“Under our new national security strategy, American dominance in the Western Hemisphere will never be questioned again.”
Following the U.S. military’s detention of Venezuelan President Nicolás Maduro, President Donald Trump exclaimed the beginning of a “new national security strategy.” His assertion led many scholars to dumb his actions the “Donroe Doctrine,” reviving the 1823 Monroe Doctrine where absolute U.S. dominance projected across the Western Hemisphere and warned against foreign interference.
What is particularly interesting about this quote is that it marks a continuation of President Trump’s “energy dominance vision.” I had previously asked, “What would a second Trump administration mean for the future of global energy consumption and its durability?” Over a year into his presidency, that vision was defined by deregulation and aggressive domestic production, paired with negotiated agreements and selective pressure abroad. More recently, however, Trump’s approach appears to be shifting toward overt coercion, a turn made especially visible in his latest actions toward Venezuela.
To understand why Venezuela is such an integral part of Trump’s “energy dominance vision,” we must first understand the nations’ long standing history with the administration. Venezuela is located in the northern end of South America, with a population of more than 28 million people, and is home to the world’s largest oil reserves. After WW2, Venezuela had the fourth-highest GDP per capita globally due to its extensive resource wealth. But since the 21st century, the country’s economy has faltered and eventually crashed in the mid-2010s due largely to the leadership of former President Hugo Chávez. President Chávez seized control of Venezuela’s oil industry to fund extensive social programs, which resulted in reduced foreign investment and technical efficiency. Rather than diversifying, the economy became even more dependent on oil. As a result, when the market crashed in 2008, poverty surged, ultimately encompassing nearly 90% of the population.
Following Chávez’s death in 2013, his mentee, Nicholas Maduro, became the President and leader of the crippling Venezuelan economy. Maduro’s regime was characterized by “repression and human rights abuses, as he [went] after his political opponents.” Meanwhile, Maduro used the country’s vast oil reserves as a tool for political survival and to gain leverage over other governments, all while production plummeted to around 1 million barrels per day by 2026 (in comparison to 3 million barrels per day in the late 1990s).
Meanwhile, President Trump and Maduro have been at odds for a while. In 2019, the United States and Venezuela “cut off diplomatic ties” as President Trump recognized the opposition leader “Juan Guaido as the South American country’s rightful leader, arguing that Maduro had rigged his 2018 re-election.” In 2020, right before Trump’s departure from office, the Justice Department “charged Maduro – along with other officials – for allegedly running a narcoterrorism conspiracy and using cocaine as a weapon to ‘flood’ the U.S.” The Venezuelan government responded by denying leading any drug cartels.
Thus, given the long-standing history between President Trump and Maduro, and President Trump’s growing immigration efforts, the administration has framed the January 3rd military operation across Venezuela, including the capture of Maduro and his wife, as “part of the U.S. campaign against illegal drugs.” But Trump has suggested the operation was also a means of forcing regime change. He added that the operation was in line with the Monroe Doctrine, stating that under Maduro, the South American country was “hosting foreign adversaries” and “acquiring menacing, offensive weapons” that threatened U.S. security.
However, these cartels and national security concerns are not the sole reason for direct military involvement. More notably, the President has expressed a desire to control Venezuela’s oil industry. The administration has said it would be up to the U.S. to “run” Venezuela and fix the country’s “badly broken oil infrastructure and improve its petroleum refining and extraction operations.”
Meanwhile, the Venezuelan President and his wife “pleaded not guilty in court appearances in New York on Jan. 5. Maduro and his wife were remanded in U.S. custody, with the next court hearing set for March 17.” Concurrently, Maduro’s Vice President Delcy Rodriguez was sworn in as Venezuela’s interim president. Rodriguez, a longtime Maduro and Chavez ally, received public backing from the Trump Administration, but with the demand that Venezuela “will pay a big, probably bigger (sanctions and other economic costs) than Maduro” if it does not accept the U.S.’ demands. This raises a central question: what meaningful change can occur when power remains in the hands of the same political network?
But what has happened to Venezuela’s oil since? The U.S. has kept oil from “tankers it seized under the blockade.” More importantly, the President announced that Venezuela will be “turning over” approximately 30-50 million barrels of oil to the U.S. (worth 2-3 billion dollars). The long-term demand is for the U.S. to have unrestricted authorization for U.S. oil companies to “invest heavily in Venezuelan oil” – a calculated $100 billion venture. The only U.S. company operating in Venezuela currently is Chevron, under a special license granted by the Biden Administration. Other oil companies have expressed reservations, such as ExxonMobil chief executive Darren Woods, famously calling the country “uninvestable.” Meanwhile, despite initial declines, Venezuela’s oil output has “rebounded to 1 million barrels a day, but there has been no sign of economic relief at the household level,” and prices and wages still increase at an estimated 400%. In fact, the interim government is selling more dollars through private banks in an effort to stabilize the bolívar. Because Venezuela has a long history of hyperinflation, citizens overwhelmingly rely on U.S. dollars. So when dollars become scarce, their price in bolívars rises sharply, worsening inflation and destabilizing the economy. By holding weekly dollar auctions, the government reduces panic, helping to calm currency markets. However, this strategy is inherently fragile and effective only as long as dollar inflows continue. Should oil revenues decline, U.S. authorization change, or political instability intensify, the system could quickly unravel, triggering a severe market shock. Venezuela is thus propping up its currency through dollar injections to avoid a return to hyperinflation, one more reason U.S. firms remain reluctant to invest heavily in an economy widely viewed as structurally unstable.
Maduro’s arrest and the U.S. military intervention in Venezuela have left the U.S. and the world split in two. On one hand, “many [have] expressed concern that the U.S. intervention was not legally justified” and fears of similar intervention to occur in resource-rich countries have already been vocalized by the Administration — Colombia, Greenland, and Cuba, just to name a few. Where does the Administration’s eye for oil draw a line?
On the other hand, many Venezuelans praise President Trump for removing a leader who has caused severe poverty and violence against the Venezuelan people. They hope that this would bring a new wave of hope for a potential democracy and welfare building under new U.S.-guided leadership. Maduro is also a close ally of President Putin, whose own use of international oil exchanges with Venezuela has directly funded the war against Ukraine. Perhaps the disintegration of Venezuela’s government through U.S. intervention, even with energy development motives, will actually increase Venezuela’s economy and standard of living, as similar patterns emerge in the U.S.’s involvement in Panama in 1989. Thus, it is important to note that no matter what future lies ahead for Venezuela, this second Trump Administration has taken more assertive and direct measures in confronting its “energy dominance agenda.” The trajectory of Venezuela’s future will be shaped by the Trump administration’s ability to implement its plan amid continued foreign control over Venezuela’s oil industry. Since 2000, China has been a primary financial backer of Venezuela, and the country has holdings of over $10 billion in outstanding debt to China. Following recent U.S. actions against the Maduro government, China has continued to defend its economic interests and partnerships, advocating for Venezuela’s sovereignty. The U.S. will have to confront not only the untapped Venezuelan energy systems but the financial backers behind their exploitation. Will countries similar to Venezuela’s position open their doors to U.S. involvement in their energy wealth or turn closer to other financial backers like China and choose the ability to hold more of their energy autonomy? These questions are what will determine the future of the U.S. oil industry and international energy leveraging in an era of “new national security strategy.”
Image source: wikipediacommons
