The Crude Calculations Ahead for Delcy Rodríguez
Despite President Trump’s best efforts, Big Oil has deemed Venezuela “uninvestable” due to the country’s enduring socialist policies. For interim President Delcy Rodríguez, rapidly making Venezuela an attractive destination for American capital risks toppling her fledgling regime.
The American energy industry’s list of grievances in Venezuela stretches a Permian mile. Expropriation is the most glaring sin—as ExxonMobil CEO Darren Woods noted, America’s largest oil company has twice suffered nationalization in Venezuela. Even if American investments remain in private hands, the economic policies of the Chavista regime risk withering any potential profits. The mandated dominance of the state oil company Petróleos de Venezuela (PdVSA), an overvalued official exchange rate, prolific corruption, and a punishing fiscal burden on private oil companies are all deal destroyers for American investors.
To avoid ending up in a Brooklyn jail cell like her predecessor, Rodríguez understands that she needs to placate President Trump and provide American access to Venezuela’s oil riches. To that end, last week the interim government unveiled a tepid bill that would tweak the country’s regulation of the hydrocarbons industry and allow Rodríguez to claim that reforms are en route.
Yet, meaningful change remains lacking because rapid economic reform would imperil the political foundations of Chavista rule. As detailed in my book, Crude Calculations, the challenge of balancing economic liberalization and authoritarian control is a common experience of oil-wealthy countries in the Middle East, Africa, and Latin America. Imbued with sudden and bountiful riches, oil wealthy developing countries have long poured their petro-profits into politically connected businesses, new capital cities, and cradle-to-grave welfare schemes for their citizens. Though these oil-funded initiatives built out the trappings of a modern state, they also shored up political control by awarding government allies with fiscal and regulatory benefits that they are now loath to relinquish.
Across the oil producing world, these bulwarks against deregulation and privatization take various forms. In the Ayatollah’s Iran, the Islamic Revolutionary Guard Corps (IRGC) jealously guards a multi-billion-dollar business empire. Across the Gulf, Saudi Arabia’s bureaucracy has historically served as a genteel adult daycare, where a guaranteed paycheck bought public support for the House of Saud. In Africa’s largest oil producer, Nigeria, business magnates trade political support for oil licenses and trade restrictions.
In Venezuela, the Chavista regime owes its control to a mixture of public patronage and a lucrative economic alliance with the military. Through forced joint ventures and a heavy fiscal burden on private competitors, former President Hugo Chávez tilted the scales of the local oil industry in favor of PdVSA. Armed with the company’s oil revenues, Chávez greased the wheels of his autocratic reign through a series of generous but politicized public welfare programs known as the Bolivarian Missions.
Having led a failed coup in 1992 and himself been evicted from power for two days in 2002, Chávez and his comrades similarly recognized that control of the military would be key to their grip on power. To bring the armed forces into the petrostate racket, the Chavista regime has installed dozens of senior military figures into leadership positions across numerous public and state-owned companies. The most egregious example was the parachuting of Major General Manuel Quevedo into PdVSA as CEO in 2017, despite his lack of experience in the oil industry.
To beckon Big Oil, Rodríguez must now root out the military’s corruption racket, soften the fiscal burden on private businesses, bring soaring inflation under control, and pave a predictable and stable way for American businesses to repatriate their profits. In practice, this means chipping away at the fiscal and regulatory privileges that have buttressed Chavista rule for a quarter century. A rapid dose of post-Soviet-style economic shock therapy risks inciting a rebellion, particularly among factions of the military who will be eager to reclaim their sinecures.
Though making Venezuela an attractive investment destination appears daunting, unwinding these barriers to market-based reform in other major oil producers has nonetheless proven possible. The liberalization of Angola’s socialist economy in the 1990s was eased by granting business elites access to preferential foreign exchange rates. In Saudi Arabia, a shift away from a birthright welfare under Crown Prince Mohammed bin Salman in recent years has been matched with easing restrictions on entertainment and social life. Leaders who continue to deliver—in one way or another—manage to both reform and remain in power.
That is why the predictable—though not unconditional—flow of Venezuelan oil revenue to Rodríguez is so crucial. If the Trump Administration’s goal is for Rodríguez is to remain in power for the immediate future, the White House must prioritize working with the interim president to gradually liberalize the Venezuelan economy with the aid of its oil revenue. Disrupting the flow of funds will hamstring Rodríguez’ maneuvering through this economic transition, ultimately to the benefit of the military thugs who covet her post.
Oliver McPherson-Smith is the author of ‘Crude Calculations: Regime Stability, Economic Liberalization, and the Energy Transition,’ published by Cambridge University Press, January 2026. He previously served as the inaugural Executive Director of the National Energy Dominance Council in the second Trump Administration.
