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Trump’s America
- Non-political tariffs thread
ART OF THE DEAL in action! Washington Post : Trump is breaking the old global order; allies brace for economic risks By David J. Lynch The open split that emerged this week between the United States and some of its closest allies highlights the seismic changes that are in store for the global economy amid the transition from full-blown U.S.-led globalization to an unruly new order. For decades, U.S. policymakers promoted global economic integration as a way of delivering peace and prosperity. Now foreign leaders and investors are reassessing those ties, putting more emphasis on avoiding geopolitical dangers, especially those emanating from a less predictable United States. Commercial links between nations made the global economy more efficient. But they created vulnerabilities that the U.S. and other governments weaponized using tariffs, financial sanctions and supply chain restrictions. President Donald Trump’s recent threat to impose tariffs on European allies that opposed his plan to gain ownership of Greenland exploited Europe’s dependence on Washington. The clash put at risk transatlantic trade worth nearly $1 trillion as well as a new U.S. trade deal with the European Union, which included $600 billion in promised European investment in the United States. Though the immediate crisis has passed, allied leaders vowed they will not leave themselves open to such threats again. “Something fundamental has shifted,” said Neil Shearing, chief economist for Capital Economics in London. “It’s about power, dependency and coercion. There will be an effort to reduce strategic dependency on the United States.” The post-World War II global economy rested on an American foundation. The U.S. Navy protected global sea lanes, making it safe for giant cargo vessels to carry goods between distant ports while investors counted on U.S. treasuries as a “risk-free” asset. Now the U.S. is pursuing an unapologetic “America First” approach, wielding power to get what it wants, no matter the cost in global goodwill. For investors, the strength of the U.S. economy amid the boom in artificial intelligence outweighs concern about any erosion in Washington’s global standing. Stock and bond prices sank when the president threatened to seize Greenland and recovered a few days later when he announced “a framework of a future deal” over the mineral-rich island. But the new U.S. posture and the resulting drive by many nations to replace efficiency with resilience will leave a subtle imprint on the global economy that will expand over time. Abandoning the rules-based global order in favor of a new regime dominated by great powers will likely raise the cost of capital, threaten the fortunes of some American businesses and make the commodities needed to build redundant supply chains more expensive. Already, as worries about U.S. economic and security policies grew over the past year, the price of gold, a traditional crisis haven, rose by nearly 80 percent. A member of the European Parliament last week urged the European Commission to develop a payment system to replace Visa and Mastercard after warning that “Donald Trump can cut them off overnight.” And prices for commodities such as copper, which is up more than 30 percent over the past year, are likely to head higher as nations build their own semiconductor and pharmaceutical plants rather than rely on imports. Even before the Greenland imbroglio, there were doubts about the U.S. government’s reliability. Foreign central bankers and finance ministers privately worried that the Trump administration might interfere with Federal Reserve tools designed to help other nations during a financial crisis, according to Adam Posen, the president of the Peterson Institute for International Economics. Those “swap lines,” which loan dollars to foreign central banks when needed, are controlled by the Fed. But since on any given day the U.S. might raid a foreign capital and capture its president (Venezuela); launch bombing strikes (Iran); or threaten to seize the territory of an ally (Greenland), foreign officials no longer are sure what to expect from the United States. Trump’s repeated threats to fire Fed Chair Jerome H. Powell have only inflamed their fears. “There is now explicit discussion among foreign governments that we can’t rely on the swap lines. A particular bank in a particular country gets into trouble and you go to the Fed for emergency dollars and suddenly somebody from the Trump administration says, well, before we press the button for the transfer, please give us this on letting us buy your port, or committing to buy our weapons, or committing to vote this way in an international organization,” Posen said. Once they learned of the doubts, Fed officials took steps to reassure their foreign counterparts, according to a person familiar with the matter, who asked for anonymity to discuss sensitive conversations. Still, that loss of faith can be glimpsed in the decline of the U.S. dollar against smaller advanced economy currencies, such as the Norwegian krone or New Zealand dollar, and the tightening spread, or interest rate differential, between corporate bonds and treasuries. Even the most creditworthy companies typically must pay higher interest rates to borrow money from bondholders because creditors see them as more likely than the federal government to default. But corporations now are paying just 0.72 percentage points more than Uncle Sam to borrow money. That’s half the spread they paid three years ago and the smallest since 1998, according to market data. Many overseas managers of government investment funds, pension funds and central bank