The US and Venezuela: a century-old relationship drenched in oil

A visual look at how Washington’s relationship with Caracas has gone from cordial to ‘predatory’

Trump ally defends Venezuela oil deal amid ‘gunpoint diplomacy’ criticism

W ritten in the middle of the last century, the US Department of State memo conveys its message in a curt and undiplomatically honest tone: the glue that binds Washington to Caracas is, and is always likely to be, oil.

“All US policies toward Venezuela are affected in greater or less degree by the objective of assuring an adequate supply of petroleum for the US,” the 1950 document reads.

Decades later, little appears to have changed. After a brazen night-time kidnapping of the country’s leader earlier this year, Donald Trump announced last week that the US was taking majority control over about a fifth of Venezuela’s oil reserves. That deal, according to the White House, “secures our energy dominance for the next century”. How much it will benefit Venezuelans is yet to be seen.

The country’s importance to the US has been proven time and time again over the past century. Home to what are now known to be the world’s largest known oil reserves, Venezuela kept allied planes, ship and tanks well fuelled during the second world war.

Washington and Caracas largely cooperated over the following decades, with US energy companies heavily involved in Venezuela’s oil industry, and profiting from it immensely. But relations took a nosedive in 1999, when Hugo Chávez became president.

A self-professed socialist and anti-imperialist, Chávez made alliances, and often oil deals, with China, Iran and Russia. Venezuela switched 180 degrees to become a natural adversary of the US, alongside its ally Cuba.

Relations deteriorated further when Chávez was briefly detained by his own military after a deadly crackdown on mass anti-government protests. The attempted overthrow lasted only two days and he was soon back in the presidential palace , accusing Washington of involvement in the failed coup .

Chávez deepened Venezuela’s dependence on oil exports in the years that followed. In 2007, he stepped up his battle with Washington with a wave of nationalisation in which he seized oilfields, including those that US firms had operated.

Caracas had nationalised the oil industry decades before, but had allowed US companies to profit from the extraction. Under Chávez’s new terms, however, the state oil company was given control of a majority share and foreign firms were offered minority stakes.

Among US oil companies, Chevron agreed to the worse terms, but ExxonMobil and ConocoPhillips refused and were in effect pushed out of the industry.

Only Chevron, the second largest US oil company, has continued to operate in the country. ExxonMobil and ConocoPhillips engaged in a years-long legal battle with Venezuela for compensation. The World Bank’s international centre for the settlement of investment disputes awarded them billions of dollars, but Venezuela has never paid the money in full.

Still, much of the country’s oil infrastructure was built with foreign involvement, and foreign companies are still active in the exploitation of the fields, among them Russian, Chinese and Cuban firms, as well as UK and European companies, including Shell, BP, Italy’s Eni and Spain’s Repsol.

When Chávez died in 2013, Nicolás Maduro rose to power. The former bus driver had worked as his foreign minister and continued an antagonistic policy towards the US.

Maduro’s rule was considered dictatorial. The UN estimated in 2019 that more than 20,000 Venezuelans had died in extrajudicial killings. Key institutions, such as the judiciary, were eroded under Maduro and the rule of law deteriorated.

The US has portrayed the Maduro government as illegitimate. A Washington-led sanctions campaign compounded widespread corruption, and the Venezuelan economy suffered.

It did not help the relationship that Maduro kept close ties with Moscow and Beijing. About 80% of the crude oil Venezuela produced was exported to China before the US-imposed blockade in December.

China is the world’s biggest oil importer, and takes the shipments as repayment for loans it previously gave to Caracas, often at low prices.

Since the start of his second term, Donald Trump had repeatedly called for Maduro to be ousted, accusing him of sending drugs and criminals to the US – a claim experts say lacks evidence. He also claimed Maduro was stealing US oil, a reference to Chávez’s seizure.

In July last year, Washington announced a $50m (£37m) bounty on Maduro’s head, accusing him of being one of the biggest drug traffickers in the world.

Trump’s administration began to carry out airstrikes against alleged drug traffickers in the Caribbean Sea and then to seize Venezuelan tankers, while building up the US military presence in the waters surrounding the country.

Trump gave Maduro an ultimatum to relinquish power in late November, offering him safe passage out of the country. But Maduro refused the offer, telling supporters he did not want “a slave’s peace” and accusing the US of wanting control of his country’s oil reserves.

This January, in the ultimate expression of a relationship breakdown, US forces carried out a pre-dawn raid on Caracas, capturing Maduro and his wife, Cilia Flores, who are now on trial in New York.

Venezuela’s acting president, Delcy Rodríguez, initially denounced Maduro’s capture as a kidnapping, but has since shown she is willing to work with Washington.

In the aftermath of Maduro’s abduction, Trump said the US would take control of Venezuela’s oil industry. And in August, after months of secret talks, Washington’s longstanding oil-focused policy was on display again when the US president announced the agreement to control millions of barrels of oil.

A White House press release described the agreement as the “biggest oil deal in world history” that gave the US government “powerful governance rights” over reserves. Further down in the document, the White House claimed private-sector growth would help drive a democratic transition in Venezuela, though few in Caracas will be holding their breath. Rodríguez has already been forced to defend herself against claims she is surrendering Venezuela’s natural resources to a foreign power.

One prominent Venezuelan economist has called the deal “predatory”, saying it was “done at gunpoint”. Francisco Rodríguez wrote that Washington’s actions in Venezuela had turned the country into “a protectorate in all but name”.

“Trying to run a country from the capital of an imperial power has been tried before,” he said. “And it has not ended well.”

​Additional reporting by Jillian Ambrose