Critical Times

The American operation in Venezuela marks a massive shift in world affairs:

• it wrecks the so-called “rules-based order” put in place by the USA after the war, as it is clearly a violation of both international and US law.
• it shifts the way that US power is exercised to a naked “might is right” approach (there was always a lot of hypocrisy in the old system).
• it moves towards a system of “spheres of influence”, where the great powers concentrate on controlling their own back yards.

Trump is declaring Venezuela, which possesses the world’s largest petroleum reserves, within America’s sphere of influence, and has struck a blow against China and Russia’s expanding investments there. In doing so he is shoring up the petrodollar, the regime that ever since the 1970s has ensured that petroleum is traded in dollars (still about 80% of all petroleum trade).

However, it is also a great risk. It may turn out brilliantly for the US, or it may just fizzle out inconclusively. Or it could blow up in Trump’s face. The Americans haven’t overthrown the Venezuelan state; all they have done so far is remove the leaders of one faction within the Bolivarian system. The situation could easily lead to long-term political instability, and possibly a coup d’etat. In that context, American oil companies will not be willing to make the billions of investment necessary to slowly get Venezuelan oil flowing again. As the New York Times has remarked, Trump has a record as a risk-taker going back to his early years in property investment; then again, he went bankrupt three times.