reserves are moving some of their money into other currencies rather than rolling them over into fresh dollar-based investments. AkademikerPension, a small Danish pension fund, announced last week it would sell its $100 million treasury holdings, citing worries over the U.S. public debt. “Fund managers are hedging against dollar downside risk in ways they haven’t since the ’70s or early ’80s,” Posen said. So far, these shifts are small. The dollar’s international dominance, while frequently challenged, is likely to endure for years, according to most economists. But the new world that is emerging is likely to witness a shortage of investment capital, as European nations plus Canada rush to rearm and try to catch up with technology leaders in the U.S. and China. Fast-growing Asian nations that once sent capital abroad are finding uses for it at home. “We are moving to a world where global interest rates are going to be higher because there will be more demand for a given pool of world savings,” said Marcello Estevao, chief economist for the Institute for International Finance. That would be bad news for the U.S., which owes its creditors more than $30 trillion and is running crisis-sized annual budget deficits even though the economy is growing. Through 2035, the federal government will need to borrow more than $21 trillion to cover its annual shortfall, according to the Congressional Budget Office. The government pays an average interest rate of 3.4 percent on its current borrowings, a figure that has risen in each of the past four years. For each 0.1 percentage point increase in the rate, the government’s 10-year interest bill rises by $351 billion. Whatever doubts existed about Trump’s determination to scrap the post-World War II international system, which he insists shortchanged the United States, dissolved amid the Greenland crisis. During several days at the World Economic Forum in Davos, Switzerland, the president and his top aides disparaged European nations as weak, overregulated and uncompetitive. Canadian Prime Minister Mark Carney, in an address that drew a standing ovation, proclaimed a “rupture” in the transatlantic alliance. “Friends can have disputes while still remaining friends. President Trump has repeatedly affirmed his commitment to America’s time-tested allies, and ensuring that our allies carry their weight and do what’s right does not undermine this commitment,” said Kush Desai, a White House spokesman. Trump administration officials say the U.S. enjoys unique advantages as the world’s largest economy boasting the deepest capital markets, which will make it difficult if not impossible for nations to reduce their U.S. ties. Treasury Secretary Scott Bessent last week derided talk of a move out of the dollar as “a false narrative.” Speaking at the forum, Trump touted his success in reviving what he said was the “nightmare” economy he inherited. And he vowed to retaliate in unspecified ways against any country that dumped its holdings of U.S. government securities. “If they do, they do. But you know, if that would happen, there would be a big retaliation on our part, and we have all the cards,” he told Fox Business. The administration insists that its “America First” credo does not mean “America Alone.” But in the absence of a clear road map to a new global arrangement, analysts, investors and diplomats are drawing their own conclusions. “I think President Trump is intent on jettisoning the Atlantic Alliance and the overall world order that we’ve known for 80 years. And what he wants to put in its place is what I would call a tripolar global dictatorship” alongside Russian President Vladimir Putin and Chinese President Xi Jinping, said Roger Altman, founder of Evercore, a New York investment bank, and a former deputy treasury secretary. U.S. support for the rules-based order was premised on the notion that global growth would allow the world to avoid a repeat of the 1930s experience of depression and war, even if American taxpayers bore a disproportionate burden in underwriting the system. It worked: the global economy today is roughly nine times larger than in 1960, according to World Bank statistics. And after suffering three major conflicts between 1871 and 1945, the continent avoided large-scale combat until Russia’s 2022 invasion of Ukraine. But Trump has long resented Europe as a free rider on U.S. security and sees globalization as an elite failure that hollowed out American factory communities and sapped national strength. In Davos, he still referred to Europe and Japan as “partners” and said they would prosper in his wake. But the president made it clear that prosperity would happen on his terms, that other nations would do well by “following what we’re doing” in economic policy. “The United States has really gotten used to living in a world that reflects American desires, American wants, American demands in ways that are invisible to most Americans. And now we’re in a world where other countries don’t have the incentive to go along with that anymore,” said Henry Farrell, professor of international affairs at Johns Hopkins SAIS in Washington.- Meanwhile in China
WSJ: China’s Top General Accused of Giving Nuclear Secrets to U.S.- Meanwhile in China
