Venezuela: A Crisis the World is Fighting Over

Editor’s Note

This explainer brings together multiple perspectives on Venezuela’s unfolding crisis — from global energy politics and U.S. intervention to regional consequences and international law. Rather than presenting a single narrative, this piece reflects how power, resources, and people intersect in shaping Venezuela’s present and future.

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The U.S.–Venezuela Conflict: Oil, Power, and the Petrodollar

Writer: Aakriti Mittal

Editor: Asmita Sharma

I. What Is Happening?

Recent media reports claimed that a U.S. military operation was conducted in Venezuela on January 3, 2026, leading to the capture of President Nicolás Maduro. This has reignited international debates surrounding sovereignty, intervention, and resource geopolitics. U.S. officials described the operation as a law-enforcement action, framing it as a response to narco-terrorism and transnational crime networks allegedly linked to the Venezuelan government. Despite these claims, oil remains at the centre of this conflict.

Venezuela holds the largest proven oil reserves in the world, estimated at 303 billion barrels in 2023, more than five times that of the United States. However, by late 2025, production had fallen to 0.9–1.1 million barrels per day, largely due to underinvestment, deteriorating infrastructure, and sanctions. U.S. President Donald Trump has repeatedly framed Venezuela’s energy sector as an economic opportunity, publicly tying the country’s future to American energy interests. Although the operation has been presented as a security measure, it is evident that it is also about access to natural resources. One of Trump’s major post-operation actions was calling on American oil companies to invest in Venezuela’s energy sector, claiming this would modernise infrastructure and unlock its full potential.

The U.S. has provided several justifications for the operation, ranging from drug trafficking and irregular migration to restoring democracy after disruptions following the 2024 elections. However, many international legal experts and UN officials have argued that the level of force used violated international law and the UN Charter. Condemnation from Russia, China, Iran, and Cuba, along with cautious reactions from European states, reflects concern that unilateral military action could worsen regional instability. In this context, focusing only on legality is insufficient when the broader issue is the control of strategic resources. Control over the world’s largest oil reserves also reinforces the global dominance of the U.S. dollar, which still underpins most international trade.

II. Petrodollar Power: Oil, the U.S. Dollar, and American Hegemony

To understand why Venezuela’s oil matters so much to the U.S., one must examine the role of the U.S. dollar in the global oil trading system. Since World War II, the dollar has functioned as the world’s primary reserve currency, gaining even greater importance when oil began to be traded almost exclusively in dollars. This arrangement, known as the petrodollar system, provides the U.S. with what economists call an “exorbitant privilege.” Oil-importing countries must hold dollars to pay for energy, while oil-exporting states reinvest their dollar earnings into U.S. markets, creating continuous global demand for the currency.

This monetary dominance also enables financial coercion. When Trump expanded sanctions, Venezuelan assets were frozen and access to the U.S. financial system was restricted. Because oil dominates Venezuela’s economy, these measures had devastating effects.

Trump’s foreign policy prioritised economic pressure over diplomacy. Sanctions became the central tool of U.S. strategy. By cutting off access to dollar-based payments, Venezuela was financially weakened. However, this approach also produced unintended consequences. Many countries began to criticise the risks of relying on a single dominant currency. As a result, alternative payment systems and regional currencies gained momentum. Venezuela reduced its dependence on the dollar, shifting transactions to euros, Chinese yuan, and digital payment systems. When cryptocurrency-based systems failed, Venezuela turned to dollar-pegged stablecoins such as USDT, allowing it to conduct international payments while bypassing U.S.-regulated banks.

While this appears contradictory, the logic lies in control. These transactions no longer pass through American financial institutions, making them harder for Washington to monitor or restrict. For U.S. policymakers, the concern extends beyond Venezuela. If other states adopt similar strategies, the petrodollar system could weaken significantly. Although de-dollarisation would be slow and costly, Venezuela’s case shows how sanctions can backfire. Small financial shifts can, over time, produce large geopolitical consequences.

The events of 2026 should therefore be seen as a warning. While the U.S. dollar still dominates global finance, its power increasingly depends on enforcement rather than consent. Venezuela demonstrates what happens when financial dominance is asserted too aggressively, it creates the very instability it seeks to prevent.

