Gunboat Diplomacy

Great Game Theory: Venezuela, Meet Machiavelli

The good news is that Chevron’s stock jumped roughly 10% once it became clear that Venezuela’s Maduro regime was unlikely to go full Suez and nationalize the company’s remaining assets. The bad news is how the White House neutralized the threat: effective, but not exactly comforting — and if recent U.S. history is any guide, it could still go sideways.

The argument that Washington’s actions sit well outside international law is, without doubt, correct. It is also, practically speaking, beside the point. Unenforceable outside of outright war, International law is largely self-policing meaning adherence is voluntary. If enough actors decide the rules no longer apply, the system becomes pointless. Why would any power, great or small, bind itself to rules its rivals and adversaries routinely ignore?

Since World War II, the world has lived through a bipolar anomaly, followed by an equally anomalous unipolar moment. What we are now seeing is a reversion to the historical norm: shifting empires and competing spheres of influence. It is expensive, inefficient, and nerve-wracking but it is the default state of human civilization.

President Trump is doing nothing to arrest the drift away from that system, but it is hard to argue that he started it. Russia’s gray-zone invasion of Ukraine was dressed up in absurd legalisms. Iran cloaks its regional proxy warfare behind militias. China spent a generation calling itself an “emerging market” while gaming the system and engaging in industrial-scale hi-tech piracy. North Korea has effectively become a hacker collective. All hide behind legal arguments devised by the very liberal order they undermine.

In a world where the system is no longer self-policing, gunboat diplomacy re-enters the picture. It is nasty and the optics are terrible but preferable to outright war.

Surgical Coercion

“Nationalization” is one of those euphemisms that describes a country enticing foreign capital to build an industry it cannot, then deciding it would rather keep the assets—and the cash—once the heavy lifting is done. The confiscation is done in the name of “the people,” who rarely see any of the proceeds.

Eighteen years ago, Venezuela’s Hugo Chávez nationalized roughly $60 billion in U.S. and Western oil assets. The companies sued Venezuela and PDVSA, the state oil company, and won. Payment never came. Since assuming power in 2013, Chávez’s heir, Nicolás Maduro, has repeatedly threatened to nationalize what remains—read: Chevron. He has also threatened to annex two-thirds of neighboring Guyana, including the oil-rich Essequibo region where ExxonMobil is the dominant player.

As I’ve written before, Venezuela is not really about drugs, nor is it unprecedented. At the height of empire, the British referred to their far-flung influence as an “informal empire,” maintained through pressure and, when necessary, gunboats. It was surgical coercion without the bother of actually running the place.

President Trump is not a man who chooses words carefully; they are deployed for effect, not precision. Much of Saturday’s press conference about the U.S. special forces operation was gibberish, but one line stood out: repeated suggestions that the U.S. was “going to run the place.” Let’s hope not. If the administration can resist the urge to take over, it may yet extract some order from the chaos.

The Best Bad Option

By declining to throw its weight behind opposition leader María Corina Machado — or even Edmundo González (who actually won the last election — Washington has avoided overt regime change. There is a degree of Machiavellian wisdom in that restraint.

Venezuelan Vice President Delcy Rodríguez has had a rough weekend, veering from mumbling about cooperation with Washington, to condemning the extraction as an “atrocity,” to expressing hope for future collaboration. Rodríguez is Maduro’s creature and lacks an independent power base. She may be a true believer, but she is also a pragmatist. To survive, she needs Washington to think she is playing ball—and she also needs the Venezuelan military.

That is where the real danger lies. Nicknamed the Cartel de los Soles for the sun insignia on their uniforms, the Venezuelan armed forces are essentially a heavily armed drug-trafficking organization. They may rally behind Rodríguez if the senior ranks believe they can profit from the new order—or at least keep their spoils and retire quietly into exile.

Alternatively, the military could fracture, with rival factions seeing opportunity in chaos.

The colectivos, well-armed, pro-government gangs, are an even bigger wildcard. Long used as deniable muscle, they are correspondingly hard to control. Additional U.S. pressure might discipline the army, but the colectivos are another matter. Think Houthis of the Caribbean.

If the military does swing its weight behind the current regime, even temporarily, Venezuela might stabilize long enough to reverse the brain drain, lure foreign capital back, and eventually hold a real election. That is a narrow path, but in a world drifting back toward gunboat diplomacy, it might be the best bad option.