NYT: Xi’s Purge of China’s Military Brings Its Top General Down China’s top general, second only to Xi Jinping, the nation’s leader, in the military command, has been put under investigation and accused of “grave violations of discipline and the law,” the Ministry of National Defense said on Saturday, the most stunning escalation yet in Mr. Xi’s purge of the People’s Liberation Army elite. The general, Zhang Youxia, is a vice chairman of the Central Military Commission, the Communist Party body that controls China’s armed forces. Another member of the commission, Gen. Liu Zhenli, who leads the military’s Joint Staff Department, is also under investigation, the Defense Ministry said. Its announcement did not say what either general was alleged to have done wrong. General Zhang’s downfall — few if any Chinese officials placed publicly under investigation are later declared innocent — is the most drastic step so far in Mr. Xi’s yearslong campaign to root out what he has described as corruption and disloyalty in the military’s senior ranks. It is all the more astonishing because General Zhang seemed to be a confidant of Mr. Xi, who has known him for decades. “This move is unprecedented in the history of the Chinese military and represents the total annihilation of the high command,” Christopher K. Johnson, a former Central Intelligence Agency analyst who follows Chinese elite politics, said of the investigation of General Zhang. With the two generals effectively out, the Central Military Commission has just two members left: its chairman, Mr. Xi, and General Zhang Shengmin, who has overseen Mr. Xi’s military purges. Mr. Xi has now removed all but one of the six generals he appointed to the commission in 2022. Mr. Johnson, the president of China Strategies Group, a consulting firm, said Mr. Xi seemed to have concluded that problems in the military ran so deep that he could not trust the top command to cure itself and must look to a new cohort of rising officers. He appears to have “decided he must cut very deep generationally to find a group not tainted,” Mr. Johnson said. “The purging of even a childhood friend in Zhang Youxia shows there now are no limits to Xi’s anti-graft zeal.” Image The general’s ouster is the most drastic step yet in Xi Jinping’s campaign to root out what he has described as corruption and disloyalty in the Chinese military’s senior ranks.Credit...Pool photo by Vincent Thian Rumors that the general might be in trouble had spread for days, since official news reports left clues that he and General Liu had been absent from a Communist Party meeting. But General Zhang has disappeared from view before, and a senior official is usually out of sight for months before the party confirms that he is under investigation. The speed with which General Zhang’s ouster was announced seemed intended to staunch the potential damage for Mr. Xi, said Su Tzu-yun, an expert on the People’s Liberation Army, or P.L.A., at the Institute for National Defense and Security Research in Taipei, a body funded by Taiwan’s Ministry of National Defense. “This could be a big blow to morale inside the P.L.A.,” Mr. Su said in an interview, referring to the removal of a seemingly invulnerable commander. General Zhang and General Liu were also the P.L.A.’s two top commanders for practical operational tasks, and their removal will leave a gap in experience, said Shanshan Mei, a political scientist at RAND, a research organization, who studies China’s armed forces. “There’s no one right now at the highest level who has operational experience or who is in charge of training and exercises,” Ms. Mei said. “This is going to cut very deep, and there’s more to come, possibly.” General Zhang, 75, had seemed to be cordoned off from Mr. Xi’s widening purges. The two men’s fathers, both veterans of Mao Zedong’s revolutionary wars, were personally acquainted, and Mr. Xi had kept General Zhang in office beyond the customary retirement age of about 70. But Mr. Xi’s worries about the trustworthiness of his commanders seemed to finally outweigh whatever attachment he felt to the general, Mr. Su said. “I think this reflects Xi Jinping’s personal sense of insecurity, and that’s a major factor in his purges of the military,” he said. Since 2023, waves of top commanders, officers and executives for arms manufacturers have been removed from office and placed under investigation — or, in some cases, have disappeared from view without explanation. The first purges in that wave focused on China’s Rocket Force, which operates most of its nuclear missiles and many of its conventional ones. Ensuing investigations took down admirals, regional military commanders and members of the Central Military Commission. Many of the targeted officers had been promoted by Mr. Xi since he took power in 2012, vowing to cleanse the armed forces of endemic graft. But after a decade in charge, he seemed to have concluded that some of his own handpicked protégés had been infected by the military’s corruption, which historically has often involved taking bribes for contracts or promotions. The investigations’ toll on the military was visible at a meeting last year of the Communist Party’s Central Committee, a council of top officials. Of the 44 uniformed officers appointed to the committee in 2022, 29 — roughly two-thirds — had been purged or were missing, according to calculations made by Neil Thomas, a researcher on Chinese politics at the Asia Society. Mr. Xi seems to have calculated that in the longer term, his shake-up of the military will make it less corrupt, more loyal and more effective in pursuing his goals, like putting pressure on Taiwan, the island democracy that rejects China’s claims of sovereignty. But for now, and potentially for years, the disruptions caused by the purges could leave Mr. Xi less confident that his commanders are ready for combat, analysts have said. “It’s a dilemma,” said Mr. Su, the Taiwan-based analyst. “He wants to first get rid of these so-called corrupt people, but for the P.L.A., if you clear out these high-level officers, that means a whole lot of experience is gone.” General Zhang was among the few Chinese commanders with extensive experience in battle. The son of a