Trump's Venezuela Oil Deal Sells Out Democracy and Free Markets
The Trump administration isn't trying to end socialism in Venezuela. Instead, it is doing socialism in Venezuela.
Just days after the U.S. military captured Venezuelan dictator Nicolás Maduro in early January, Secretary of State Marco Rubio outlined the Trump administration's plans for the future of the South American country.
Rubio described a three-stage process. First would be "stabilization of the country," which would include President Donald Trump's biggest priority: seizing oil reserves. "We are going to take between 30 and 50 million barrels of oil," Rubio said in January.
Then would come the latter stages of the plan, which Rubio described as "recovery" (opening up Venezuelan markets) and, lastly, a political "transition" toward new leaders.
Those remarks—and the order of Rubio's priorities—are worth revisiting in light of last week's announcement that the U.S. would be, in President Trump's terms, taking "control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela."
According to The Wall Street Journal, the deal includes a 100-year lease of some Venezuelan oil fields. The oil will be extracted by what is technically a new private company—but the U.S. government will be a major shareholder in the entity.
Under the terms of the deal announced by the White House on Monday, the government will hold a 35 percent stake in North American Blue Energy Partners, previously the second-largest private oil producer in Venezuela. The federal government will also hold "veto power over the appointment of any member of" the company's board of directors, the White House announced.
This is a rather shocking expansion of the state corporatism that the Trump administration has mainstreamed into American politics. Now, in addition to owning stakes in more than two dozen American companies, the Trump administration is giving the federal government direct control over an oil company that will operate in a foreign country while competing with other American and international firms.
It is effectively the "American nationalization of Venezuelan oil," as National Review termed it. The Trump administration has apparently decided it can solve socialism in Venezuela by…doing socialism in Venezuela.
Meanwhile, the deal also seems likely to create additional hurdles to the democratic transition in Venezuela—a country that is still officially governed by socialist Delcy Rodríguez, Maduro's second-in-command, who was appointed as interim president by the Trump administration in January.
Indeed, inking this oil deal with the Trump administration is likely to strengthen the Venezuelan regime. "Both the Trump administration and the Rodríguez regime might now share an incentive to prevent any elected government from taking office," concludes The Economist.
Then again, Rubio made the Trump administration's priorities clear all the way back in January, didn't he? Bringing democracy to Venezuela was always a distant third.
No wonder Rodríguez seems thrilled. "The benefits are endless," she said during a brief television broadcast announcing the deal.
Many other Venezuelans seem to disagree.
Ricardo Hausmann, a former Venezuelan official who teaches at Harvard's Kennedy School, called the deal "shameful" and told Rubio that "it will come to haunt you."
"You opted to use US power, not to free Venezuelans, but to go to bed with our oppressors," Haussman posted on X. "You opted to push an asset grab, an unconstitutional deal with an illegitimate oppressive government, instead of using US leadership to re-establish constitutional rule and democracy first, and then deal with a legitimate government that could have made credible long-term commitments, in due course."
Juan Pablo Guanipa, a prominent figure in the Venezuelan opposition movement, characterized the oil deal as "a skyscraper [built] on pillars of clay," in a post on X.
"The only way to truly reactivate the Venezuelan economy in the long term and make this agreement benefit both parties is through a free election that leads to a representative government, clear rules of the game, rule of law, and institutions that allow our resources to be managed transparently and for the benefit of the nation," Guanipa wrote.
The oil deal makes those goals more difficult to achieve. It suggests that the Trump administration prefers a Venezuela ruled by a deeply unpopular and unlawful leader who acquiesces to bizarre forms of neo-colonialism, rather than a democratic country with a legitimate government and free markets.
And the consequences of this deal could be felt well beyond Venezuela. The Trump-Rodríguez oil deal is "a gift to socialists all over the world who can now point to it with some credibility as an example of an imperial resource grab," writes Ian Vásquez, vice president for international studies at the Cato Institute.
"The deal flies in the face of economic freedom and the principle of voluntary exchange that made the United States prosperous," writes Vásquez, "and it makes little strategic or economic sense."
A more stable, democratic Venezuela would be the kind of place where American oil companies would be able and willing to invest resources. Prioritizing "taking the oil" undermines both the interests of Venezuelans and the principles for which America supposedly stands.