4 things to know about Trump’s Venezuela takeover

Gunboat diplomacy is back. But it won't bring cheaper gasoline any time soon.

Venezuela’s [former?] President Nicolás Maduro is in New York City, where he pleaded not guilty to narco-terrorism charges on January 5. The legal prosecution of Maduro will take months and be far less dramatic than the January 3 raid that removed him from power.

Yet President Trump’s forced removal of Maduro could have repercussions that last for years. Here are four to consider in the immediate aftermath of Trump’s decision to take control of Venezuela:

Congress should matter—but it doesn’t. There will be tons of ongoing media coverage of the proper role for Congress in military operations Trump is directing single-handedly. Democrats will seethe at President Trump’s gunslinger bravado. Some Republicans will express concern. There will be hearings, etc. But Congress has become a supine organization that has willingly ceded tons of authority to the president, much of it under Trump, but some of it preceding Trump.

The reality is that many members of Congress want the president to make tough decisions alone, so they never have to take a stand on something controversial. This could snap back somebody. But not now, given that Republicans who run Congress have essentially given Trump free rein. Trump has figured out that he can bulldoze Congress without much meaningful pushback. He’ll keep at it.

There won’t be an immediate impact on oil supplies or prices. Venezuela has the world’s largest oil reserves, yet oil prices barely budged after US forces ousted Maduro on January 3 and Trump said he was in charge of the country. That’s because much of Venezuela’s oil infrastructure is old and wrecked. Despite huge reserves, Venezuela supplies less than 1% of the world’s oil and that isn’t likely to change much anytime soon.

Trump has identified oil as his main interest in Venezuela, saying on January 3, “We’re gonna get the oil flowing the way it should be … We’ll have the greatest oil companies in the world going and invest billions of dollars.” That suggests Venezuelan production—down 80% from peak levels—could ratchet back up again. But this is hardly an overnight operation. Plus, big US oil companies such as ExxonMobil and Chevron don’t want to pump as much oil as they can get their hands on. They want to pump the right amount of oil to keep prices stable and maximize profits.

Morgan Stanley said in a January 5 research note that they expected “limited near-term impact on oil prices” from Trump’s intervention in Venezuela. The biggest impact, the Wall Street firm said, is likely to involve bonds issued by the Venezuela government and by its state-run energy company, PDVSA. Those are arcane, risky assets most ordinary investors don’t own.

There’s a lot going on beneath the headlines. Trump has mostly talked about Venezuela’s oil, but some analysts think that’s a smoke screen. Financial analyst Tracy Shuchart says Trump’s oil narrative is “pure theater,” and suggests a few other reasons Trump may have wanted control of Venezuela. One is that Venezuela has some critical minerals the Pentagon needs for weapons systems. Another is that Venezuela has allied with China on developing some of those minerals, and other matters. Maduro also allowed certain Russian and Iranian operations in Venezuela, and Trump may have simply wanted to kick adversarial interests out of America’s zone of influence.

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Then there’s the question of whether Trump may try to strong-arm other Latin American nations, for whatever reason. Cuba looks vulnerable, especially since it relied on Venezuela for oil supplies that Trump may now control. Some Cuban blood pressures certainly spiked on January 3 when Secretary of State Marco Rubio said, “If I lived in Havana, and I was in the government, I’d be concerned.”

Trump will win … if nothing goes wrong. Removing Maduro was the most audacious move Trump has made during either of his presidential terms. Establishmentarians are already decrying Trump’s imperial presidency and strong-arm tactics. They could turn out to be right. Trump has now embarked on nation-building in Venezuela, despite prior disasters in places such as Vietnam, Afghanistan and Iraq. Venezuela could end up lawless or even more of a failed state than it was under Maduro.

But if Venezuela muddles through, with its oil infrastructure slowly rebuilt and its people enjoying slightly better living conditions, the Trump takeover might eventually look like a modest success. Trump shouldn’t take that for granted, but Trump’s critics shouldn’t assume that Venezuela will be worse off under Trump than it was under Maduro.