general, he gained prominence as a frontline officer during China’s last war, a border conflict with Vietnam that began in 1979 and lasted for years. He rose to become head of the General Armaments Department, which is in charge of procuring weapons, and Mr. Xi promoted him to the Central Military Commission in 2017. “For Zhang Youxia, having combat experience — and being one of the only left who has any — has to add to his luster, at least to Xi Jinping,” John Culver, a former Central Intelligence Agency analyst specializing in the Chinese military, said in an interview before General Zhang’s dismissal was announced. But analysts speculated that General Zhang’s time in the General Armaments Department — which, because it controls arms contracts, became known as a honey pot of corruption — may have planted the seeds of his downfall. Other generals who rose through that department have also been purged, including Li Shangfu, a former defense minister. Mr. Xi may need years or more to nurture a new crop of — presumably — trustworthy officers, and he must also fill the depleted ranks of the Central Military Committee. “To rebuild these chains of command may take him five years or longer,” Mr. Su said. “The chances of an attack on Taiwan in the short term have been lowered.” A correction was made on Jan. 24, 2026 : An earlier version of this article misstated how many uniformed commanders that Xi Jinping appointed to the Central Military Commission since 2022 have been removed. Five commanders have been removed, not six. When we learn of a mistake, we acknowledge it with a correction. If you spot an error, please let us know at corrections@nytimes.com.Learn more- Greenland
Terrific post. An interesting exercise would be to estimate the percentage of population fully able to grok and consider the implications of this post. I want to say about 20% and declining rapidly.- Greenland
- Greenland
- Greenland
TACO has been served but the trust is almost certainly gone. What an imbecile! Trump says he reached Greenland deal ‘framework’ with NATO, backs off Europe tariffs- Greenland
cnbc : European lawmakers suspend U.S. trade deal amid Greenland tariff tensions- Greenland
- Greenland
Gripens use GE engine.- What's happening in Iran?
- The Trump Economy
- What's happening in Iran?
Signs Emerge Of U.S. Navy, Air Force Push To Middle East TLDR: A lot of hardware is on its way to the middle east.- Greenland
Trump threatens new tariffs on European allies over Greenland until deal reached, as thousands protest President Donald Trump said Saturday the United States will impose new tariffs on several European countries unless a deal is reached for the purchase of Greenland, escalating his long-running push for US control of the Arctic territory. Trump said Saturday he will impose a 10% tariff on “on any and all goods” from Denmark, Germany, the United Kingdom, France and other countries starting February 1, increasing to 25% on June 1, until an agreement is reached. “We have subsidized Denmark, and all of the Countries of the European Union, and others, for many years by not charging them Tariffs, or any other forms of remuneration,” Trump wrote in a Truth Social post. “Now, after Centuries, it is time for Denmark to give back — World Peace is at stake!” Trump argued that Greenland is central to US and global security and said Denmark’s defenses were insufficient. He warned that the nations’ deployment of small numbers of military personnel to Greenland amounted to “a very dangerous situation for the Safety, Security, and Survival of our Planet.” The president added that the US has sought to acquire Greenland for more than 150 years and argued that modern weapons systems and missile defense projects, including the “Golden Dome,” make control of the territory especially important. His repeated statements have strained diplomatic relations between the US and Denmark, which owns the territory but gives the local population the right to self-determination, while also prompting condemnation from NATO’s European member states. Several of them deployed small numbers of military personnel to Greenland this week to participate in joint exercises with Denmark. While it is not necessarily unusual for NATO countries to conduct such exercises, the timing and symbolism represent a significant show of support for Denmark and underscore the current tensions within the transatlantic alliance. Meanwhile Saturday, protesters demonstrated in Greenland and Denmark against Trump’s threats to take over the Arctic island and demanded that its citizens should be allowed to determine its own future. In Denmark, thousands turned out in the cities of Copenhagen, Aarhus, Aalborg and Odense to stand in solidarity with the Greenlandic population. A protest kicked off later in Greenland’s capital of Nuuk. Just before 2 p.m. local time there was an estimated crowd of 5,000 — a large proportion of the island’s population of 56,000. People waved banners including “Yankee go home” and “Greenland is already great.” Protesters demonstrate in solidarity with Greenland amid the US president's threats to annex the territory in Denmark's capital, Copenhagen. Martin Sylvest Andersen/Getty Images In Copenhagen many waved banners with slogans including “Hands off Greenland” alongside the territory’s red and white flag, according to Reuters. The protests across Denmark were organized by Greenlandic organizations in cooperation with the NGO ActionAid Denmark. A statement from ActionAid said the unrest was planned to coincide with a visit of US senators to Denmark. “We are demonstrating against American statements and ambitions to annex Greenland,” said Camilla Siezing, chair of the Joint Association Inuit, one of the Greenlandic