Brian O’Boyle, writing in Rebel, states that “Trump’s MAGA project is designed to reassert the power of a declining hegemon. It is an attempt to make the world ‘great again’ for the US ruling class.” Vis-à-vis the US attack on Venezuela, the US ruling class, O’Boyle writes, has made a “calculation that the US can reassert control over an important continent [South America], capture some much needed resources and weaken the role of China in the region.” O’Boyle concludes that Trump’s programme “represents a brutal ruling class turning to ever more brutal tactics to secure their own interests.”
But can one speak of a singular, coherent US ruling class capable of making such calculations and agreeing on such tactics? American economist Doug Henwood (writing in 2021) is sceptical, documenting the growing fractures and frictions within US capital, leading to what Salar Mohandesi describes as a lack of a “coherent global vision” on the part of the ruling class. In any event, Trump, to a greater extent than any US president in the modern era, clearly pursues policies that are of direct, personal benefit to himself – primarily materially, but also in the sense of feeding a narcissistic ego. In other words, he is not (nor is the regime he dominates) a reliable representative of any fraction of US capital beyond his own business interests and, perhaps, those of the “patronage system of oligarchs” (John Feffer’s phrase) assembled for the purposes of tribute extraction.
Two qualifications are important at this point. First, I am not trying to revisit longstanding Marxist debates about the relationship between the capitalist class and the state, I am concerned with the facts of where we are right now. Second, I am not arguing that previous US regimes were not partly driven by the corrupt motivations of key actors. To take just one example, vice-president (under George W Bush) Dick Cheney drove the 2003 invasion of Iraq and, not coincidentally, saw a firm in which he had substantial interests – Halliburton – profit enormously, as Jeffrey St. Clair has documented, from no-bid, billion-dollar government contracts (rife with fraud and overcharging) for claimed reconstruction.
Convergence of interests?
But Cheney’s greed and grift can be argued to have largely overlapped with the objectives of US imperialism in controlling Middle East oil and the region more generally – US and other Western oil companies previously shut out of the Iraqi market were able to re-enter (they are all still there), launch major new fields and reap massive, ongoing profits. As I will argue, no such convergence of interests can be assumed in the case of Trump and Venezuela. This argument may seem counterintuitive: does not Trump’s seizure of Venezuela’s president and its oil mark a logical and successful (for now) strengthening of US corporate profits and imperial power? The issue is given added force by the claim that Venezuela possesses the world’s largest untapped oil reserves, potentially making it even more strategically significant than Iraq.
It is true that there is far more continuity in US foreign policy than is sometimes acknowledged, especially when it comes to brutal military interventions abroad (with the important qualification that, to date, Trump has killed far fewer people in other countries than did many previous presidents and he has not yet gotten around to fully occupying any overseas territory). But whether the control of Venezuelan oil is or was of particular value to US capital, even to US oil companies, is moot – it is certainly of limited value in the US’ imperial rivalry with China or anyone else. Far from demonstrating a rational and clear-eyed resolve on the part of the US ruling class and the US state to shed multilateral constraints and directly achieve their core objectives, Venezuela reveals a pattern of short-term thinking, exaggerated claims, venality and the prioritization of public relations over substance.
Returns?
In the first place John Ganz argues that Trump’s demands for US companies to invest in Venezuela are unlikely to yield much return:
“Most oil companies today are not inclined toward large-scale production investments; they prefer to hoard cash and limit exposure. There are also internal tensions within the industry: the United States is now a major oil producer, and domestic producers have little incentive to finance projects that would undercut their own prices. Asking US oil interests to invest capital in Venezuela in order to depress global prices is, from their perspective, an irrational proposition.”
Why then did the share prices of those firms rise after the assault on Venezuela? Most likely, Matt Huber suggests, because there was an expectation that a new (or newly disciplined) Venezuelan government would finally deliver to the companies compensation for property and investments expropriated or stymied due to past nationalizations and state restrictions. There is certainly money to be made here, largely because the system of investor-state dispute settlement courts privileges corporate claims against governments. To take just one of many examples, oil company ConocoPhillips won nearly $9 billion in a World Bank arbitration court ruling against the Venezuelan government in 2019 (the company claims to be owed a total of $12 billion) with Trump reportedly promising that they would get much (if perhaps not all) of ‘their’ money back.
These are non-trivial sums (and it would be surprising if Trump was not seeking a cut from any such payouts), but they do not presage large-scale investment in, and rehabilitation of, the Venezuelan oil industry. Low investment over past decades and associated infrastructural decay has left the industry in a sorry state – bringing production back up to historical highs would demand at least a decade of large and steady investment, as well as overcoming the constraints posed by a shortage of essential dilutants. (If the ruinous environmental cost of all this was to be properly priced in then the bill would be even higher, but we can assume the oil industry is unconcerned with that).
Asset stripping
Chris Morlock forecasts:
“What’s actually lined up for Venezuela is not extraction, but asset stripping. The firms positioned to ‘re-enter’ Venezuela are overwhelmingly financial, not productive. Asset managers like BlackRock are positioned to absorb distressed sovereign and PDVSA[state oil company]-linked debt, restructure it, and turn future production into collateral streams rather than national revenue. U.S. and European oil majors are waiting not to build capacity but for production-sharing agreements, arbitration rulings, and debt-for-equity swaps that cap output and guarantee rents”.
