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  • Writer's pictureRichard Murff

And the Next War...

Venezuela, Guyana and Brazil get Prickly

Venezuala Guyana get prickly
Map courtesy of The Economist

Brazil has “intensified defensive actions” along its northern border with Venezuela to prevent an invasion of Guyana. US Army special forces are also met with Guyanese leaders over the weekend.


The fracas is over a Venezuelan referendum, held yesterday by President Nicolás Maduro on whether two-thirds of Guyana known as the “Essequibo” is, in fact, part of Venezuela. Guyana, for its part isn’t being asked about it. Caracas hasn’t released results yet, but the opposition is publishing photos of empty polling stations.


Historically, the squabble goes back to 1899, when the Essequibo was ceded the Great Britain, and the matter has been in limbo since Guyanese independence. Then the Stabroek Block was discovered offshore oil fields – big ones - which ExxonMobile reckons has the equivalent of some eight billion barrels of oil. Then that vague historical grievance became and real geopolitical hankering. While Venezuela is in no shape to actually fight a war, Guyana can hardly defend itself against the rain. So Brazilian forces are massing on the border and the US is lurking in the shadows.


Practically speaking, however, Venezuela can’t extract its own oil, much less anyone else’s. The US has lifted sanctions on its heavy, sour crude on the condition that Caracas allows free(ish) elections in 2024. Even if they did, it hardly matters because under President Maduro the state oil company was looted of most of its equipment and its infrastructure has crumbled.


That election is the root of the matter. While going through the motions of a free(ish) primary, nearly the entirely of the opposition rallied around the María Corina Machado – who thinks the Essequibo matter should be settled in international court. Maduro can’t really put her in jail, as sanctions on the oil they can’t get too will come crashing down, along with foreign investment. He can label her as un-patriotic. So, a foreign invasion a la Argentina’s heave on the Falklands or Iraq’s on Kuwait.


With knock-on here is that this foolishness turns into a shooting war (unlikely) that it would put a halt Guyanese oil coming on line for the duration as well as any ramp up of Venezuelan production. It wouldn’t do Brazil’s booming production too much harm, but you never know about these things. An open conflict would increase OPEC+ (currently slipping) ability of to control global oil prices, which won’t do the world any favors.


What a war would certainly do is created a displaced person crisis and the smart money is that they’d head north, creating a refugee crisis the US southern border. Combined with the escalation by Houthi's this weekend in the Red Sea, the two conflict zones would bring the global economy to a crushing halt over energy prices.


Still, a war in the Caribbean is unlikely, simply because Caracas can’t pull it off, and it would bring sanctions roaring back. But what the hell? Nonsensical invasions are fashionable this season. At least this one should be easy to roll back.


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