organizations involved in planning the protests. “We demand respect for the Danish Realm and for Greenland’s right to self-determination. Hopefully, we can show that we are many who support Greenland.” In Greenland on Saturday, protesters were similarly defiant. Asked what her message to the US president was, one female protester in Nuuk, who didn’t give her name, told CNN, “We are not for sale.” Another protester named Patricia said, “We have seen what he (Trump) does in Venezuela and Iran. He doesn’t respect anything. He just takes what he thinks is his. … He misuses his power.” A male protester, who didn’t give his name, said, “We do not accept this kind of aggression,” referring to Trump’s threats on Greenland. “My biggest fear is that the US military come here and try to take over our country. But I don’t think it will happen.” Large crowds protest against a US takeover of Greenland in the territory's capital of Nuuk on Saturday. Sean Gallup/Getty Images Amid the escalating situation, a US delegation of bipartisan lawmakers traveled to Copenhagen to meet with leaders from Denmark and Greenland. In a press conference on Saturday, Democratic Senator Chris Coons, who is leading the delegation, said the Trump administration’s “tempo of statements” around Greenland’s potential acquisition was not constructive. Senator Coons also expressed his respect to the indigenous people of Greenland, telling journalists that it was a “remote and difficult place to live, and that the population of Greenland has managed to carve out of an exceptionally difficult environment, a culture and an approach to living that is worthy of deep respect.” The US lawmaker sought to highlight the partnership between the US and Denmark, including in the military sphere, saying that the delegation would visit a cemetery later Saturday to lay a wreath for Danish soldiers who fell fighting alongside American troops in conflicts such as the war in Afghanistan. Even lawmakers within the Republican Party have expressed their opposition to Trump’s plans for Greenland. Rep. Don Bacon (R-Nebraska) told CNN that Trump’s threats to other NATO countries were “shameful.” “The fact that Greenland is part of NATO’s umbrella gives the President all he needs to put more bases there.” Reporting from Greenland’s capital of Nuuk, CNN’s International Diplomatic Editor Nic Robertson said the visit by the US lawmakers was intended to signal how much Denmark’s military partnership with the US is appreciated. “The visit to that cemetery today to lay a wreath, really for them, will sort of encapsulate how much the United States has valued that partnership, valued the lives laid down by Denmark, by Danish troops,” he said. Jake Tapper, Kit Maher and Ivana Kottasová contributed reporting.- The Trump Economy
When they say Art-Of-The-Deal, is this what they mean? Prime Minister Carney: Canada and China ‘forging a new strategic partnership’- What's happening in Iran?
- What's happening in Iran?
TACO'd. Wsj: Trump was told attack on Iran wouldn’t guarantee collapse of regime WASHINGTON—President Trump was advised that a large-scale strike against Iran was unlikely to make the government fall and could spark a wider conflict, U.S. officials said, and for now will monitor how Tehran handles protesters before deciding on the scope of a potential attack. The U.S. would need more military firepower in the Middle East both to launch a large-scale strike and protect American forces in the region and allies such as Israel should Iran retaliate, the advisers told Trump, the officials said. The U.S. officials and Middle Eastern partners told the White House the regime was unlikely to fall after a massive bombing campaign, which could instead spark a broader conflict. Smaller assault packages, meanwhile, could boost morale among protesters but ultimately not change the regime’s crackdown, the officials said. Trump, without making a final decision on which action he would take, asked for military assets to be in place should he order a big attack, the officials said. “The president and his team have communicated to the Iranian regime that if the killing continues, there will be grave consequences,” White House press secretary Karoline Leavitt told reporters Thursday. Only President Trump knows what he’s going to do and a very, very small team of advisers are read into his thinking,” Leavitt said. She said the U.S. learned of Iranian plans to execute 800 people Wednesday, which didn’t happen. She didn’t say how the U.S. had learned about the planned executions. She confirmed Trump had a recent conversation with Israeli Prime Minister Benjamin Netanyahu but didn’t disclose specifics of their discussion. She didn’t say when the conversation took place, but the officials said that Israel had raised concerns about a potential strike. NBC earlier reported that Trump’s advisers couldn’t guarantee that the Iranian regime would quickly collapse after a U.S. strike. Central Intelligence Agency Director John Ratcliffe on Tuesday showed Trump covertly obtained videos of dead Iranian protesters, as the president huddled with senior White House officials to consider options over Iran, a person familiar with the matter said. Sen. Lindsey Graham (R., S.C.) told reporters on Thursday that the size of an operation against Iran is still in question. “Should it be bigger or smaller? I’m in the camp of bigger. Time will tell,” said the staunch Trump ally, adding he hopes “the regime’s days are numbered.” Iranian officials in recent days called the governments of Turkey, Qatar, the United Arab Emirates and Oman to warn them that if attacked Iran would strike American bases in the region, according to a diplomat familiar with the talks. The official said the