An output cap would also avert the threat of lowered prices reducing the profitability of existing production, especially in the US. Trump may, as Brian O’Boyle argues, want “cheap energy to bring down the costs for ordinary Americans”, but it is not what the oil industry wants and it is likely not what consumers are going to get. And it is not as if Trump cares that much for American consumers: his tariffs cost the average US household $1,000 last year. This is all, of course, an outrageous rip-off of Venezuelans: the US has stolen stocks of Venezuelan oil, is selling it and placing the returns in Qatari bank accounts, while telling Venezuela what it can and cannot do with its share.
But this thievery does not equate to the transformational investment and output surge Trump has been bloviating about, and, from the point of view of geopolitical rivalry, it does not give the US any substantial new leverage over China, which has limited dependence on Venezuelan oil – just 4 per cent of Chinese oil imports last year came from Venezuela (albeit that was 61 per cent of all Venezuelan oil). Likewise Trump’s claim that India will substitute Venezuelan for Russian energy is probably hype. Cuba is severely threatened by the US blocking its access to existing Venezuelan production, and this constitutes another crime, but it is, sadly, of limited geopolitical significance (despite the potential political win it offers to the anti-Cuba zealots within the US administration).
Dollars or renminbis?
Is geopolitical significance rescued by the fact that seizing Venezuelan oil ensures its sale (in whatever quantities) will be denominated in dollars? Since 2018 Venezuela had been selling oil to China denominated in renminbi, thus arguably threatening the dollar’s seigniorage position in the global economy, a position that mean the US can both borrow and import more cheaply as well as avoid exchange rate transaction costs. The attack on Venezuela might be seen as an attempt to nip such moves in the bud. But, again, this makes little sense as an ever more erratic and aggressive US is only encouraging countries, including those in the EU, to hedge against the dollar and transact more business in other currencies, as well as to hold a greater proportion of their reserves in non-dollar form.
Caveats are, to be fair, in order. One is that Chevron, of all the oil majors, might well boost its production and launch new ventures in Venezuela because it is the one US company that still has significant capital and infrastructure already embedded in the country. This will be bad news for people living in Pascagoula, Mississippi, where Chevron refines that oil as they are likely to face higher levels of pollution. A second caveat is that the industry players may be protesting too much, exaggerating the difficulty of operating in Venezuela in order to build a stronger case for government support. The US Export-Import Bank (EXIM) is in the process of being tapped for such support in the form of export credit guarantees that would minimize the risk for oil companies entering or re-entering Venezuela. The risk, as per the neoliberal playbook, would be transferred to the US taxpayer. Still, even extensive state incentives are unlikely to prompt the companies to produce in such quantities as to undercut their prices and profit margins.
“Looking powerful”
It is, in summary, difficult to see the assault on Venezuela as a truly serious attempt to open up new investment opportunities and substantively combat rivals such as China. What then did drive Trump’s actions? Greed surely plays a role. Some of the proceeds of Venezuelan oil sales will doubtless flow into Trump Inc’s pockets (funneling the revenues through Qatar hardly instils hope of transparency), and so, in all probability, will gratuities from those corporations that succeed in collecting arbitration judgements against the Venezuelan state. Even if it were fully feasible, the development of Venezuela’s massive oil reserves is a long-term project that would be of little interest to a president obsessed with quick, large paybacks and immediate praise.
As Robert Kuttner observes, “Trump’s trademark is abrupt violent action that plays well on TV”. Or, in the words of John Ganz again:
“Ultimately, I think it’s worth looking at the whole episode from a propaganda standpoint. As Trump himself would likely put it, the invasion of Venezuela looked cinematic: clean, tactically impressive, and visually compelling. This is the model they seem intent on repeating – producing discrete tactical vignettes that look powerful and decisive to their audience. This is precisely what many American reactionaries fantasize about.”
Is it what members of the US ruling class (however unified or fractured) fantasize about? At a personal level doubtless some of them do, but is this type of regime behavior in their interests as a class? What Trump has done in Venezuela certainly does not run contrary to their short-term interests – some (financial vulture funds, the oil majors at the margin) will make money, others (like the powerful tech barons) will be more or less unaffected.
But it hardly represents a serious class project i.e., part of a concerted attempt to advance the long-term interests of US capital over and against rival powers and interests. It does not, to borrow Mike Gonzalez’s phrase, also writing in Rebel, significantly tilt the balance towards the US in the current “competition between capitals”. US imperialism remains a formidable enemy of humanity but its actions lack the coherence and gravity that is sometimes assigned to them.
Indeed, the more recent assault on Iran displays the same characteristics as that on Venezuela: short-term thinking, exaggerated claims of success, and a pathetic quest for deference and affirmation. The beast is deadly but it is also deranged, petulant and incoherent – resistance can draw strength from that even as havoc is wreaked across Latin America and the Middle East.
