“You can check in any time you want but you may never leave.” (The Eagles, Hotel California)

That might be said of the Petrodollar system that sustains US power and influence in the world and largely explains the gunboat diplomacy employed by Washington against Venezuela.

In his press conference explaining why the US launched a special military operation against Venezuela and kidnapped a neighbouring head of state President Trump called a spade a spade:

“We’re in the oil business. We’ll be selling large amounts of oil to other countries.”

The shale revolution disguised the fact that the US does not possess an abundance of oil—or rather the type of oil it needs.

The shale gas the US has pumped out in recent decades is light crude that does not feed the US refineries.  The old US refineries were built 50 years ago and designed to process heavy crude oil.  That is why the US, with its abundance of oil, still continues to import large quantities of it.

It would also be very expensive to transport the shale oil to California and the east coast:  its market.  Enormous pipelines would be required.  It is much cheaper to ship foreign oil to US ports.

The price of oil is very important to the US consumer.  It has a major impact on the cost of living, influencing the results of the plentiful elections the US system has.

Heavy crude is produced by Russia, Canada, Saudi and Venezuela.  The US has traditionally imported Saudi Arabian heavy oil for its refineries.  But Riyadh is not now the US dependency it once was!  In the mid-1980s its arm was twisted to collapse the price of oil and thus help destroy the Soviet economy by depriving it of the income and foreign currency resulting from oil exports.  

Saudi Arabia saw the effect of Western sanctions against Russia in 2022 and began making alternative arrangements. Its future is towards BRICs.

It was the Reagan/Casey strategy of the mid-1980s, aimed at collapsing the global oil price in order to undermine the USSR economy, that destabilised Venezuela.  Up to that point it was pumping 3 million barrels of oil a day and the Petrodollars were flowing into the US-aligned Caracas. 

When the oil markets crashed, the illusion of prosperity disappeared and this prompted the Chavez coup of 1992.  In 1998 he won the Presidency in a landslide vote:  on a programme of clearing out the old elite which had ruthlessly cut social spending to preserve its own wealth. 

The US/Venezuela alliance ended, and Caracas reorientated on Bolivarian lines. 

Sanctions were imposed by George W. Bush on Venezuela.

The US has bided its time because it required the Venezuelan heavy crude, especially when it was embarking upon its destabilising adventures in the Middle East.  But things have changed.

Now, the US Strategic Petroleum Reserve is at its lowest level.  To stop inflation President Biden drained the US energy Reserve. This Reserve of oil was meant for emergencies such as war.  But Biden flooded the market to keep prices low in order to win the 2024 election against Donald Trump.  And he also released large quantities to shore up Europe:  in order to break its relationship with Russia, as part of Washington’s War in Ukraine.

The US Strategic Petroleum Reserve had reached critically low levels just when oil prices were beginning to rise.  The instability in the Middle East, brought about by the ongoing Israeli threat to Iran, was also a factor to consider.

The US Strategic Petroleum Reserve could not be replenished on the open market without economic damage to the US economy, so the only alternative was to seize control of Venezuela’s oil.

It should be understood that the US dollar is no longer backed by gold or by industrial productivity.  It is backed by an agreement with the House of Saud made 50 years ago.  That agreement dictates that oil must be sold using dollars.  This creates a universal need for dollars because everybody needs oil.

This system created the ability for the US to print dollars out of thin air.  Ordinarily this would produce inflation, but it does not have the same implication it would if others did it, due to the need for dollars around the world in purchasing energy.

New dollars can always be sold as long as the world needs them for oil.  Over half the print run can go abroad, bought by foreigners, making the increased supply only marginally inflationary for US consumers, since it is absorbed outside the domestic economy.

If another state acted in this way, the result would be massive inflation—but the US can print as it sees fit and it has been printing and spending, despite all promises to curtail producing an ever-growing deficit.

It is the Petrodollar system that is the main source of US power and prosperity these days.

But the new coherence presented by the BRICs alliance threatens the success of this.  After all, Brazil, Russia, India, China, South Africa, Iran, Saudi Arabia, Egypt, Ethiopia, United Arab Emirates, and Indonesia together represent about 49% of the world population, 36% of its territory, 39% of GDP, and 23% of international trade.

There were reports that Venezuela, to escape its predicament, was preparing to price its oil in a basket of currencies led by the Chinese Yuan.  The Petrodollar system was, therefore, under threat.

Venezuela was under long-standing Washington sanctions, and—with no way out of a predicament that has produced great poverty and depopulation in the country—was threatening to decouple from the dollar.

If this happened the US Treasury Bond Market would begin to collapse.