most likely target for possible Iranian retaliation was the large American military base in Qatar, which Tehran attacked last June in retaliation for U.S. strikes on Iran’s nuclear sites. The U.S. moved some troops off the base this week as a precaution. Some troops were sent to hotels, according to an official familiar with the situation. U.S. allies in the region including Turkey, Qatar and Saudi Arabia have urged Trump in recent days not to attack Iran. Turkish foreign minister Hakan Fidan, who has been calling and meeting regional leaders including Iranian officials, said he was working to avoid a military escalation. “We do not want an intervention here,” he told a news conference in Istanbul on Thursday. Still, Trump is expected to order the Pentagon to send an aircraft carrier, the USS Abraham Lincoln, from the South China Sea to the Middle East, according to two U.S. officials and another person familiar with the move. Once it begins, the voyage is expected to last about a week, the people said. The USS Abraham Lincoln© mike blake/Reuters The internal discussions show the complications of enforcing Trump’s red line that Iran couldn’t kill protesters en masse. Tehran’s heavy crackdown has killed thousands of people and forced demonstrators off the streets in some cities. Now the president is left with options that fall short of quick victory over the regime and firmly supporting the uprising. Trump said Tuesday that “help is on its way,” urging protesters to keep pressuring the regime. The next day he told reporters that Iran had said it would stop killing and wouldn’t execute protesters, a sign that he might not order strikes as long as the crackdown stops. On Thursday morning Trump appeared pleased with reports that Iran wasn’t going to execute demonstrators. “Good news,” he posted on social media. “Hopefully, it will continue!” U.S. and Middle Eastern officials said Trump might be stalling for time as military assets move toward the Middle East. One Qatari official said the U.S. might need five to seven days to prepare a full offensive. Write to Alexander Ward at alex.ward@wsj.com, Lara Seligman at lara.seligman@wsj.com and Jared Malsin at jared.malsin@wsj.com- Transfer Cycle 2025-2026 - I'm With Stupid
We'd better be ready, he'll drive a hard Bahrgain.- Transfer Cycle 2025-2026 - I'm With Stupid
Après FLood, le déluge- What's happening in Iran?
NYT: Trump Is Briefed on Options for Striking Iran as Protests Continue https://archive.is/VDyWJ- Things not going well in Venezuela
Can Trump Make Venezuela an Oil Giant Again? Can Trump Make Venezuela an Oil Giant Again? The president wants U.S. oil companies to return in a big way, but the petrostate’s turbulent history suggests formidable challenges ahead.Share Resize Listen (3 min) A refinery in Puerto Cabello, Venezuela. Experts estimate that bringing the country back to peak oil production would cost $100 billion or more. Matias Delacroix/Associated Press By Daniel Yergin Jan. 9, 2026 11:00 pm ET “No one was paying any attention to Venezuelan oil two weeks ago,” a longtime oilman said to me the other day, “but now everyone is.” Donald Trump made that happen. Following the dramatic seizure of dictator Nicolás Maduro by American forces on Jan. 3, the president declared that the U.S. would take control of the country’s oil industry, with Venezuela turning over 30 to 50 million barrels for the U.S. to sell, the proceeds being used “to benefit the people of Venezuela and the United States!” But that’s just the beginning. Trump has made clear that he wants U.S. oil companies to return to Venezuela in a big way. There’s certainly plenty of oil to be produced there. Venezuela holds the largest reserves in the world, more than Saudi Arabia and the U.S., and for decades was one of the stars of the oil world. But recent years have brought a crushing descent. Venezuela has been producing well under a million barrels a day—less than North Dakota—and accounts for less than 1% of world oil production. Estimates range widely for what it would cost to bring back the industry. One reasonable guess is $20 billion to boost Venezuela’s output to 1.5 million barrels a day from the 870,000 barrels it produced in November. To get back to the 3.4 million barrels a day of peak production at the end of the 1990s could cost $100 billion or even more, including new facilities, infrastructure and environmental remediation. But what will it take to persuade companies to make such big bets on Venezuela again? The country’s state-owned oil company, devastated by years of corruption and political turbulence, doesn’t have the money or technology for a recovery, let alone a massive upgrade. The international oil companies who do will want to be confident about security, regulation and the legal foundations of their investment, given that Venezuelans across the spectrum—including most of the 70% of the public that voted against Maduro in the last election—believe the country’s oil resources belong to the nation and are essential to the recovery of their battered economy. Any real plan for reviving Venezuela’s oil industry has to reckon with the political legacy of the country’s long, turbulent history with its petro riches. From ‘mirage’ to oil boomThe hunt for oil in Venezuela began before World War I in unmapped jungles whose hazards included giant mosquitoes, malaria and hostile native tribes. One driller, sitting on the porch of a mess hall, was killed by an arrow fired from the nearby jungle. The results of the hunt were so disappointing that in 1922 an American geologist dismissed the country’s petroleum prospects as a “mirage.” Venezuelan drilling platforms in 1948, when the country’s reformist government established a 50/50 