President Donald Trump has proposed a straightforward approach to the U.S. operation in Venezuela, suggesting that the country’s oil reserves could be easily accessed and exported. This perspective echoes the early days of the U.S. invasion of Iraq in 2003, which also revolved around seizing control of oil resources. Yet, the experience in Iraq highlights that such operations are often fraught with complications, a reality that could impede oil companies from making quick investments in Venezuela.
The U.S. invasion of Iraq led to the capture of then-leader Saddam Hussein, but more than two decades later, the situation in Venezuela differs significantly. Unlike Iraq, Venezuela is not engulfed in war, and there are currently no American troops on the ground. However, the political and social landscapes in both countries present challenges that could hinder foreign oil investment. Analysts predict that it may take several years before oil majors consider substantial investments in Venezuela, primarily due to the unpredictable security environment.
According to Bill Farren-Price, a senior research fellow at the Oxford Institute for Energy Studies, the complexities are considerable. He stated, “It’s really going to be a very, very difficult mountain to climb.” The rebuilding of oil industries in regions like Iraq and Venezuela is a lengthy process, often taking years to stabilize.
In Iraq, shortly after the invasion, then-Deputy Defense Secretary Paul Wolfowitz claimed that the country’s oil reserves could finance its reconstruction. However, this assertion did not materialize as anticipated. Mohamad Bazzi, director of the Center for Near Eastern Studies at New York University, noted that the U.S. administration overestimated the speed with which Iraq’s oil industry would yield economic benefits.
Iraq’s oil sector had been nationalized since the 1970s, effectively closing it off from Western companies. Following the invasion, the U.S. disbanded the Iraqi armed forces and removed thousands of members of Hussein’s ruling Baath Party from government roles, placing critical ministries, including oil, under temporary U.S. control. An interim Iraqi government regained authority the following year, but it wasn’t until around 2009 that contracts were offered to foreign oil companies.
Nonetheless, these contracts often lacked appeal. Raad Alkadiri, managing partner of 3TEN32 Associates, explained that foreign firms were invited to act as contractors without ownership rights over the oil reserves. This arrangement led to dissatisfaction among oil companies, which had high expectations before the invasion.
The security landscape in Iraq deteriorated post-invasion, contributing to a challenging environment for foreign investment. Bazzi highlighted that the chaos included looting, attacks on oil infrastructure, and a subsequent insurgency that escalated into civil war.
Potential Challenges in Venezuela
While it is premature to predict how security will evolve in Venezuela, experts draw parallels with Iraq. Carlos Solar, a senior research fellow at the Royal United Services Institute, pointed out that remnants of the Maduro regime remain in power, unlike the situation in Iraq following the U.S. invasion. He noted that Venezuela’s landscape is marked by armed groups that could create a highly volatile security environment.
Venezuela features a complex web of armed factions, including the Venezuelan army, organized criminal gangs, Colombian guerrilla groups, and colectivos, paramilitary groups loyal to Maduro. As opposed to deploying U.S. troops, the Trump administration is reportedly preparing to use private military contractors to safeguard oil and energy assets in the country.
This mirrors past U.S. practices during the Iraq War, where billions were spent on private security and logistics, often amid controversies. Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, emphasized the current uncertainties that make it difficult for oil companies to justify significant investments in Venezuela.
She raised critical questions regarding the stability of the Maduro government, the potential for contested elections, and the broader landscape of foreign oil operations. “The lesson of Iraq is that it’s not really about how much oil is there — it’s about what’s going to happen on the ground,” Jaffe stated.
As the U.S. navigates its approach to Venezuela, the lessons learned from Iraq remain relevant and cautionary for oil companies contemplating investment in the region. The complexities of politics, security, and economics will ultimately determine the feasibility of accessing Venezuela’s vast oil reserves.
