In 2023, Donald Trump lamented that, under the Biden administration, the U.S. was again buying oil from Venezuela. When he left office at the end of his first term, Trump said, “Venezuela was ready to collapse. We would have taken it over, we would have gotten all that oil.”
In his second term, he did.
Trump announced last week that the U.S. “just entered into an Agreement with the Country of Venezuela on, THE BIGGEST OIL DEAL IN WORLD HISTORY!” The deal, he added, “secured majority U.S. control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer.”
It costs the U.S. taxpayer nothing because, following the raid in Venezuela and the kidnapping of its president this January, Washington simply took control of Venezuela’s oil industry, effectively asserting U.S. ownership of another country’s natural resources. Now, Trump wants to convert this into tangible benefits for the American people.
Trump’s hope is that the new deal will enhance his country’s energy security and “substantially lower Gas Prices for all Americans,” which is a high priority since prices at the pump remain elevated and the Strategic Petroleum Reserve has fallen to its lowest level since 1982. According to Secretary of State Marco Rubio, “This deal is a huge win for both the American and Venezuelan people.”
The U.S. is doing this partly through a partnership with Alejandro Betancourt López, a powerful private Venezuelan oilman who is under investigation in Switzerland and Spain for money laundering and tax fraud. Strangely, the principal U.S. government entity involved is the Pentagon’s Office of Strategic Capital, whose nominal function is to make investments to boost weapons production.
The deal allows the Pentagon to take a 35 percent stake in López’s company. The U.S. would then be guaranteed 20 percent of the oil the company produces at “production cost” and granted “the right of first refusal to purchase the remaining 80 percent.” The U.S. also gets “veto power over the appointment of any member of the board of directors,” and “a majority” of the board “must be U.S. citizens.”
But there are some problems. One is that the deal likely won’t bring much relief to Americans at the pump, at least any time soon. Miguel Tinker Salas, professor of Latin American history at Pomona College and one of the world’s leading experts on Venezuelan history and politics, told The American Conservative that “the only immediate impact would be on existing mature oil fields that would still require millions in investments before they would turn a profit.” And that’s the good news (from the U.S. perspective). “Other fields,” he said, “would require billions in investments and would not produce for several years.”
Another problem is that Venezuela’s constitution mandates that all oil resources be treated as part of the “inalienable public domain,” which would seem to present issues for Trump’s deal. Nevertheless, Delcy Rodríguez, the interim president of Venezuela, says the deal is good for her country, bringing $100 billion in investment and $209 billion in tax revenues.
Not everyone buys that interpretation; some see Rodríguez as a mere puppet of the Trump administration. “The Venezuelan government currently functions as a neocolony of the U.S.,” Salas said. “It appears that Delcy Rodríguez will do anything to stay in power.”
Though $209 billion in tax revenue sounds impressive, economist Francisco Rodríguez, senior research fellow at the Center for Economic and Policy Research, notes that the sum amounts to “tax revenue of just $3.22 per barrel of Venezuelan oil,” less than 5 percent of the current price.
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Delcy Rodríguez boasts that the deal will put “our immense reserves at the service of national development, job creation, increased income for our workers, and the well-being of our people.” This, not incidentally, is also what Venezuela’s previous socialist leaders claimed. In 2007, then-President Hugo Chávez completed the nationalization of the oil sector, pledging that henceforth the country’s natural resources would benefit the people as a whole. The promise was popular, although the prosperity it was supposed to bring never materialized.
Of course, one of the factors that contributed to Venezuela’s economic woes was a harsh U.S. sanctions regime. According to Mark Weisbrot, co-director of the Center for Economic and Policy Research, the sanctions that Trump slapped on Venezuela in 2017 accelerated the decline in oil production, which dropped by 700,000 barrels a day, causing accompanying losses in revenue.
In light of this recent history, the deal that Trump announced is not a good one for Venezuelans. Whether it proves a good one for Americans, as the administration has promised, remains to be seen—although it is debatable, however this turns out, whether a deal based on theft and plunder can truly be described as “good.”