profit-sharing deal with oil companies. INTERCONTINENTALE/Agence France-Presse/Getty Images But as has so often happened in the history of oil, when just about everyone is about to give up on a new geography, a discovery proves them wrong. Later that same year, Royal Dutch Shell, the Anglo-Dutch company, found an oil field so huge that the initial well flowed at 100,000 barrels a day. That set off an oil rush that drew in more than a hundred U.S. and British groups. An oil boom engulfed the country. Within seven years, Venezuela had gone from nothing to become the second-largest oil producing country in the world, behind only the U.S. Oil became the foundation of the economy, generating 90% of export earnings. No one benefited from the boom more than the country’s dictator, the avaricious and brutal General Juan Vicente Gomez, and his family. They showed remarkable business acuity in selling the rights to new oil concessions to companies eager to get into the game. By the late 1940s, more than a decade after the death of Gomez, a reformist group won control of the government and demanded a new arrangement with the oil companies. In a deal partly brokered by the U.S. government, oil proceeds were divided on a “50/50 principle,” with companies paying taxes and royalties to the government equal to half their net profits on the oil. The new terms, plus expanding production, led to a sixfold increase in government revenues and contributed substantially to the country’s impressive postwar economic development. There could be no doubt that Venezuela was now well established as a petrostate. No one benefited from Venezuela’s oil boom more than the brutal dictator Juan Vicente Gomez, who ruled the country from 1908 to 1935. ullstein bild/Getty Images But the 50/50 deal didn’t last long. Nationalism would change the balance, with Venezuela passing a law in 1958 to increase its share to about 60%. In 1959 and 1960, international oil companies, facing a surge of new supplies from the Soviet Union, cut prices. That in turn reduced the income of the other oil-exporting countries. In response, an infuriated Venezuela took the lead with Saudi Arabia in establishing a new organization called the Organization of Oil Exporting Countries—better known as OPEC—to defend their interests. OPEC and rising demandOPEC’s founding was a sign of what was to come. As markets tightened in the late 1960s and early 1970s in the face of rising demand, a wave of nationalism swept over oil-producing countries. Venezuela nationalized the companies’ positions, not through confrontation, as in some other countries, but by a process of tough negotiation. Longstanding oil concessions were fashioned into four government-owned operating companies, staffed by Venezuelan nationals who had been trained and worked in the international companies. The new state companies kept their links to the former owners in order to maintain technical skills and to make sure the oil could get to market. The four operating companies were under the national oil company, PdVSA, which existed both for coordination and, importantly, to provide a buffer between politicians and the operating companies, to guard them against political interference and to reduce corruption. When I visited Caracas in the 1990s, meeting with PdVSA and its subsidiaries was like meeting with any other professionally run international company. But at that moment the Venezuelan economy was already in deep trouble. Population had doubled in just two decades, per capita incomes had fallen, and inflation was high. The only obvious way to bolster the economy quickly was to increase oil earnings, and the only way to do that was by substantially boosting output. But PdVSA could not do it alone. It had neither the investment capital nor the technology. The country’s answer during the 1990s was the Apertura Petrolera, the oil opening. International companies were invited to come back to Venezuela, bring their technology and investment, and work once again directly, not as owners of concessions but rather as partners and operators. The plan met violent opposition. Nationalists charged that the sovereignty of Venezuela was being violated once again and that control of the country’s oil, which had been wrested away from foreign companies, would be undermined. The ‘Peace Monument’ sculpture outside the headquarters of Venezuelan state-owned oil company PdVSA. federico parra/Agence France-Presse/Getty Images No one more vocally opposed the Apertura than a charismatic army colonel named Hugo Chávez, who had been imprisoned after leading a coup in 1992. By the time of the 1998 presidential election, the country’s economic crisis had become worse: The price of oil, the lifeblood of the economy, had collapsed to $10 a barrel. Running as an outsider, Chavez, amnestied from prison only four years earlier, won the presidency, though with a total turnout of just 36%. Once in power, Chavez wasted little time in dismantling the democratic system, centralizing all power in his hands and that of his clique, under the rubric of his “Bolivarian Revolution” and his motto “socialism for the 21st century.” He rewrote the constitution, eliminated one house of parliament, undermined the supreme court and took direct control of PdVSA and its enormous revenues. Cuba’s influenceCubans arrived to help Chavez cement his control. Parents decried the “Cubanization” of school textbooks, and Chavez took to playing ball—literally—with Fidel Castro, pitching against him in a game in Havana. Castro’s team won 5 to 4. More important, Cuba won subsidies and oil supplies from Venezuela, a lifeline for its own economy. Castro blessed Chavez as his political son and sent his secret services to help protect