Donald Trump’s State Capitalism

The U.S.-Venezuelan oil deal has been described in American media as “mind blowing,” and it is difficult to find a precedent for an agreement of this kind. Whatever one thinks of it, Donald Trump and his advisers have shown that they see few limits to their creativity when negotiating major business deals.

After Nicolás Maduro’s capture in January, Trump had already made clear that the United States intended to benefit from Venezuela’s oil wealth. The agreement now negotiated with Venezuela’s new president, Delcy Rodríguez, would give businessman Alejandro Betancourt’s company, North American Blue Energy Partners, operating rights for 100 years across 17 strategic oil fields.

The aim is to quickly raise Venezuela’s devastated oil production to at least 1.5 million barrels a day. Rodríguez says the plan would create thousands of jobs, bring $100 billion in U.S. investment and generate more than $200 billion in tax revenue for Venezuela. The United States would provide technology, expertise and logistical support.

In return, Washington, specifically the Defense Department, would receive 35% of NABEP and the right to buy 20% of the oil at production cost. The agreement and U.S. government involvement are also intended to reassure other oil producers that Venezuela can become a stable location with attractive returns after years of mismanagement and expropriation. Days after the NABEP deal, Chevron announced plans to invest $7 billion in its Venezuelan oil fields. The article says more companies are likely to follow, given Venezuela’s more than 300 billion barrels in oil reserves. Trump has called the arrangement “the biggest oil deal in the history of the world.”

Its future remains unclear. Venezuela’s 1999 constitution says the country’s oil reserves belong exclusively to the nation and its people and may never be sold. A 100-year exclusive license may look attractive on paper, but the article questions what will happen after Rodríguez and Trump leave office. It presents the deal as an unusual fusion of state control, close to socialism, with a form of turbo-capitalism associated with the United States.

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the biggest oil deal in the history of the world