When news broke recently that the American military had captured Venezuelan President Nicolás Maduro and had brought him to the U.S. to face trial on drug charges, it raised major questions about what comes next.
Miguel Tinker Salas, emeritus professor of history and Chicana/o-Latina/o studies is a leading scholar on Venezuela. He is the author of Venezuela: What Everyone Needs to Know and The Enduring Legacy: Oil, Culture and Society in Venezuela.
He provides history and context for understanding a complicated issue in this interview, edited for length and clarity.
What has been the historic relationship between the U.S. and Venezuela?
Historically, the U.S. presence in Venezuela has paralleled the rise of the oil industry. A U.S. military attaché once said that as oil relations go, so go U.S.-Venezuela relations. Since 1908, every Venezuelan leader, in one fashion or another, has sought to mediate relations with the U.S. to ensure they stayed in power and have access to oil profits. That changed with Hugo Chávez’s election in 1998, when he started to chart another course. Oil had already been nationalized in 1976, but the Venezuelan oil company, PdVSA, had managed to create a separation between the state and the company. Chávez sought to break that barrier because he wanted to control profits to invest in social programs. As was the case with all Venezuelan governments, his revolution depended on oil industry revenues.
Who are Venezuela’s current allies?
Venezuela has generally had good relationships with all of its neighbors. Until January 3 of this year, it had the distinction of being one of the only countries in the Caribbean Basin where the U.S. had not intervened militarily. Before Hugo Chávez was elected in 1998, Venezuela’s closest partner was the U.S. Chávez promoted the idea of a multipolar world. Venezuela established relations with China, Cuba and Russia and endeavored to establish relationships with Africa. That shifted the balance of the relationship away from only the U.S. toward a new set of partners.
Why is the Venezuelan economy in shambles when the country is reported to have the largest proven oil reserves in the world?
For starters, Venezuela’s oil is heavy crude. It is much harder to pump out of the ground, and to refine it requires dilutants imported from the U.S. and elsewhere. That means the price of oil must be high for Venezuela’s crude to be profitable. Historically, oil-producing economies have experienced boom-and-bust cycles depending on the price of crude.
The U.S.-led sanctions against Venezuela have also hurt tremendously. They meant that Venezuela could not get credit on the world market, could not improve its infrastructure and did not have the ability to bring in new technology. Its gold deposits in the Bank of England were sequestered, denying the Venezuelan government access to them.
Then there was mismanagement, particularly after the strike in 2002 that attempted to force Chávez out of office by crippling the oil industry. This led to an exodus of experienced oil executives from the country. All of these factors combined to reduce oil production and income that the country relied on to purchase products, goods and services.
What about gold? Venezuela has lots of it.
Venezuela has one of the largest deposits of gold in Latin America. However, mining in the Amazon rain forest is very destructive, scarring the earth permanently. There’s a very strong environmental movement in Venezuela that opposes this destruction. But gold is one of the major exports of Venezuela and has helped keep it afloat for the last 10 years. It’s easier to get around sanctions with gold than with a supertanker loaded with 400,000 barrels of oil.
Were U.S. companies compensated when Venezuela nationalized its oil?
The nationalization of Venezuelan oil was completely compensated. In fact, the very first comprehensive Venezuelan legislation on oil was in 1943, and it was developed in cooperation with the Roosevelt administration. The U.S. was quite happy with the process because it extended their contracts beyond their original expiration dates and into the 1970s.
The same thing happened in 1976, when Venezuela negotiated its relationship with U.S. oil companies. They were fully compensated for their concessions and their machinery. The formal nationalization of the Venezuelan oil industry in 1976 left open a back door called Article Five, which allowed American oil companies to remain as service contractors. When Chávez came to power in 1999, he sought to close that back door.
In 2007, the American oil companies were offered an opportunity to remain in Venezuela and receive 39% of the revenues, with the Venezuelan state oil company getting a 61% share. Exxon Mobile and Conoco Phillips refused and sued for damages. Exxon Mobil insisted they were owed $16.1 billion, but an international court lowered the amount to $1.6 billion. That was negotiated for many years, and some payments were made to the companies. But finally, as the price of crude dropped, payments stopped.
Chevron took a long-term view and accepted the terms. It is still pumping oil in Venezuela to this day.
What about U.S. claims to have a right to Venezuelan oil?
U.S. oil companies were given a concession to tap into the subsoil in Venezuela, but they were never given a contract to own it. That’s part of the Spanish colonial legacy. Every country in Latin America initially retained ownership of the subsoil. That means that everything below the ground belongs to the state and if you want to exploit it, you have to get a concession from the government. So foreign companies had a concession to produce the oil. They did not own the subsoil.
Why isn’t the U.S. supporting María Corina Machado, Venezuela’s opposition party leader and Nobel Peace Prize recipient?
The CIA did its own study and assessed that she did not have enough support, especially among the military, to govern the country in a peaceful manner. It’s one thing to kidnap a president. It’s another, much more complicated thing to run a country. I think the U.S. opted to work through the existing government because they feared strong opposition from the military, security forces and other political sectors if they didn’t; it might have led to conflict and disarray. Just remember Iraq.
It’s interesting that just days before he was captured, Nicolás Maduro said he would open up Venezuelan oil to other American companies on the same terms Chevron enjoys. He said that if American agents wanted to work on anti-narcotics (and Venezuela doesn’t make fentanyl—it doesn’t have the precursor materials), they would be welcome in the country. So it’s unclear what Delcy Rodríguez [Venezuela’s interim president] can offer that Maduro hadn’t already offered.
So what ultimately led to the current situation between the U.S. and Venezuela?
The latest U.S. national security strategy document lays out the U.S. repositioning itself to the Western Hemisphere and paying less attention to the Middle East, Europe or Asia. The U.S. has stated its desire to reapply the Monroe Doctrine, reestablish its hegemony and send a clear message to China to stay out of Latin America. In South America, China is already the dominant economic power and the primary purchaser of agricultural products from Argentina, Brazil, Chile and Peru.
Since the first Trump administration, the U.S. has applied maximum pressure on Venezuela. There were efforts at destabilization, support for a coup, and an increase in sanctions, all in service of seeing Maduro out of power.
What does the history of the region show us about what is likely to unfold now?
The countries of the region will likely reconsider their relationship with the U.S. Mexico, Colombia, Uruguay and Brazil have all signed a common statement condemning the intervention in Venezuela. So short term, we’re going to see concern about future U.S. intervention.
I also think we’re going to see a reaction among the population of Latin America. They may want a particular leader out of power, but they don’t want to give away their natural resources. They resent having a foreign power say, ‘We’re going to manage your wealth, own your oil, and we’re going to sell it for you—and we’re going to make a profit, which we might share with you.’ I think that is resented by most Latin Americans and particularly by Venezuelans. It harkens back through history, to the country’s colonial past, its interaction with foreign powers in the 20th century and the people’s sense of nationalism.