the Venezuelan strongman. “There is only revolution and counterrevolution,” Chavez declared. “We are going to annihilate the counterrevolution.” Chavez had the good fortune of rising oil prices to help bolster his regime, but by 2002 most Venezuelans had grown weary of his increasingly dictatorial rule. Mass opposition and a coup briefly deposed him, but after three days under guard on a military island, he helicoptered back to Caracas. At the end of that year a general strike brought the country to a halt. Oil workers stopped working, oil output fell to almost nothing, and exports ceased. The shutdown lasted a couple of months. When it was over, half the workforce was fired. Fidel Castro chats with Hugo Chavez before a baseball game between the Cuban and Venezuelan teams in 2000. JUAN BARRETO/Agence France-Presse/Getty Images Most of the foreign investment under the Apertura had gone into the Orinoco Belt, a 54,000-square-mile region, rich with oil, but oil so thick that it would not flow by itself. Before Chavez came to power, a half dozen companies had entered into contracts with PdVSA to produce the oil, which required extra investment and extra technology. But Chavez would not have it. In 2007, dressed in red fatigues, he descended on the Orinoco to announce “the true nationalization of our natural resources” and thundered, “Down with the U.S. empire.” Behind him was a poster declaring “Full Oil Sovereignty, the Road to Socialism.” Most of the companies left and went into arbitration, which, after lengthy processes, left them with judgments that went largely unpaid. In 2013, Chavez died and was succeeded by his Vice President Nicolás Maduro, a former bus driver who had risen through the union movement. He had held various jobs under Chavez, including foreign minister, but had none of Chavez’s charisma. What he did have was the capacity to run a highly repressive dictatorship that would imprison and torture opponents or even those who had wandered into a protest on the streets. He also presided over an economic disaster, as the country, through mismanagement and corruption, suffered simultaneously from both hyperinflation and deep recession. At one point, GDP declined by 35%. By one estimate, 75% of the population was living in poverty. Crime was endemic, and cartels turned drugs into a big business. Out of desperation, eight million of the country’s 30 million fled as economic refugees, mostly to neighboring countries. Falling productionFor decades, Venezuela had been a petrostate. But under Maduro, the country hardly even made the grade. Over the course of his presidency, production fell 60% and was actually 75% lower than when Chavez had come to power. Workers in 2007 demonstrating for the nationalization of Venezuela’s oil industry. JUAN BARRETO/Agence France-Presse/Getty Images For oil companies now thinking of returning to Venezuela, the immediate problem is the wreckage left by Chavez and Maduro. “The oil industry has been in a state of continuing destruction of assets and value because of lack of investment and maintenance, corruption, and political control,” said Juan Szabo, a former senior official of PdVSA. For two decades, corruption and theft reached from the top of the government down to the field, where unpaid workers sold off drilling equipment and metal from pipelines to pay for food. Talent fled the industry, with many of the most capable managers in exile. And PdVSA itself, once one of the most respected state oil companies in the world, was turned into a political machine and a piggy bank for the regime, which is still very much in power even after Maduro’s arrest. Some larger companies may return to Venezuela in the hope of somehow collecting billions of dollars of unpaid debts, and some smaller companies and entrepreneurs with a high tolerance for risk will certainly look for opportunities there. But none of this promises a full-scale revival of the once mighty Venezuelan oil industry. For that to happen, there will have to be a more fundamental change in Venezuela’s politics and policies and also in the readiness of companies to make a new deal with a country that, despite the ruin left by Chavez and Maduro, is still committed to the idea that it should control its own oil. The current situation reminds me of a conversation I had with the CEO of one of the major international oil companies on the eve of the 2003 invasion of Iraq. “You know what I’ll say to the first person in our company who comes to us with a proposal to invest a billion dollars?” he said. He’d ask them about the new regime’s legal and political system, economic and fiscal policies, standards for contracts, arrangements for arbitration and security. “Tell us about all those things,” he added, “and then we’ll talk about whether we’re going to invest or not.” Venezuela today is very different from Saddam Hussein’s Iraq, and 2025 is not 2003. But similar questions will be on the agenda before billions of dollars of investment start to flow again into Venezuela, and the answers will have to be worked out. That will take time. Hugo Chavez, left, seen with then Foreign Minister Nicolás Maduro, in 2006. Under Chavez, striking oil workers shut down the industry and output fell to almost nothing. JUAN BARRETO/Agence France-Presse/Getty Images Daniel Yergin, vice chairman of S&P Global, is the author of “The Prize: The Epic Quest for Oil, Money and Power” and “The New Map: Energy, Climate, and the Clash of Nations.” Copyright ©2026 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8 Appeared in the January 10, 2026, print edition as 'Can Trump Make Venezuela an Oil Giant Again?'.- Transfer Cycle 2025-2026 - I'm With Stupid
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