President Trump’s historic intervention in Venezuela offers needed hope to friends of freedom around the world and nervous traders in the oil market.
A pro-America, free-market government could unleash the country’s oil potential and lower energy prices around the globe. This is bad news for the Kremlin and clerics in Iran, who need high oil prices to perpetuate their regimes.
For decades, Venezuela’s socialist leaders have plunged their country into a black hole of poverty. Populist leader Hugo Chavez promised his voters unlimited riches. Nicolás Maduro, Chavez’s hand-picked successor, turned those hopes into an economic nightmare.
Chavez and Maduro seized the infrastructure of American oil firms in their country and ran the national economy into the ground. Under Maduro’s rule, the economic decline in Venezuela has been worse than the Great Depression in the US.
In the 1930s, America’s GDP declined by 30%.
Under Maduro, Venezuela’s economy has shrunk by about 75%, and Moscow and Beijing have been circling like vultures.
Last year, China purchased around 568,000 barrels per day from Venezuela; and Beijing needs Venezuela to fuel its economy. Meanwhile, Vladimir Putin has been keen to keep the Maduro regime as a proxy in the Western Hemisphere.
The loss of Maduro in Caracas, who has welcomed Russian weapons and support to prop up his wobbly regime, is a major blow to Moscow. It also sends a powerful message to dictators around the world who look to America’s rivals as an alternative to US leadership: When the chips are down, Putin and Xi Jinping can’t help you.
While Maduro was in power, both Putin and Xi were eager to include oil-rich Venezuela in their “Axis of Aggressors.”
Trump abruptly changed the geopolitical balance by putting Maduro in handcuffs. He can now put more pressure on Beijing and box out Moscow’s hopes for a sustained partnership with Caracas.
The clerics in Tehran are also worried. The Islamic Revolutionary Guard Corps needs Venezuela to enable its sanctions-evasion schemes that were in place under Maduro. Worse, the ghost tanker fleet that serviced the IRGC out of Venezuela is now in jeopardy. And with the prospect of increased Venezuelan oil exports, there’s a potential opportunity to put a squeeze on all remaining Iranian oil.
Chevron reformation
US oil companies are right to be first in line to manage the redevelopment of Venezuela’s energy sector. For years, Chevron successfully lobbied for an exception to US sanctions in Venezuela, arguing that if it were forced to abandon the energy infrastructure in the country, Chinese interests would take its place.
Trump’s move is a win-win. A revitalized oil industry means higher incomes and better lives for the Venezuelan people and lower prices and diplomatic leverage for Americans.
By ousting Maduro, Trump has begun to liberate the country while striking at the heart of the axis between Russia, China and Iran and providing more democracy, oil and security to our friends in the Western Hemisphere.
Peter Doran is an adjunct senior fellow focused on Russia, Ukraine and transatlantic relations at the Foundation for Defense of Democracies. A former senior counselor for the White House National Energy Dominance Council, Richard Goldberg is an FDD senior advisor and director of FDD’s Energy and National Security Program.
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