https://alexkrainer.substack.com/p/the-price-of-venezuelas-democracy

Yesterday, Venezuelan opposition leader and the newest nobel prize laureate, Maria Corina Machado gave a podcast interview to Donald Trump Jr., during which she gave an inspirational, moving speech about how much money the U.S. companies will make in Venezuela once she takes power: “Forget Saudi Arabia, I mean we have more oil than them, I mean endless possibilities. We will privatize our entire industry for you. American companies will profit greatly!” Trump Jr. could hardly conceal his excitement: he looked like he was struggling to stay awake.

Ms. Machado has been dying to get into power in Venezuela for over 20 years now. In 2002 she participated in the failed coup against then President Hugo Chavez for which she accepted funding from the CIA front, the National Endowment for Democracy. Well, great ends might justify great means and Machado has continued to seek such means ever since.

Sanctioning Venezuela to death

When Trump imposed severe sanctions on Venezuela in 2017, she was enthusiastically supportive in spite of the fact that the sanctions killed tens of thousands of Venezuelans. The 2019 Center for Economic Policy Research (CEFR) report on US sanctions against Venezuela, co-authored by Mark Weisbrot and Jeffrey Sachs came to the conclusion that the sanctions killed over 40,000 in just one year

The sanctions didn’t do the trick and by 2018, Machado was calling for stronger medicine, arguing that the Maduro regime could only be removed by force. The following year she wrote a letter to Israel’s Prime Minister Benjamin Netanyahu: citing the R2P (responsibility to protect) doctrine, she asked Netanyahu to intervene in Venezuela and overthrow Maduro already so she could become the country’s new democratic President. She sent a similar letter to Argentina’s President Macri and also to Santa Claus, according to three people familiar with the matter.

All these years, Machado has persevered and now it appears that a renewed push to free Venezuela’s resources people from the odious, undemocratical Maduro regime is gathering momentum once more. Trump has moved American naval assets to the region and yesterday blew up yet another Venezuelan boat, killing six people on board. No worries, all six were very, very bad people. That was the 5th such strike, which killed a total of 27 very bad people. However, the reasons given by the administration for killing these bad people make little sense.

Supposedly, these are suspected drug traffickers. But even if they were, deploying the U.S. military to kill them wouldn’t be the best way to stop the drugs flow into the U.S. The real purpose of these strikes is to exert pressure on Maduro regime and embolden its opposition. With any luck, this will provoke them into retaliating, giving the U.S. a justification to bomb Venezuela - like nobody’s ever seen before. Eventually, we do in Venezuela as we did in Libya, Syria, Iraq and a few other places around the world.

Why are regime changes necessary?

Of course, everyone understands that the real reason for the regime change is Venezuela’s oil wealth. But as we learned from the New York Times last week, President Maduro did reach out to the Trump administration, offering his country’s resources to the U.S. in order to avoid a military conflict. Here’s the relevant excerpt:

Venezuelan officials, hoping to end their country’s clash with the United States, offered the Trump administration a dominant stake in Venezuela’s oil and other mineral wealth in discussions that lasted for months, according to multiple people close to the talks.

The far-reaching offer remained on the table as the Trump administration called the government of President Nicolas Maduro of Venezuela a “narco-terror cartel,” amassed warships in the Caribbean and began blowing up boats that American officials say were carrying drugs from Venezuela.

Under a deal discussed between a senior U.S. official and Mr. Maduro’s top aides, the Venezuelan strongman offered to open up all existing and future oil and gold projects to American companies, give preferential contracts to American businesses, reverse the flow of Venezuelan oil exports from China to the United States, and slash his country’s energy and mining contracts with Chinese, Iranian and Russian firms.

The answer from the Trump White House was, NO, confirmed with yesterday’s killing of another six very bad people on a Venezuelan boat.

If Maduro was offering what the Trump administration wanted, and they could have had it without a fight, then why was that offer declined? In general, resources can always be obtained through trade. For the regional behemoth like the United States, they would always be able to negotiate guaranteed long-term contracts on very favorable terms, so Venezuela’s riches could flow to the U.S. markets even without Maria Corina Machado and still, the “American companies would profit greatly.”

It’s all about bank collateral

So then, how is Maduro a problem, and Machado the solution? As always, the key element in the geopolitical equation isn’t the resources as such, but resources as collateral. With political control over Caracas, Venezuelan resources would become the collateral of U.S. and other Western banks. Their clients - companies like BP, Shell, Exxon Mobil and even the Venezuelan state itself - would be able to obtain credit secured with Venezuelan oil, gold and other resources. In this way, Venezuela’s natural resource wealth magically turns into profit-generating assets on the balance sheets of banks like JPMorgan, Goldman Sachs, Citigroup and others.

This relationship highlights the driving incentive behind imperialism and colonial wars over centuries, whether we are talking about Venezuela, Libya, Syria, Ukraine, Russia, India, Congo, or any other resource rich nation. It may be hard to imagine that the fine, affluent gentlemen in expensive suits sitting in corner offices in New York or London could be the ultimate butchers of humanity, but they are the only group in society that have the motive, the means and the opportunity under their control.

The business model to kill for

To appreciate just how big an incentive this could be, back in April I wrote about the case of Alberta’s 175 billion barrels of proven oil reserves which, once they came under control of Rockefeller interests in New York in early 2000s, provided $9 trillion in new collateral (see the article and video linked below). The bulk of that collateral ended up fuelling the $5 trillion mortgage bubble which then burst in 2007/8.

After the bailout, the banks walked away with at least $16 trillion in profits, which works out to more than $42,000 per man woman and child living in the United States. That business model far eclipses oil trade, military industrial complex and all other industries. It truly is the business to kill for.