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The Western Perspective

Writer: Atulya Mishra

Editor: Tanishtha Ghosh

The vast majority of critiques against the US operation “Absolute Resolve” seem to revolve around oil. This lies in part due to comparisons drawn with the Iraq war, critiqued by many as a case of “petro-aggression” or an “oil war”. Despite the oil theory having proven to be largely inaccurate in Professor Emily Meierding’s Petroleum and the Causes of International Conflict, gaps in historical understanding of Venezuela in modern discourse seem to perpetuate the narrative that the US simply invades countries because of crude oil- and then lies about it.

So, let’s discuss.

Venezuela first started to become a major oil producer after a small fishing village called Cabimas had a blowout in 1922, which revealed massive oil reserves and captured the attention of the world. The kind of oil that is found in Venezuela is thick and viscous, unlike the type of oil found in Saudi Arabia, which is lighter, more free-flowing and does not have to trade at significant discounts.

Since Venezuela was a poor country and had a largely agrarian economy at the time, American oil companies like Exxon and Gulf oil provided the technical expertise and heavy machinery to process Venezuelan oil which is much harder to refine. This worked, and by 1928 Venezuela had become one of the richest companies in the world and among the top oil exporters owing to an industry built by US support. Venezuela further benefitted from its relationship with the US after the oil crisis in the 1970s which saw increases in oil prices up to 500%. Venezuela saw increases in oil revenue worth billions at a time where the international economy was devastatingly impacted, and from 1970-80 its GDP rose from 11.5 billion dollars to a whopping 48.3 billion dollars. In the middle of this crisis, Venezuela nationalized its oil industry and created PDVSA (pronounced Pedevasa).

After Hugo Chávez came into power in 1999 on his promises of ending corruption, things changed. Far from traditional misconceptions that Chávez “freed” the industry from the US, he did no such thing. What instead happened was the purge of thousands of technical workers and their replacement with party loyalists which created a culture of corruption. This resulted in a three-fold increase in the payroll of PDVSA along with a collapse of the oil industry from which it never recovered to this day. Jorge Giordani, former power minister of the country and Marxian economist, estimates that up to 300 billion dollars was stolen. At least 7.9 million people have left the country since 2014 as a result.

Chavez’s handpicked successor, Nicolas Maduro, worsened this crisis. By 2017, 76 out of 84 PDVAS plants were defunct and oil production fell to 20% of total capacity. And before the effects of sanctions or embargoes are pointed out, it is important to remember that US sanctions only targeted individuals in Venezuela for things like human rights violations, narco-trafficking, and corruption and Venezuela was selling its oil to the US without any repercussions. Sanctions on PDVSA itself did not come before Maduro caused a constitutional crisis in 2017 by blocking the powers of the majority-opposition National Assembly. Afterwards in 2018, Maduro refused to accept election results when he had lost and resorted to suspending and denying them from parliament altogether. He did the same thing in the 2024 election where about 70% of voters voted against Maduro’s rule.

There is a myriad of factors in play here. Firstly, if the intention behind Operation “Absolute Resolve” was about ‘oil’, the US would have accepted the autocrat’s earlier offers which included all of the existing and future oil and gold projects to American companies, preferential contracts to American businesses, and a ‘slash’ of the country’s energy and mining contracts with Chinese, Iranian and Russian firms. As is in the case with the previously noted PDVSA embargo, the cause was not economic but political.

Secondly, Venezuela’s democracy was already crumbling before Chavez and Maduro. What these two despots did to the Venezuela they inherited was use their weak judicial systems to expand the scope of illegal narcotics trade. The reason for this practice, particularly in recent years, was that Maduro needed a crutch like the drug trade to sustain the state after decades of corrupt rule. Venezuela might have been a corrupt duopoly in the pre-Chavez years but at the time of Absolute Resolve it was indubitably an illegal autocracy.

Lastly, any claim of the operation as ‘unlawful’ cannot be made unless one considers Venezuelan sovereignty to lie in the Maduro government. Prohibition of use of force and sovereign equality only apply to- you guessed it- sovereign nations. If the Maduro government is to be recognized as the sovereign government of Venezuela, then the precedent it sets is far more dangerous than the precedent of extracting criminally indicted abusers of power. It then renders the founding principles of modern democratic theory completely useless.

To quote Article 5 of the Venezuelan Constitution “Sovereignty resides untransferable in the people”. It is perhaps best - in all cases of international affairs and not just Maduro- that state representation is not confusing with popular support. For they continue to run in contradictory terms in much of the developing world.

