“May you live in interesting times” — suposta praga chinesa
This was not the text we wanted to write as the first of the year. However, this is the reality that prevails: we start the year with another event of great geopolitical relevance.
We write immediately after the events and, therefore, what can be definitively stated is still limited. Still, some facts seem beyond doubt. The US government conducted an operation that resulted in the capture of Venezuelan dictator Nicolás Maduro and his wife. So far, the accusations disclosed refer to international drug trafficking.
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Are there precedents for this type of action? Yes, although none with exactly identical characteristics. The closest case is the invasion of Panama in 1989, which removed dictator Manuel Noriega from power, who was later taken to the United States, tried and sentenced to 40 years in prison. Therefore, although rare, the current action is not unprecedented.
The central question, however, concerns less the past and much more the future: what comes next? From here, we enter the realm of speculation. Who governs Venezuela now? The American president states that the United States will exercise temporary control until elections for a new government are held. On the other hand, the Venezuelan vice-president declares that the country will resist any attempt at external control.
Here the first big problem arises. From the American perspective, declaring that you will exercise control is the simple part. For this control to take place, some form of military occupation would be necessary — what the Americans themselves call boots on the ground. On the Venezuelan side, resisting would mean facing the most powerful military force on the planet, and, perhaps more importantly, doing so without significant popular support.
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On the horizon, relevant institutional questions should arise, especially regarding the US president’s ability to conduct offensive military actions without Congressional approval — something that, according to our understanding, would be unconstitutional. This debate, however, belongs to the future.
At the moment, our objective is not to make moral judgments about whether the ends justify the means, but rather to analyze the possible economic and market impacts.
In fact, the American government appears to have copied pages from the doctrine of “realpolitik” by the late Henry Kissinger.
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The actions were based on:
- Realism;
- A vision of national interest above ideology;
- Legitimacy above justice;
- Pragmatism and flexibility.
In short pure realpolitik.
What is up to us is to analyze the possible economic and market impacts.
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The most direct channel is the price of oil, although the effect is far from clear. According to data from the International Energy Agency (IEA), Venezuelan production is around 945 thousand barrels per day. The physical oil market is currently well supplied, and OPEC countries have more than enough spare capacity to compensate for any loss of supply.
Paradoxically, in the long term, the effect may be the opposite. Venezuela has the largest proven oil reserves in the world, estimated at more than 300 billion barrels. In the 1990s, its production reached almost 3.5 million barrels per day. The North American president has already declared that one of the objectives of the operation is to guarantee access for American companies to these reserves. Obviously, this will take time, given the highly depreciated condition of the local infrastructure.
From the perspective of regional contagion and geopolitical instability, the initial effects appear limited. Venezuela was already an isolated country, with a government widely considered illegitimate by the international community following electoral fraud. The risk of contagion could increase if the United States chooses to extend this type of action to Colombia — an even more relevant actor in global drug trafficking and whose president has been antagonizing the Trump administration for some time.
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Overall, therefore, the immediate impacts on markets appear limited.
It is important to be clear: this does not mean minimizing the risk of a humanitarian crisis. There is, at this moment, a power vacuum that could trigger a wave of violence. The local economy, already deeply depressed, could practically come to a standstill, and the interruption of basic services and food supplies is a concrete possibility.
The outcome will depend, to a large extent, on the existence — or not — of an American plan for the day after. Historical experience shows that removing a dictator is often much easier than subsequently building a functional and stable government.
