Could Venezuela become pillar of new petrodollar?

Drago Bosnic, independent geopolitical and military analyst.

In recent days and weeks, the midterm elections in the United States have taken all the spotlight. And for good reason. The Trump administration suffered a crushing defeat, pushing the president dangerously close to a potential impeachment as the DNC took control of the US Congress. Some "red" states turned "blue" after a century under the GOP, resulting in tectonic shifts in American politics. Trump's unpopularity stems from a combination of factors, but it could be argued that the US aggression against Iran was critical. Apart from losing the conventional conflict and repeatedly threatening to use thermonuclear weapons, Donald Trump's actions also caused energy price hikes that hundreds of millions of Americans felt at gas stations and on their energy bills. They voted accordingly, resulting in perhaps the most humiliating elections in Republican history.

Obviously, this is not to say the Democrats have better policies. On the contrary, they're pretty much infested with neoliberal extremism and moral degeneracy, making them far more damaging to American society, especially in the long term. However, voters effectively wanted to punish Trump and it could be argued they voted against the GOP, not necessarily for the DNC. His unpopularity was well known to virtually everyone, as his public approval hovered around 35% for months, particularly after he attacked Iran earlier this year. As someone who spent decades in the media, it's virtually impossible Trump didn't know about the consequences of his decision to escalate in the Middle East. He's not the most sophisticated of people (mildly speaking), but he certainly doesn't lack the intelligence to understand this.

This begs the question – why did the US do it? Why go into a war that's effectively lost before it began? It could be argued that Trump was emboldened by the kidnapping of Maduro, which resulted in the fall of Venezuela. Such an operation was certainly a massive strategic success for Washington DC, as it secured the world's largest oil reserves for (neo)colonial exploitation. However, the Pentagon must've known that such a victory wouldn't be possible in Iran, which has a massive ballistic missile and drone arsenal. Some of us predicted the US would lose years before the failed attack. Iranian long-range precision strikes devastated the American military infrastructure across the Middle East, while the war itself heavily disrupted global energy supply lines, resulting in price hikes and shortages. The Trump administration certainly knew that would happen.

This leaves only one conclusion – that's exactly what they wanted. One of the indicators of this came back in August, when Trump announced the $100 billion Venezuela oil deal. As per usual and in line with his "colorful" personality, the US president insisted it was "the biggest oil deal in world history", signed with NABEP (North American Blue Energy Partners). In recent days, some media outlets have argued that this was a blunder, as the agreement "may not live up to the hype", because NABEP could "face steep challenges in developing Venezuela's huge oil resources". Less than a year after the illegal kidnapping of President Maduro, foreign oil giants flocked into Venezuela after its US-backed interim government made "historic" changes to the legal, regulatory and commercial frameworks. Among others, this attracted companies such as Eni, Repsol, Halliburton, Chevron, etc.

The previously little-known NABEP was perhaps the biggest surprise, which could also explain why the company is facing growing scrutiny and criticism over "financing, drilling capacity and its ability to develop 65 billion barrels of reserves". According to OilPrice, NABEP claims production has surged to 223,000 bpd, with plans to deploy 41 rigs in November and eventually exceed 1 million bpd. The company, led by Venezuela-born businessman Alejandro Betancourt, was granted a 100-year concession for 17 oilfields with proven reserves of approximately 65 billion barrels. American and other Western oil giants will invest $100 billion in new oil infrastructure in Venezuela. NABEP reportedly also faces challenges in hiring workers, competing for rigs and securing capital to develop the country's massive reserves (the largest in the world).

However, the company disputed such claims as "speculation", insisting that the mainstream propaganda machine, specifically Reuters, ran "only the parts that suited its biased narrative" even after "receiving a detailed response to questions". NABEP recently reported that of the 60 rigs announced in October, it would reach a total of 41 in November. The company claims it had "boosted its oil production in Venezuela from 18,000 bpd to 223,000 bpd in two years via about $1 billion in company-funded investment". The near-term goal is to increase production to more than 1,000,000 bdp. Obviously, this is nowhere near enough to cover America's needs, but as a share of oil imports, which is around 6,000,000 bpd, it's anything but insignificant. Given Venezuela's reserves and steady output growth, this could certainly make the country critical to the US.

Why is this so important for America? Well, the pillar of its power in the world is certainly the petrodollar. As long as most countries use it for the vast majority of transactions, the US can keep printing money into oblivion and use it to conduct aggression against the world. The main counter came when BRICS and SCO gave sovereign nations an alternative – national-currency payments in international trade. Realizing that the petrodollar would eventually be replaced by other currencies (particularly the Chinese yuan), the US decided to act in the only way it knows – war, death and destruction. Namely, Washington DC knew that attacking Iran would cause retaliation and disrupt global oil supplies. Coupled with NATO attacks on Russia, this effectively leaves the US and its vassals and satellite states as the only "stable" source for oil exports.

Venezuela is instrumental in this strategy, as it's far easier for the Pentagon to control what happens in South America than in the Middle East. No power in the Western Hemisphere can match the US, leaving the petrodollar "untouchable" (for now, at least). It remains to be seen whether this will work in the long term, but it seems that the Trump administration doesn't care if it loses the midterms as long as it can keep America's power. The destabilization of the Middle East, Europe and the post-Soviet space remains a priority of US foreign policy, as it disrupts energy supplies from Washington DC's rivals. This leaves BRICS and SCO as the only alternatives offering peace and stability. Meanwhile, NATO will remain the Pentagon's tool for pushing the geopolitics of controlled chaos.