Niccolo Soldo

Dec 2, 2023

Every weekend (almost) I share five articles/essays/reports with you. I select these over the course of the week because they are either insightful, informative, interesting, important, or a combination of the above.

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One of the most obvious strengths that the United States of America possesses is its geographic location. Bounded on both sides by vast oceans, it also has the run of the Western Hemisphere thanks to the lack of any domestic competitor to its unrivaled power, and due to its strict enforcement of the Monroe Doctrine which takes the position that any foreign meddling in the Americas is a potentially hostile act against it. When you combine this fortuitous defensive geographical setting with the abundant natural resources available to it, and an aggressive policy of neighbourhood maintenance on top of both of these factors, it makes the USA an impregnable redoubt.

The history of US interventions in Latin America is a long, long one, and it is something that most of you are already familiar with. Whether you cheer on the overthrow of the Allende regime in Chile in 1973, or lament the removal of the Arbenz government in Guatemala in 1954, you can find many, many examples of American meddling from the Rio Grande all the way down to Tierra del Fuego. It is their backyard after all, whether you like it or not. Much like Russia will not tolerate NATO in Ukraine, the USA would never tolerate a Chinese client regime in Mexico, for example. The Cuban Missile Crisis showed us to which lengths the USA will go to in order to enforce the Monroe Doctrine.

Personally, I generally do not get as critical towards US interventionism in the Americas as I do when the Americans decide to insert themselves somewhere where they don’t belong in the Old World. This is easy for me to say as I am not from Nicaragua, or Chile, or El Salvador, etc. etc. etc. If you grant me the indulgence of being a pure analyst, I can argue for why the Monroe Doctrine is a valid one, so long as you permit me to separate theory from practice.

The USA remains the world’s biggest oil producer, but being number one is not sufficient for US strategic and economic concerns. Attempting (but failing) to remove Russian oil from the global market risked sending the price of crude sky high, and crashing economies around the world, including its own. Thankfully, this hasn’t happened. American policy planners continue to brace for oil price increases, which is why the USA eased some of the sanctions on Venezuelan oil. Venezuela is a big oil producer and is an OPEC member, and by bringing its product to the US market, the Americans can use it as a form of price insurance alongside satiating market demand.

The most important alliance the Americans had during the Cold War next to NATO was its alliance with the Kingdom of Saudi Arabia. Access to cheap oil fueled its economic growth, and the 1973 Oil Crisis underlined just how important this access was, not just to the USA, but to the West as a whole. Oil politics matter, even if its importance can sometimes be exaggerated. The world economy runs on oil, and controlling its production, and even more importantly, controlling who has access to the product, allows for an incredible amount of leverage over others.

I bring this up, because there is trouble a-brewin’ along the border between Venezuela and Guyana. In 2015, ExxonMobil discovered 11 billion barrels of oil off of the coast of Guyana, promising to “change the country forever”. The oil titan struck a lucrative deal with the government there to explore and produce oil for the global market, making the country’s strategic value to the USA (and regionally as well) rocket overnight. There is one big problem, however: Guyana’s border with Venezuela has been disputed for 200 years now, with the dispute never being fully resolved. To this day, Venezuela still claims the Essequibo region of Guyana, which is roughly 2/3rds of the country’s entire landmass:

Venezuela’s government has recently launched a referendum drive that it insists is non-binding and advisory only, on whether Essequibo should belong to it, and whether its residents should become Venezuelan citizens. Guyana is protesting, and the Brazilian army has been sent to the region that abuts this territory. I’ll turn to Yves Smith of Naked Capitalism to explain what is going on:

On Wednesday (Nov 29), the Ministry of Defence of neighbouring Brazil announced it was sending military reinforcements to its northern border as a precautionary measure. The northern Brazilian state of Roraima, in the middle of the Amazon jungle, shares a border with both Venezuela and Essequibo and Brasilia is concerned that the ratcheting tensions between its two neighbours could descend into violence.

Last week, Brazil’s President Luiz Inácio Lula da Silva (aka Lula) sent his senior adviser, Celso Amorim, a former minister of defence and foreign secretary, to Caracas to meet with the President of Venezuela, Nicolás Maduro, to express the Brazilian government’s concerns about the risk of war breaking out between the two countries. That meeting does not appear to have had the desired effect. On Wednesday, Lula posted a message on X reminding that (machine translated):

When a country decides to go to war, it is declaring the bankruptcy of dialogue. And I came into politics through dialogue, and I believe that it is much more sensible and effective to waste a few hours at negotiating tables than to go around shooting at random, killing innocent women, children and men.

The Brazilian government is particularly concerned about the possible fallout from a popular consultative referendum the Maduro government is holding this Sunday on the country’s territorial claims over Essequibo. The referendum includes five questions, the fifth of which is whether citizens agree that incorporating Essequibo as part of Venezuela’s own territory and granting its “current and future population” Venezuelan citizenship is a good idea.

Why are the Venezuelans doing this, and why now?

The move is largely seen by Maduro’s critics as an attempt to shore up domestic support at home and is also a response to Guyana’s increasingly close military ties with the US. Caracas insists that the referendum is purely consultative and non-binding, and that it has no intention of annexing the territory. But at the same time it is increasing its military activity close to the border with Essequibo, ostensibly to combat illegal mining activities.

Ominously, Venezuela’s Minister of Defence Vladimir Padrino López recently said the dispute with Guyana “is not an armed war, for now.”

“Go out and vote (in the referendum). This is not an armed war, for now, it is not an armed war,” he said, adding that the members of the Bolivarian National Armed Forces (FANB) will be “permanently on guard” for “any action that threatens” the country’s “territorial integrity.”