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Venezuela – The Making of a Failed State

Writer: K.S. Prathignya

Editor: Prisha Singh

Imperialism and Political Intervention

A central concern with Operation Absolute Resolve is that this is not the first instance in which a so-called ‘third world country’ has been subjected to what may be described as Western imperialism. While this may appear to be a basic argument, there are multiple layers of analysis that reveal how this process unfolds over time. Western imperialism refers to the extension of power and influence by Western states through colonisation, military force, or other indirect means.

However, Western imperialism does not begin as imperialism; rather, it progresses through stages. This pattern can be observed in the case of Venezuela, where the most prominent recent development has been the killing of the country’s dictator.

Historical Sentiments

Historical parallels are particularly evident when considering the invasion of Iraq. Following the killing of Saddam Hussein, many Iraqi citizens initially celebrated. His execution was justified on the basis of allegations that Iraq was harbouring nuclear weapons, claims that were later proven to be false. What followed, however, was widespread violence, large-scale civilian casualties, and the systematic destruction of infrastructure, alongside the accumulation of oil by external actors. This process produced extreme instability, dispossession, and long-term underdevelopment.

As a consequence, Iraq became vulnerable to occupation by ISIS and is now widely regarded as a failed state. The failure lay in the inability to establish a stable, welfare-oriented regime. Destroyed infrastructure was not restored, basic amenities were not adequately provided, wealth distribution remained uneven, and corruption became increasingly centralised. While authoritarianism is undoubtedly inhumane, it is also unrealistic to expect a society to transition immediately to democracy without social stability and institutional support, particularly following the collapse of its only governing structure.

Nuclear weapons were framed not only as a political threat, but also as an economic one. While the prospect of a single individual controlling nuclear weapons was presented as volatile, the United States also perceived a threat to its monopoly over nuclear power. Warfare is therefore rarely a matter of moral clarity. Despite this, Western interventions are often presented as binary struggles between good and evil, obscuring their underlying complexities.

The use of American taxpayer funds to finance destruction in Iraq reinforced the perception that ‘third world countries’ are inherently underdeveloped. In reality, these states are more accurately described as overexploited. This pattern has repeated itself across history, both before and after the Second World War, where corruption and wealth accumulation coexist with widespread poverty. Geographic conditions often come to reflect this imbalance, as seen in regions such as parts of Africa, India, Argentina, and the Middle East.

The Foundations Behind It

The removal of a dictator does not, in itself, guarantee the establishment of democracy. Although dictatorship is inherently authoritarian, it can offer greater political stability than the absence of any governing regime. This is particularly evident when a state is simultaneously attempting to establish authority while being externally destabilised and subjected to resource dispossession. Without the means to rebuild its economic foundation, such a state becomes dependent, creating conditions that enable corruption and deepen poverty.

Robert I. Rotberg defines failed states as those that can no longer provide essential political goods to their citizens. A state begins to fail when it is unable to ensure security, neglects public welfare, and undermines long-term development. As these failures intensify, corruption becomes entrenched, especially when regimes are abruptly dismantled without replacement.

Arturo Escobar, in Encountering Development, demonstrates how states are rendered ‘failed’ through entrenched power structures. He argues that development operates as a Western discourse that constructs the Third World as underdeveloped, thereby legitimising intervention while reproducing colonial power relations. What this discourse ignores, however, is the historical production of poverty itself. When knowledge is constructed without this context, solutions become one-sided and rooted in Western normative standards. Development is further reduced to statistics, erasing the complexity behind structural poverty. As a result, when a state challenges Western norms, it is positioned as the ‘other’ through narratives of underdevelopment rooted in overexploitation.

Noam Chomsky’s Manufacturing Consent offers insight into how media and political narratives presented for public consumption are rarely neutral. Through mechanisms such as the Propaganda Model, public opinion is shaped to accept particular policies and interventions, including Operation Absolute Resolve. While there may be no overt censorship, the stories that gain prominence often serve those who occupy privileged positions within power structures. Consequently, dismissing claims that Western intervention is motivated by resource accumulation reflects the effectiveness of this model, rendering such critiques ‘unthinkable’.

Does History Repeat Itself?

To briefly revisit the Venezuelan case, a dictator has been killed under allegations related to drug trafficking. However, there is strong indication that the motivations behind this intervention are not solely political, but also economic in nature.

