A likely double fail in which the president both undermines the American-led global order and fails to get the oil.
Over the holiday weekend, we ran my three-part series on President Trump’s de facto seizure from Venezuela of oil reserves that, putatively, would well more than double American reserves. Here are the links to parts one, two, and three. I say “putatively” because, although the 65 billion barrels of Venezuelan reserves in question (compared to America’s 46 billion) are said to be proven, it is a long shot that the United States will actually get the oil.
At around 304 billion barrels, Venezuela has the world’s largest store of proven reserves, but it now contributes only a million barrels per day — just 1 percent of global supply. That’s down significantly from the nearly 3.5 million bpd production level the country reached prior to Hugo Chávez’s Bolivar revolution; it is a significant rebound, however, from the nadir of 392,000 bpd in 2020 to which production plummeted under Chávez’s protégé, Nicolás Maduro. Obviously, the production infrastructure became dilapidated (parts of it became outright useless) under the corrupt Marxist regime after Chávez’s 2007 expropriation of the assets of U.S. oil companies, valued at over $20 billion.
Why do I contend that the president’s gambit is unlikely as a practically matter?
For starters, that the Trump administration is keeping the corrupt regime in place. Administration officials insist that the leopard has changed its spots. Anyone want to take that bet? Especially if the regime perceives that Democrats could be back in the White House come 2029. (The Obama and Biden administrations careened between trying to restore diplomatic relations with the Marxist regime and ineffectual sanctions to try helping the opposition; Biden reengaged with Maduro in 2022 after first-term Trump had withdrawn recognition when Maduro stole Venezuela’s 2019 election.)
Even in the best of circumstances (the installation of a democratic, pro-American government in Caracas, which seems unlikely in the near term), it would take many years to ramp up oil production. Moreover, because Trump has acted unilaterally, there is no treaty or legislation that would preserve the arrangement he has imposed, which (as I explain in the series) is unconstitutional and runs afoul of statutory law — though the administration calculates that the Republican-controlled Congress will not protest and potential legal challenges will founder due to lack of standing to sue.
Still, the Trump administration has just a bit over two years left, and in January it is a near certainty that Democrats will control at least one chamber of Congress. With subpoena power and a 2028 election agenda, Democrats will launch aggressive probes of Trump’s Venezuela gambit. That can only slow up the oil production works: For example, it will discourage reentry into the Venezuelan oil sector by American oil companies. They are already leery because (a) the regime has previously expropriated their property, and (b) having kept that regime in place, Trump designed his arrangement to prevent the American companies from recovering their billions of dollars in losses.
Without neither a sufficient investment in the venture by the U.S. oil giants nor a congressional allocation of funds, the Trump administration turned for help to Alejandro Betancourt López. He is a Chávez crony who got rich when the regime gave him billions in no-bid power plant projects, and he now controls Venezuela’s second largest private oil company — the entity in whose (thus far unidentified) parent company the Trump Defense Department has taken a de facto 35 percent equity interest, North American Blue Energy Partners (NABEP).
Betancourt has a shady background, having been investigated by the Justice Department and authorities in Spain and Switzerland for money laundering and extortion (with the Trump DOJ having reportedly having pressured European law enforcers to suspend their pursuit, at least for now).
Because President Trump is seizing the oil, not trying to buy it, he has told the public that our nation is getting it — in the form of a controlling interest in NABEP — with no investment of U.S. taxpayer funds. What’s left unstated is that it will be left to Betancourt to parlay the waning political muscle of a lame duck president into the roughly $100 billion in investor funding and know-how it would take to convert Venezuela’s massive reserves into flowing oil.
Again, why would oil companies jump at this opportunity under the circumstances? Factor in the volatility of Venezuelan politics: Post-Trump, the the country will probably be run either by the regime, which will fully return to its Marxist ways, or democratic reformers, who are already protesting that the Trump arrangement violates Venezuela’s constitution (under which oil reserves belong to Venezuela and the governing regime many not cede control over them).
The administration is painting Betancourt as a reliable partner. He is said to have won the backing of Secretary of State Marco Rubio, Trump’s point man for managing relations with Delcy Rodríguez, formerly Maduro’s vice president and now the regime’s leader. That, notably, is a departure from how he was viewed during the first Trump administration. I’ll end with an excerpt from a recent Washington Post op-ed by Elliott Abrams, who writes frequently in our pages and who was the president’s special representative to Venezuela in Trump I:
[B]ecause major U.S. oil companies have been unwilling to pony up large amounts of cash to invest in Venezuela, Trump has allied the government with the most shadowy and repellent Venezuelan businessman he could find. Alejandro Betancourt, who leads North American Blue Energy Partners, is under a Swiss arrest warrant for alleged money laundering involving Venezuela’s state oil company, PDVSA. (He denies wrongdoing and hasn’t been formally charged.) Yet Betancourt is one of the few who made fortunes under the corrupt Hugo Chávez and Maduro regimes — a symbol, among Venezuelans left and right, of everything wrong with cronyism driving out the free market and the rule of law.
When I served in the first Trump administration as special representative for Venezuela, we knew exactly what Betancourt stood for and kept him far away from the U.S. government. No longer, as The Post reported last week. Senior U.S. officials apparently “lobbied to resolve the case in Switzerland in a way that would avoid criminal charges and end travel restrictions against the Britain-based businessman.” Washington has also allowed him to visit for several meetings with the administration.
The U.S. plan thus depends on the remnants of the Maduro regime in both the presidential palace and the business community.
The president maintains that his seizure of Venezuela’s oil wealth is for Venezuela’s own good, since the Marxist regime, absent his purported taming of it, would not develop that oil for the good of the Venezuelan people, while Trump assures them a piece of the action. As the series elucidates, I believe this is a short-sighted and perilous wrong turn for the United States, undermining the post-World War II America-led international order — based on commitments to liberty, free markets, private property, and territorial sovereignty.
Ironically, it’s a good bet that, while Trump’s actions will indeed encourage rogue powers to seize their weaker neighbors’ assets, the United States will not actually get the oil.