The government of Guyana is also raising the stakes. Up until last week it had repeatedly denied allegations from Caracas that it was planning to invite US Southern Command to set up a forward operating base in Essequibo. But then last Friday the country’s Vice President Bharrat Jagdeo said in a press conference:

“We have never been interested in military bases, but we have to protect our national interest… We’re going to be working with a number of countries on greater defence cooperation. We will have from the US Department of Defence next week two visits to Guyana, by two teams. And then several other visits in the month of December and then high level representation from the Department of Defence here.”

In other words, it appears that US Southern Command is about to set up a new forward operating base, or bases, in a territory that is still very much in dispute. That territory is not only rich in oil and gas but also boasts other mineral deposits, including Gold and Bauxite, as well as huge fish stocks and fresh water supplies. Also of note is Jagdeo’s mention of “a number of countries” with which it is seeking “greater defence countries.” Those countries include Canada, which has mining interests across Latin America, and Brazil.

The US and Guyana already signed an agreement in 2020 to undertake joint military patrols in the Essequibo region, ostensibly for “drug interdiction” and to provide “greater security” to the South American country. Southcom has signed similar agreements with the governments of Ecuador and Peru in recent months (as we have covered here, here and here) and is looking to do the same with Uruguay.

Venezuela has every reason to be paranoid regarding US designs on it. After all, it has now tried several times to overthrow its government. Parking a US military base right next to it (to add to the ones already in place in Colombia) should scare them, and rightly so.

At the same time, this type of belligerent talk from Caracas does it no favours whatsoever. A Venezuelan entry into Guyana or even declaration of annexation of Essequibo would give the USA more than enough reasons to hit the Maduro regime and remove it permanently.

Yves does a good job and explaining the long, long history of this border dispute, so instead of excerpting that long portion, I will turn to the matter of oil (and more):

For the moment, it is Guyana’s vast untapped energy supplies that are of most interest to the US government and corporations. As a 2018 report by US Southern Command conceded, the US will have increasing difficulties securing enough energy to meet domestic demand in the decades to come. Though the report does not mention Guyana directly by name, it leaves little doubt that the US economy’s main source of energy supplies in the years to come will be its direct neighbourhood.

Then, in January this year, Southcom Commander Laura Richardson explained, with disarming frankness, US’ strategic interest in Guyanese oil in a speech to the Atlantic Council:

This region, why this region matters, with all of its rich resources and rare earth minerals: you’ve got the Lithium Triangle which is needed for technology today; 60% of the world’s lithium is in the Lithium Triangle, Argentina, Bolivia, Chile. You just had the largest oil reserves, light sweet crude discovered off of Guyana over a year ago. You have Venezuela’s resources as well with oil, copper, gold. China gets 36% of its food source from this region. We have the Amazon, lungs of the world. We have 31% of the world’s fresh water in this region too.

“Exxon’s revenge”:

The US began taking an interest in Guyana, which boasts one of the lowest population densities on the planet, in 2015 — the same year that a consortium of firms led by Exxon Mobil discovered huge deposits of oil in waters off the coast of Essequibo. For decades Washington had more or less stood on the sidelines of the territorial dispute over Essequibo, calling for a “timely resolution” through bilateral negotiations. But that all changed in 2018, when it began calling for the hugely controversial 1899 arbitration decision to be upheld.

In the same year, Guyana filed an application before the International Court of Justice (ICJ) asking the Court to reaffirm the 1899 arbitration award that established the boundary between Guyana and Venezuela. In 2020, the ICJ ruled against Venezuela, whose government refuses to acknowledge ICJ jurisdiction on the matter.

As the Washington Post reported in 2017, the discovery of oil in Essequibo was the perfect revenge for Exxon’s then-CEO Rex Tillerson, whom Donald Trump would later go on to appoint as his secretary of state:

Rex Tillerson hadn’t been CEO of ExxonMobil very long when the late president Hugo Chavez made foreign oil companies in Venezuela an offer they couldn’t refuse. Give the government a bigger cut, or else.

Most of the companies took the deal. Tillerson refused.

Chavez responded in 2007 by nationalizing ExxonMobil’s considerable assets in the country, which the company valued at $10 billion. The losses were a big blow to Tillerson, who reportedly took the seizure as a personal affront.

Only Tillerson didn’t get mad, at least in public. He got even.

Flash forward to May 2015. Just five days after former military general David Granger was elected president of the South American nation of Guyana, unseating the country’s long-ruling leftist party, ExxonMobil made a big announcement.

In the deep blue waters 120 miles off Guyana’s coast, the company scored a major oil discovery: as much as 1.4 billion barrels of high-quality crude. Tillerson told company shareholders the well, Liza-1, was the largest oil find anywhere in the world that year.

For tiny Guyana (population 800,000), the continent’s only English-speaking country and one of its poorest, it was a fortune-changing event, certain to mark a “before and after” in a country long isolated by language and geography.

There was just one problem with this undersea bonanza. Venezuela claimed the waters — and the hydrocarbons beneath them — as its own.

Clearly drilling in the disputed area was potentially a good business decision for ExxonMobil, not some sort of elaborate revenge scheme by its CEO

But revenge had been served. Venezuelan President Nicolas Maduro, Chavez’s successor, was livid.

“There is a brutal campaign against Venezuela of lies, funded by ExxonMobil … which has great influence at the Pentagon,” Maduro declared, calling the dispute an attempt to corner Venezuela and precipitate “a high-intensity conflict.”

Is the USA about to successfully bait Venezuela into invading Essequibo? Lula has tried to talk some sense into Maduro, but it seems that it didn’t work. On the speculative side, I am certain that some will claim that Maduro might invade Guyana to coordinate the Russian invasion of Ukraine with that of Hamas’ raids into Israel as a strategy of stretching out US resources and attention.

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