Professor Emily Meierding argues that oil is rarely the primary cause of war, as it is often easier to purchase oil than to conquer it. Nevertheless, when a country has already been structurally weakened through exploitation, its position within the global economic system becomes increasingly unstable. In such conditions, reliance on a single resource, such as oil, renders the state particularly vulnerable. Venezuela’s overdependence on oil places it in precisely this position. Should this resource be dispossessed, the prospects for rebuilding an economic foundation become deeply uncertain.

At present, Venezuela exists without a stable governing regime. Before such a regime can be established, external occupation remains a significant risk. This situation is likely to produce long-term structural disadvantage within Venezuela’s political economy, particularly in relation to its global standing. Within dominant development discourse, democracy is often framed as a privilege, strategically detached from the historical realities of exploitation that underpin contemporary inequalities. While the language has evolved since the colonial era, the underlying structures of control remain largely unchanged.

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Latin American/Regional Impact 

Writer: Harshita Jaggi

Editor: Aniket Vijayvargiya

The Latin American region has been severely hit with a massive wave of migration that has been caused by the Venezuelan crisis. The UNHCR estimates that almost 8 million Venezuelans have been forced into displacement around the world, and it is estimated that 6.5 million Latin America and the Caribbean contain the largest forced displacement problem ever to be seen in Latin America. Colombia alone has its own half-million or so (an estimated 5 percent of the population) of these migrants, and some of the Andean nations (Peru, Ecuador, Chile) have hundreds of thousands. In general, up to 7-8 million people who are almost a quarter of the Venezuelan population have fled since 2014. Such a massive exodus has had its toll on the surrounding economies, as well as being a burden on them. These migrants are generally adults ranging between the working-age, and are moderately educated, which has slightly increased the labour force and demand of the host countries.

IMF researchers suggest that since 2017, the GDP growth of major recipient countries has increased by an average of 0.1-0.25 percentage points due to increased labour supply from Venezuela migration within much of the new workforce. Meanwhile, a number of Venezuelans are employed in the informal sector at less pay. research studies show no displacement of local labourers as the host economies consume the influx. Fiscally, migrants have augmented the government spending on health, education, and social services by about 0.1-0.5 percent of the GDP in different nations a transient load which analysts anticipate diminishing as the migrants become full-fledged participants and pay taxes. 

The various governments of Latin America have dealt with these issues differently. At the beginning of the crisis, open-door policies were adopted by a majority of countries, which gave Venezuelans legal status and social assistance. Most common were flexible visas, humanitarian corridors, and temporary residency programs, reinforced by the understanding for the need of humanitarianism and economic opportunity. In 2018-19, however, as the number of flows increased, some countries began to introduce entry requirements or visa requirements. The integration process has been accompanied by increasing social tensions: where the xenophobic or anti-migrant mood or rather the national level in most host countries has risen. According to one scholarly research, the attitude towards migrants became worse in those countries which received the larger numbers of Venezuelans despite the fact that the migrants spoke the same language and celebrated the same culture as the native population. Furthermore, there has been a drop in the wages of locals (particularly those in the informal sector) and there has been an increase in the number of backlogs in the government services of overcrowded border towns. However, the general picture is that long-term growth of the economy is a positive expansion of the labour markets and consumer base given that the policy focuses on integration (e.g. work permits, training). 

Latin America has been torn by the political turmoil in Venezuela.

The governments of the regions are divided ideological differences in the approach to dealing with Caracas. Since 2019 the so-called Lima Group (consisting of conservative or centrist regimes in Colombia, Brazil, Peru, and others) supported the opposition leader Juan Guaido and pushed Nicolas Maduro to relinquish his power. In comparison, leftist governments (like the AMLO of Mexico, the government of Uruguay led by Boric, and the government of Argentina led by Kirchner) did not recognize Guaido and supported dialogue with Maduro. This rift was manifested at a 2022 OAS summit in October: where Chile, Colombia, Peru, Argentina and Mexico voted against continued representation of Guaido at the OAS but indicated a change to engagement. Similarly, an August 2024 meeting of Cuba, Bolivia, Nicaragua and Caribbean members in the ALBA (Bolivarian Alliance) explicitly reaffirmed its support of re-election of Maduro and condemned U.S. sanctions which were meant to choke Venezuela. 

