U.S. President Donald Trump on Sunday defended the pact under which his country will have majority control of one-fifth of Venezuela’s oil reserves, calling it a gift from Venezuela to the people of the United States in a message on his platform Truth Social. Trump repeated his claim that the plan agreed to with the interim government in Caracas will not cost U.S. taxpayers a penny and will only bring benefits. He has also promised that one of the things he plans to do with the 65 billion barrels included in the agreement is to replenish U.S. national strategic reserves, which are currently at their lowest level in four decades.
Little by little more details are emerging about a deal that has provoked intense criticism across Venezuela’s political spectrum, from the most hard-line Chavistas to the opposition. The secretly negotiated deal would make the U.S. government the majority partner in a new joint venture that will hold the rights to operate 17 oil fields in Lake Maracaibo and the Orinoco belt for an initial term of 25 years, renewable, the acting president Delcy Rodríguez announced on Saturday.
Many questions remain about who will participate in that public-private partnership and what the final contract details will be. Above all, the big question is whether it can actually be implemented; how it will be executed, with what level of transparency and according to which roadmap. And what impact it will have on the democratic transition in Venezuela.
One thing does seem clear: if it is implemented as both governments envision, the colossal agreement will tie Venezuela’s economy to the United States, and Trump to Delcy Rodríguez. The Republican president needs a figure in Caracas who will diligently carry out his plan to secure preferential access to cheap oil. In turn the Chavista leader, who is deeply unpopular at home, needs backing and an economic improvement that will allow her to stay in power.
Coinciding interests
Venezuelan economist Luis Vicente León agrees that the deal reflects very specific interests in Washington and Caracas that, at this moment at least, are aligned. “For the United States there is a security advantage of reserves at a time when its own are at historic lows and the price of gasoline is very high. The conflict with Iran has not been resolved and could extend much longer than expected,” he explains. “For the Venezuelan government the need for resources is urgent and its room for maneuver vis-à-vis the United States is limited, because the threat remains credible.”
When the agreement was announced on Friday, each leader praised the other. For Trump, Delcy Rodriguez — who once served as the number two official to the now captured Nicolás Maduro, and was installed by the United States in the post after the military operation that seized the Venezuelan president on January 3 to transfer him to New York — is “enormously respected.” Rodríguez, the former Washington foe turned collaborator, expressed her “gratitude” to the U.S. government for its “willingness” to reach the agreement.
According to both parties, the Venezuelan oil sector will receive $100 billion in investment. Caracas estimates that, at a market price of $65 (€56) per barrel, it will receive about $19 for each barrel it sells, roughly $209 billion in royalties over 25 years.
Trump’s enthusiasm in promoting the deal, which he on Friday described as one of the largest in history, seems to vindicate those who warned that the operation to overthrow Maduro never had as its main objective a return to democracy in Venezuela. The argument Washington used for months — the fight against the drug trafficking network that it accused Maduro of leading — is barely recalled now. What mattered was the oil.
“The agreement further damages the image of the United States in Latin America. The January military intervention could have been seen as an act in defense of democracy against a brutal regime that had few friends in the region. Now, however, it is hard to argue that Trump was not primarily motivated by oil, reinforcing critics of the U.S. who maintain that American policy toward the region has never been driven by values but by economic interests,” says Benjamin Gedan, director for Latin America at the Stimson Center and former South America director at the National Security Council under Barack Obama.
Trump had made clear his interest in Venezuelan crude even before Maduro’s capture. He had suggested that he considered the nationalization of the sector ordered by Hugo Chávez in 2007 illegitimate, and a possible legal justification for U.S. military action in the South American country. One of his early acts in the White House brought together the heads of major oil companies to encourage them to invest.
But the big oil companies have so far resisted, given the risks they perceive in a country governed by a president who was not chosen at the ballot box and whose oil industry requires massive investment to recover lost production levels. That reluctance pressured Trump’s decision to make the U.S. government the investor in this unusual deal, in which a Pentagon office, the Office of Strategic Capital, will be the managing entity.
One of the unknowns is precisely whether oil companies will join the agreement, given the setbacks they have suffered in Venezuela. And the pact not only fails to resolve but even exacerbates doubts about the transition process and elections, which had already been relegated to the final step of the third phase of priorities. “My reading is that those contracts will remain protected with Trump or without Trump. They may be modified, but scarcely to the detriment of investors or of Washington,” León maintains. “The announced agreement is bad news for the country’s political trajectory,” Gedan says.
“I do not doubt that [Marco] Rubio, [the secretary of state who led the negotiation of the oil plan from the U.S. side] is committed to a democratic transition. In fact, despite the shameful exclusion of opposition leader María Corina Machado from the process, he has managed to push for the start of negotiations and a first legislative step to recover the independence of the Supreme Court of Justice,” the expert clarifies. “The challenge is that Trump is not interested in democracy and, as long as he perceives benefits from his friendship with Delcy, he will not be encouraged to promote a process that, without a doubt, would end with her leaving power.”
First test
In the United States the first test of the new pact is imminent. Midterm elections will be held in November, in which Trump hopes to put cheap gasoline on the table to counter high prices, the electorate’s main concern. Polls present a scenario in which Republicans could lose control of the House of Representatives and perhaps even the Senate, which would greatly limit the president’s room for maneuver. Although the agreement will not lower fuel costs by then — it will take much longer to have that kind of effect, if it does — the president wants to use the pact to promise that better times are just around the corner.
With those midterm elections looming, Venezuelan journalist and writer Moisés Naím urges caution and patience. November’s results will be decisive in determining Trump’s future and his plans. “Trump’s promises are all sensationalist, ambitious, provocative and conflictive initiatives that then face the courts, Congress and the opposition. So if the agreement follows the pattern of his other major proposals… this won’t take off,” Naím says. For the writer, doubts about whether elections can take place and their credibility with the U.S. pushing every decision in Venezuela are reasonable, but he insists on waiting. “November’s results are much more important than the oil discussion. They will shape everything.”
“The electoral issue is not the immediate objective in Venezuela,” Luis Vicente León says. If the current political situation persists, León believes it likely that the United States will not want change to occur by a radical route when it finally happens. “But politics is very volatile and it is not possible to make a linear projection,” he warns. “Many variables must be considered, among them the Venezuelan population’s desire for change, the popular strength of opposition leadership and internal pressures within the United States.” Analyst Benigno Alarcón trusts that the United States will allow the election to proceed and “that the person everyone knows would win at this time will win,” he says, alluding to María Corina Machado.
Chavismo, meanwhile, is celebrating the agreement. An improvement in the economy is the best — if not the only — electoral asset Delcy Rodríguez has if she wants to be a competitive candidate in potential Venezuelan elections. Her entire circle of power has publicized the agreement — even Nicolás Maduro’s son reposted it on his social media accounts — but none has provided further details beyond a terse official statement. Indira Urbaneja, one of Chavismo’s leading communicators, did weigh in on Saturday, warning: “Calm and prudence!!!! Everything is going to get better… These are new political times. These are new economic times. We only need that wealth to be seen in people’s pockets… Then we will have Chavismo for 1,000 years.” And, in case there was any doubt, in another tweet she announced: “Chavismo will win the next presidential election in two years!!!”
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