Concerns Rise Over Venezuela Oil Deal

Black Gold Dreams and Nightmares: Concerns Rise Over the US-Venezuelan Oil Deal VENEZUELA Venezuela From the US to Russia, and almost everywhere in between, drivers around the world are feeling tremendous pain at the fuel pump. The US, however, has a plan to help American drivers: use Venezuela’s oil. More than nine months after American troops seized former Venezuelan President Nicolás Maduro, who is now in New York facing federal charges that include narco-terrorism and drug trafficking, officials in both countries recently released details about how the US plans to acquire as much as a quarter of Venezuela’s oil. Citing Acting Venezuelan President Delcy Rodríguez, the Associated Press described how the US government and Barbados-based North American Blue Energy Partners (NABEP), the biggest private oil company operating in Venezuela, formed a joint venture with rights to drill for oil in the South American country for a century. The expectation is that the joint venture will tap 65 billion barrels of crude that will require $100 billion of investment into Venezuelan infrastructure and generate $209 billion in tax revenues for the country. The US Department of Defense will own 35 percent of the joint venture. The US State Department will have the right to purchase 20 percent of its output at cost. On Tuesday, US President Donald Trump “reveled” in the new US access to Venezuela’s oil fields while addressing the UN General Assembly in New York. “It’s perhaps the biggest deal ever made,” he told the audience. “To the victor belong the spoils.” However, the deal has been strongly criticized by some US officials, Venezuelans and others who echoed World Politics Review when it wrote that it “does not pass the sniff test.” One major concern is the involvement of Venezuelan oligarch Alejandro Betancourt, who controls NABEP and who is a close ally of Rodríguez: He owes his fortune in part to no-bid contracts his companies were awarded under former President Hugo Chávez; he has been investigated for money laundering in Switzerland and Spain and was arrested twice in the United Kingdom last year on warrants related to those charges. The US has pressured Switzerland to drop its case and the UK to release Betancourt. He has not yet been charged with a crime. However, observers say Betancourt is extremely controversial in Venezuela, not least because it was his company that was awarded a no-bid contract under Chávez to upgrade state electricity power plants. Venezuela suffers from blackouts to this day. Then there are the worries over the echoes of “imperialism,” as French newspaper Le Monde labelled the deal. What right, they asked, does the US have to abscond with Venezuelan oil, even if the deal benefits ordinary Venezuelans – a big “if” given the rampant corruption and the country’s broken economy? “Nothing about this deal, closer to an ultimatum than a real compromise, rings right,” it wrote. “It represents a predatory move reminiscent of the worst eras of colonial empires, imposed on the land of Bolivarian ideals, which once championed mutual respect between nations.” Meanwhile, free-marketeers at the conservative Cato Institute worried about the lack of transparency, the lack of legitimacy, and the expansion of state corporatism with the US government getting involved directly in the oil business after years of American leaders criticizing meddling socialist governments like Venezuela’s. “This isn’t even ‘creeping’ socialism anymore,” they said, adding that the legality of the deal with an unelected leadership and one not approved by the legislature was in doubt. Regardless, after announcing his intentions to strike the deal months ago, Trump said the deal would unleash a massive wave of foreign investment into Venezuela. So far, observers say he’s right. Continental Resources recently announced a plan with state-owned Petróleos de Venezuela (PDVSA) to develop and operate a 126,000-acre patch in the Orinoco Belt, an oil region in the country’s center. Exxon is also preparing to make a big investment to start pumping black gold even though the CEO of ExxonMobil told Trump at a White House meeting earlier this year that Venezuela remains “uninvestable.” Such a move would be a “staggering reversal” for Exxon, Reuters noted: The company left Venezuela after Chávez, a socialist, nationalized its facilities, sued the country and is still owed billions in damages for the expropriation. Regardless, if and when the joint venture starts shipping crude, it will likely be years before that oil helps oil consumers abroad, wrote PolitiFact. The Venezuelan oil industry is decrepit after decades of mismanagement and corruption under the Chávez and Maduro administrations and will take years to upgrade. Armed groups control some areas that are necessary to access in order to drill for oil. Between then and now, a new US administration could scuttle the deal – or the Venezuelans could, if they shrug off their dictatorship in the future. Already, the Venezuelan opposition, which was not party to the deal, has reacted angrily to the agreement, which it sees as theft of national resources. The public is just as dismayed – with 87 percent opposed according to recent polling. Now, the opposition, observers and analysts also worry that the deal will disincentivize any push to restore democracy despite progress that was made in August with the first talks between the government and the opposition, a “National Dialogue” that is supposed to lead to reconciliation and a restoration of democracy. However, such an outcome would likely threaten the arrangement for Rodríguez and the US, analysts say. US officials counter that the deal is key to getting Venezuela’s destroyed economy back on track before any election is held. They say it’s necessary to give democracy a solid foundation. But Venezuelans, many of whom supported the US action to capture Maduro, aren’t buying that, as one Venezuelan told the Economist: “This is all being done behind the people’s back by people who are illegitimately in power.”