In the meantime, new regional alliances are coming up. As an example, when Brazil returned to the left in 2023, the election of the new president, Lula, they immediately reestablished embassies and trade relations with Venezuela nearly, three years after they had been locked out. In Colombia, the relations returned to normal where, at the beginning of 2023, border crossings were completely opened, and ambassadors were exchanged with Caracas. Necessary pragmatic solutions have likewise been pursued in other countries. These changes imply that Latin America has to juggle between humanitarian cooperation (migrant aid, joint infrastructure) and a multifaceted diplomatic environment. Altogether, Venezuela has fallen into a major crisis in the region, which has stimulated the collaboration in migration and social services despite the fact that it could intensifies the political divide and alters alliances in the entirety of the Latin Americas. 

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The Road Ahead for Venezuela

Writer: Hrishik Bains

Editor: Ananya Karthikeyan

Foreign powers have started to use military force in Venezuela, which has created rising danger as global energy disputes become more intense. Multiple international legal violations have been documented. The current situation presents two distinct challenges: Venezuela faces internal instability, while the United States actively backs military operations through diplomatic efforts, economic sanctions, and military presence.

The 2024 presidential elections in Venezuela attracted global attention because the nation experienced its most severe international crisis. The United States, along with its allied nations, denied recognition of the election results because opposition candidates faced restrictions, institutions were placed under government control, and the elections lacked reliable monitoring (Council on Foreign Relations, 2024). The crisis intensified when international sanctions were imposed. Diplomatic relations were cut during the early phase, and by 2026, Washington increased its verbal pressure and military actions against Venezuela, as it now considers the country a national security threat due to drug trafficking and its potential to destabilise neighbouring states (Reuters, 2024).

This growing situation has created serious legal challenges that affect the entire international system. States may only use force against other sovereign nations in self-defence or when authorised by the United Nations Security Council. International law has consistently opposed unilateral actions such as cross-border asset seizures, financial blockades, and the targeting of state leaders, as these violate Article 2(4) of the UN Charter (Chatham House, 2024). Operations presented as law-enforcement or counter-narcotics missions require consent from the state involved, as well as proper international authorisation.

The conflict remains centred on oil, which is the primary source of disagreement. Venezuela holds the largest proven crude oil reserves in the world, making its economic collapse a crisis for both human welfare and global energy security (U.S. Energy Information Administration, 2023). In 2019, the United States imposed sanctions on Venezuela’s state-owned oil company PDVSA, blocking its access to international markets and financial institutions. Although Washington allowed limited oil exports through temporary licences in late 2023, these licences remain subject to change, allowing the U.S. to control Venezuela’s main source of revenue (Reuters, 2023).

By 2026, analysts describe Venezuela’s oil industry as operating under indirect external control. Sanctions enforcement, shipping restrictions, and asset-seizure threats have significantly reduced Caracas’s ability to generate revenue independently from its resources. This system of indirect resource control creates serious legal and moral concerns, as economic pressure has severely restricted the government’s ability to fund essential services such as food imports, healthcare, and infrastructure (Brookings Institution, 2023).

Regional responses to these developments have been deeply divided. Governments in Brazil, Colombia, and Mexico have avoided military escalation and instead prioritised diplomacy and gradual engagement, based on historical experience with U.S. intervention and concerns about migration, border security, and economic instability (Inter-American Dialogue, 2024). More than seven million Venezuelans have been forced to flee their homes, placing overwhelming pressure on public services across Latin America and affecting every country in the region (UNHCR, 2024).

By 2026, Venezuela faces a dangerous political deadlock. The government continues to function through coercive institutions, while the opposition enjoys international recognition but lacks domestic power. External pressure has tended to reinforce authoritarian control rather than weaken it, a pattern observed in sanctions-based conflicts worldwide (International Crisis Group, 2024).

The situation in Venezuela demonstrates how the use of force and economic coercion fails to resolve political and economic crises. Military power and resource restrictions can weaken governments, but they do not rebuild institutions, restore public trust, or address the structural dependency that caused collapse. Unilateral enforcement by powerful states also threatens international legal norms by turning coercion into a standard practice.

Venezuela has become a test case for the international system.

The question is no longer whether Venezuela will change, but whether that change will occur through negotiated reconstruction and regional cooperation, or through escalation that prioritises power over law. The outcome will shape both Venezuela’s future and the credibility of global rules governing sovereignty, intervention, and resource control.