With the GE power grid deal and the hope of additional energy investment, the U.S. has an opportunity it shouldn’t squander.
With the GE power grid deal and the hope of additional energy investment, the U.S. has an opportunity it shouldn’t squander.
V enezuela’s interim president, Delcy Rodríguez, signed a deal last week authorizing American energy giant General Electric to restore the country’s power grid. While this marks the start of important infrastructure investment in Venezuela, it also provides a real opportunity for the United States that we shouldn’t let slip by. The Trump administration should use American industrial leverage to encourage market-based reforms in Venezuela that would set the country on a path to prosperity.
Rodríguez, who has closely cooperated with the Trump administration after the U.S. carried out a military strike in the country earlier this year to remove President Nicolás Maduro, described the General Electric agreement as “a historic step for Venezuela” to restore “an essential service.” Venezuela’s power system, which was nationalized in 2007 under Maduro’s mentor, Hugo Chávez, is in dire need of repair and investment. The country suffers from rolling blackouts and often lacks electricity for ten hours a day.
The power grid deal with GE is a win-win for Venezuela and the U.S. “The U.S. can fix Venezuela’s electric grid with Venezuela’s own oil revenues,” Daniel Di Martino, a Manhattan Institute fellow who is originally from Venezuela, told National Review. “The problem for American companies is that they don’t trust that they will be paid for their work, but the U.S. government already controls all oil revenues and can use them to pay GE or other firms up front for their work in a transparent U.S. bidding process. This can start the work immediately and bring about more oil production (which requires electricity), more private investment, and a higher quality of life for Venezuelans.”
But America should use the leverage of deeper energy investment, expertise, full sanctions relief, and long-term capital access to create a phased series of verifiable free-market reforms. The goal of these should not be regime change by fiat or endless punishment, but the deliberate reconstruction of Venezuela as a productive, rules-based economy integrated into the Western-aligned order, helping the nation evolve into a reliable energy partner rather than chronic crisis exporter or playground for America’s authoritarian rivals.
Under Chávez and Maduro, decades of socialist policies — including nationalizations, expropriations, and price controls — gutted Venezuela’s ability to keep the lights on and collapsed oil production from peaks above 3 million barrels per day to roughly 800,000 per day. Real GDP contracted by roughly 75 percent in the space of a decade. Its economy lies in ruins, and its people have suffered one of the largest exoduses in modern history, with nearly 8 million citizens fleeing since 2014.
Yet Venezuela sits atop the world’s largest proven oil reserves — roughly 300 billion barrels that U.S. refineries are already tailored to process. America’s leverage is immense, as Venezuela is currently burdened with a crippling $170 billion debt twice the size of its economy and ten times its 2025 oil revenues. The country needs more cash right now.
“I think it’s wise to restructure the debt now but not as pressure but because Venezuela simply cannot pay it back and really should not,” Di Martino said. “Some debt is owed to China and other lenders that illegally lent it and should not receive any payment.”
Rodríguez signed a law in January opening up Venezuela’s oil sector to privatization, but the country has a long history of nationalizations that may chill investment in its energy sector. Unconditional or lightly conditioned deals, such as a 2022 attempt by President Joe Biden, repeatedly failed to deliver broad prosperity in Venezuela. Limited openings in recent years produced incremental oil gains, but the nation’s corruption and state dominance persisted.
“Using Venezuela’s debt to extract oil concessions from the Rodríguez government while leaving the underlying institutional rot intact — the militarized PDVSA, the captured judiciary, the absence of property rights — will not work because the Venezuelans are overwhelmingly against the dictatorship, as demonstrated in the 2024 election and beyond,” Marcos Falcone, the Cato Institute’s policy analyst on Latin America, told National Review. “The people are growing impatient that their demands are not being heeded. The longer the dictatorship stays in place, the more likely it is that we will see protests and increased political instability, which will halt any planned investments in the country regardless of any deals between the U.S. and the Venezuelan regime.”
The triumph of democratic procedures over socialist ones is essential because they will restore accountability and end the arbitrary political power that enabled the country’s economic destruction. Socialist systems lack essential feedback because they favor vested political interests over real-world economics and don’t have the institutional stability required for credible, market-based reforms to take root and drive prosperity.
“Without a doubt, the most important condition for Venezuela to be a prosperous capitalist nation today is for the U.S. government to request an election calendar in the next one to two years maximum to ensure they are free and fair because Trump will still be in office,” Di Martino said. “A democratic transition is the only thing that will allow foreign companies to invest with long-run certainty that they won’t be expropriated and allow a long-term, pro-American government to rule.”
Reforms should begin with independently audited, transparent revenue management and commercial control of joint ventures, building on recent hydrocarbons reforms by allowing genuine private-sector expertise to reduce the state-run oil company’s operational stranglehold. A system of secured property rights must end the threat of expropriation through constitutional or statutory guarantees, with credible mechanisms for restitution or compensation and gradual privatization of nonstrategic state assets.
“The most important concessions the U.S. should demand are foundational,” Falcone said. “A binding electoral calendar is essential. The question of whether Venezuela could become ‘the next Argentina’ is worth taking seriously — the natural resource endowment, the diaspora, the geographic position all argue for enormous potential. But [Argentinian President Javier] Milei’s reforms, as encouraging as they are, are being conducted within a constitutional framework with functioning, if imperfect, institutions. Venezuela’s need to reconstruct those institutions almost from scratch is a generational undertaking, not a deal that closes in a licensing round.”
A reformed Venezuela could realistically scale production toward 2.5 million barrels per day or more over a decade with serious investment, providing reliable supply to U.S. refiners and enhancing Western energy security, according to analysis by J.P. Morgan. The economic boom this would trigger would reduce poverty and create political space for a prosperous and democratic Venezuela to strengthen the whole hemisphere at a time of energy crisis.
The world’s ongoing energy crisis and largest-ever oil supply disruption means now is the time to demand meaningful change in Venezuela. The International Energy Agency found that the ongoing 2026 energy shock was worse than the 1973, 1979, and 2022 shocks combined. By anchoring energy engagement to free-market reforms in Venezuela, the United States can help convert a cautionary tale of socialism’s failures into a demonstration of what open markets, rule of law, and Western partnership can achieve.
Venezuela has a genuine chance to become the productive, prosperous member of the Western-aligned order it was always positioned to be. The alternative is more wasted potential and repeated crises. America should choose the former.