the vines and in ever-growing streams flowed through the underbrush like black serpents.” Within a decade, Venezuela’s oil production expanded from one million barrels per year to 137 million, and the country became the world’s largest petroleum exporter.
Even before El Reventón, Venezuela was playing John Bull against Uncle Sam in the granting of oil concessions, and in the decade after the blowout, Standard Oil (now Exxon) and Gulf (now Chevron) gained equal footing to Shell through aggressive State Department diplomacy and endless litigation. None of these three companies owned land in Venezuela; rather, they negotiated oil concessions with the Venezuela government, which was a dictatorship until 1958. The terms of these agreements were frequently changed.
The first nationalization, in 1976, entailed creation of a state-owned oil company, Petróleos de Venezuela, or PDVSA (pronounced “pedda-vaysa”). The expropriation grew out of Venezuela’s leading role in creating the Organization of the Petroleum Exporting Countries, or OPEC, in 1960, which prompted many member nations to nationalize their oil industries. Global oil shortages and rampant inflation discouraged the Ford administration from objecting too strenuously to Venezuela’s nationalization. It was a very inopportune moment to rock the boat; memories were still fresh of the 1973 Arab oil embargo. Venezuela didn’t participate, but instead provided the United States with desperately needed oil—though at sufficiently high prices that Venezuela’s oil revenues quadrupled.
This first nationalization amounted to a more extreme version of Venezuela’s earlier unilateral alterations of oil concessions. Since 1943, Venezuela had claimed 50 percent of all oil profits. Now foreign companies would stop partnering with the Venezuelan government and start partnering with PDVSA. That was enough to drive out Shell, as well as Chevron and Conoco Phillips. But within Venezuela, the nationalization was widely criticized as chucuta, or incomplete, and over time the terms were made less onerous, persuading Chevron and Conoco Phillips to return.
The second nationalization, in 2007, by President Hugo Chávez, was of a different order. PDVSA now claimed 60 percent, and in some cases more than 80 percent, of all oil profits. That was too much for Exxon and (again) Conoco Phillips, who were already paying higher taxes and royalty fees, so they left. Chevron remained, and now stands to gain the most if Trump truly seizes control of Venezuela’s oil.
But that’s more easily said than done. Oil pretty much is Venezuela’s economy—even in its current diminished state, after two decades of dwindling production under Chávez and Maduro’s Revolución Bolivariana and seven years of on-again, off-again U.S. sanctions against PDVSA, oil accounts for more than 17 percent of Venezuela’s gross domestic product and more than 80 percent of its exports. Indeed, since 2020, Venezuela’s oil production has been on the rise. Barring a full-scale American invasion, not even the Trump-friendly González or Machado regimes (should they come to power) will likely allow Trump to exert control over Venezuela’s oil industry. Among other obstacles, Venezuela is still a member of OPEC.
Which brings us back to Iraq.
After the U.S. invasion of that country, I found myself asking: “Has the U.S. joined OPEC?” The answer turned out to be yes, sort of, inasmuch as Iraq today remains both an OPEC member and a U.S. client state. This awkward dual identity makes Iraq a somewhat uncooperative OPEC member or, if you prefer, a somewhat uncooperative American proxy. Even with boots on the ground, the United States never dared order Iraq not to participate in the blatantly illegal international oil cartel—because, among other considerations, the American oil companies that came in wouldn’t have stood for it. Don’t expect any better from Venezuela, where we have zero boots on the ground, and where any American oil company that comes in will similarly expect to profit from OPEC’s international price-fixing conspiracy.
In the end, Iraq did increase its oil production after we deposed Saddam Hussein (though that leveled off after 2016). Today, Iraq is our fourth-biggest supplier of foreign oil, after Canada, Mexico, and Saudi Arabia. But nobody thinks it was worth it—not even, last time I checked, Trump. In 2002, the White House economic adviser Lawrence B. Lindsey lost his job for telling Congress the Iraq War would cost between $100 billion and $200 billion, because President George W. Bush deemed that estimate unacceptably high. In fact, Lindsey’s calculations were unacceptably low. The Defense Department calculated two decades later that the Iraq War cost $728 billion—and with no personal stake in the matter, Nobel laureate Joe Stiglitz and Harvard Kennedy School lecturer Linda Bilmes calculated the cost at more like $3 trillion. You can be a fiscal conservative or you can be a military interventionist, but you really can’t be both.
And, of course, many people died in Iraq. Nearly 9,000 American soldiers and contractors; about 40,000 Iraqi soldiers; nearly 300 journalists (including former New Republic editor Michael Kelly); and approximately 200,000 Iraqi civilians. Plus there were about 32,000 wounded American soldiers. Seizing control of foreign oil, recent history tells us, is a very expensive proposition. I doubt Trump is up to the task, and fervently hope he is not—because in more ways than I can count, we can’t afford it.