If Venezuela was successful, the Petro-dollar was dead.  If the dollar was dead Trump and MAGA were done.  

Trump had inherited a situation in which US Sanctions on Venezuela were not achieving anything.  Venezuelan oil in the ground is useless to the United States.

The US policy has, therefore, moved from containment of Venezuela to direct control of the country and its oil.

The US will now hope for a compliant Venezuelan government which will assist the re-integration of Venezuelan oil into the US dollar system, along with a rebuilding of the oil industry by US companies, tying it to the needs and putting it under control of the United States.

At the time of writing, Trump and Rubio are content to work with the present Caracas “regime” with a US gun at its head—rather than to import the Nobel-prize winning Quisling Opposition figurehead, María Corina Machado. 

The maintenance of the present relationship, of course, will be conditional on good behaviour on the part of the Venezuelans.

Intelligence had informed President Trump that President Maduro had prepared for a US invasion on the Iraq-rearguard model:  he had deployed heavily armed forces in the barrios.  Venezuela is awash with weapons and there are revolutionary groups on its borders.  The country has the potential to be a quagmire for the US and Trump if he intervenes in a more substantial way.

Venezuela has the potential to be a quagmire for the US and Trump if he intervenes in a more substantial way.  There is the spirit of Simon Bolivar, waiting in the long grass.  Maybe one day they will talk of “America’s Ukraine”—along with Vietnam etc!

On a historical note, people forget the Venezuela crisis of 1902, when the US threatened Britain and Germany with war if they attempted intervention on the American continent in breach of the Monroe Doctrine—a long-standing policy which marked out the continent as a sole US sphere of influence.

At the time, the British and the Germans were mounting a naval blockade against Venezuela to recover banking debts.  But they backed down for the first time in the face of US power and President Theodore Roosevelt’s ultimatum.  The British and the Germans were forced to agree to having the dispute referred to international arbitration and settled to US satisfaction. 

The effect of the confrontation was that European Imperialists were successfully warned off and the Monroe Doctrine became a reality.

The incident was an early indication that Britain, the global hegemon of the time, was prepared to give way to its Anglo-Saxon cousin, rather than risk a disastrous war with the growing young upstart.  Instead, the British Empire was to make war on Germany, twice, and gave way to the US in due course.

This 1902 event is known as the Roosevelt Corollary to the Monroe Doctrine.

Can anybody seriously believe that Trump would tolerate the influence of foreign powers (Russia and China), however minimal, in America’s sphere of influence?

When Trump returned to power earlier this year I suggested that it marked the end of the New World Order (1990-2025).  It seems that the BBC and others are now agreeing!  Even General Ben Hodges, the main military media supporter of Kyiv, is suggesting that Trump has agreed spheres of influence with Putin at Alaska and that this explains his desire to withdraw from the Ukraine War. 

Hodges suspects that the Kremlin, despite its public protests over the Venezuela intervention, will be happy with what Trump has done.  One has to agree with him this time!

Trump is ‘cleaning house’ in his own Western Hemisphere and probably plans to use the vast Venezuelan oil reserve to influence the global energy market—defending the PetroDollar—from the growing threat to it from BRICs and multi-polarity.

What has just happened in Venezuela is the US ‘cleaning house’ within its sphere of influence—the Western Hemisphere—and hoovering up its resources in the US interest.  Trump always promised America First.

This is, perhaps, the best signifier of the end of the New World Order (1990-2025) and the new developing multi-polar world:  in which nations look after their own interests!

It looks like Samuel Huntington (author of Clash of Civilisations) was right and Francis Fukuyama (End of History) was wrong!

There will be more to come.  When does USA’s SMO [Special Military Operation] #2 Greenland begin?

Trump, of course, is no aberration.  Remember President Manuel Noriega of Panama—long time CIA asset—captured by the US in 1989 in President Reagan’s final days, and subsequently put on trial by his former American ally.  Noriega was a real drug dealer, run by Washington, against the Sandinista Government in Nicaragua.  He died in prison, like Jeffrey Epstein.

This latest US action in Venezuela truly signifies the end of the US ‘rules-based international order’ (1990-2025).

While Trump calls a spade a spade, Sir Keir Starmer—the great “human rights lawyer”, cannot say if his actions are a breach of international law!

Or does he dare not say?

Instead Starmer, Von der Leyen, Kallas etc. meekly pretend this coup represents a blow for Western ‘democracy’ against an authoritarian. 

Not a word is said about the 80 or so extra-judicial killings of Venezuelan citizens and Cuban employees by US forces!

These bankrupt leaders long for the old world—the US rules-based international order (1990-2025)—which Trump sees as over:  but which they dearly yearn for to return.

Pat Walsh