To fully understand what is happening in Venezuela, analysts should watch the Venezuelan bond markets, as they’ve soared in the past few days, as U.S. investors close to Trump are expecting deferential treatment in collecting on debts that they have held for a long time. That’s where the real action is, and the oil markets are connected to this, but not with the goal of owning Venezuela oil production—there’s little interest in that right now. But instead, wealthy bondholders in the U.S., several very close to the Trump administration, hope to benefit in the long term from revenues generated by increased production, which some U.S. oil companies would help service. Remember that all of the big global oil corporations make money in a lot of different ways, partly by placing derivative bets on oil markets, rather than owning facilities that produce oil.
Trump is an extension of a longtime U.S. tradition when it comes to protecting massively wealthy U.S. bondholders who are looking for the best political solution for extracting payments on debts held: authoritarian rulers who agree to cooperate in paying bondholders and increasing accessibility and protection for foreign investors.
In summary, what the Trump administration is doing now is attempting to cut a political deal on mafia terms with the Venezuelan state. The reason that Trump’s advisers have decided to keep the current Venezuelan regime intact is they think the Venezuelan military is a necessary precondition for ensuring stability and protection for any financial and investment deal they can negotiate. The outlines of any political deal would be: agreement by the Venezuelan regime to pay debts owed to bondholders, though percentages and who would be favored would have to be worked out (here the U.S. hopes to crowd out Chinese investors); opening Venezuela to more foreign investment across a range of productive and portfolio type investment options; oil concessions to the U.S. government; and commitments by the Venezuelan military to provide investment guarantees through security, police and contractual provisions. In return, the Trump administration would lower sanctions.
It’s a mafia state attempting to cut a deal with the Venezuelan state: the Trump Administration with the Venezuelan military, which has been identified by Trump as the most powerful institution in Venezuelan politics. Indeed, the Venezuelan military cannot easily be dislodged without triggering a large-scale civil war, according to a CIA report which concluded that retention of the Venezuelan military, alongside senior Maduro loyalists, offered the best option for governing the country. Trump is currently pressuring Venezuelan officials to offer oil concessions to the U.S., reported to involve as much as $2 billion of Venezuelan oil concessions. If the U.S. acquires such quantities cheaply, at below market rates, profits from sales would likely be distributed to U.S. creditors, many of whom have ongoing lawsuits against the regime.
U.S. imperialism is designed to enrich wealthy investors, who are hopeful of being bailed out by U.S. militarism. The Trump Administration is the latest manifestation of brazen illegality in the expansive use of military force in the Western Hemisphere, intervening in ways reminiscent of late 19th and early 20th century U.S. military invasions, which at the time were concentrated in Central America and the Caribbean. The use of militarized violence on a large-scale is a symptom of an empire in decline, gasping at lowest-common denominator tactics to extract wealth by force, without bothering to address the larger systematic reasons for its decay.
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