Before capturing Maduro, Trump admin sought lessons from Iraq war to get Venezuela’s oil flowing

By Kylie Atwood, CNN

(CNN) — As the Trump administration prepared late last year for the US military operation to capture Venezuelan President Nicolás Maduro, a handful of officials began studying the US approach to oil resources in Iraq following the 2003 US invasion.

During a State Department briefing in late December, among the key findings presented was that Iraqi skepticism about America’s intentions hampered US efforts to boost production quickly, according to two sources familiar with the conversations.

Distrust of Americans was so high among Iraqis working in the oil industry that internal sabotage harmed the ability to quickly boost output, according to one of the sources familiar with State Department briefing.

It’s unclear if elements of the briefing, which has not been previously reported, were ever shared directly with President Donald Trump, who has long been a critic of the US decision not to, as he puts it, “keep the oil” in Iraq.

But if they were, they do not appear to have altered the president’s thinking.

Trump has made no secret of his desire to exert US control over Venezuela’s vast oil resources, and in private, both before and after Maduro’s January 3 capture by US forces, he has been keenly focused on how to revitalize Venezuela’s oil industry, sources said.

While multiple Trump administration officials have said the oil profits would go towards benefitting the people of Venezuela, Trump has repeatedly promised to “take back the oil” in Venezuela that he also claims was “stolen from us” — a reference to Venezuela’s past nationalization of assets and infrastructure owned by US oil companies.

That kind of language, particularly coming without a clear ownership and development plan for the industry, could undermine the long-term US objectives in Venezuela, multiple US officials told CNN.

“Venezuelans are all going to be suspicious of the US,” said one current US official. “There is no trust, there is no vision laying out what the plan is.” The official, who agreed to speak on the condition of anonymity for fear of retaliation, added that Trump’s language could engender “deep distrust” among Venezuelans and efforts to “find a way to fight against the system.”

Trump has directly lobbied major US oil firms such as Exxon and Chevron to invest billions of dollars in Venezuela’s oil industry. His administration has also begun having conversations with smaller independent oil companies that may be more willing to take on the risks associated with operating in Venezuela, three sources familiar with the discussions said.

The discussions are being led at the White House by the National Energy Dominance Council, sources said. Some of these firms have experience in oil excavation in places where the political dynamics are not stable, driving an eagerness to engage in Venezuela.

“It will likely be a mix of large, mid, and independent players closely matching the makeup of the room during the meeting with President Trump a few weeks ago in the East Room,” an administration official said. “There is massive potential in Venezuela, so there is room for a wide variety of companies to be involved.”

White House spokeswoman Taylor Rogers said that the White House “has been flooded with requests from the world’s greatest oil and gas companies looking for licenses to operate in Venezuela” adding that the administration is currently working through those requests.

‘It’s far more brazen’

The driving rationale and the approach to the US intervention in Iraq and Venezuela are very different, but in both cases the US set out to revitalize another country’s oil sector after ousting its leader. Those similarities prompted US officials to consider potential lessons learned from Iraq, sources said, though it’s unclear how much they are being put into practice as the Trump administration works through its next moves on Venezuela.

“That you would have a president come in and state we’re going to control the sector, we’re going to control all oil sales, and we’re going to decide who invests in (the country), is sort of worlds apart from what you saw in Iraq,” said Raad Alkadiri, an expert with over 20 years of experience advising senior oil and gas industry executives following his UK government career which included time in Iraq from 2003-2007.

“In the Trump case, it’s far more brazen,” Alkadiri said.

In Iraq, the George W. Bush administration’s goal was to topple Iraqi leader Saddam Hussein based on the claim – which later proved incorrect – that he possessed weapons of mass destruction. During the intervention and in the following years, the US never dictated Iraq’s oil policy or sought preferential access to the country’s resources for American companies. It was not even until 2009 that international oil companies entered Iraq’s market.

According to two former Bush administration officials, the unmistakable message from the Bush White House was that the US intervention had nothing to do with oil. While the US worked to revitalize the Iraqi oil sector, it did so in conjunction with Iraq’s oil ministry and with the backing of the United Nations through the creation of the Development Fund for Iraq.

“President Bush could not have been clearer that intervention had nothing to do with Iraq’s resource wealth,” said one of the former Bush administration officials. “We went out of our way to ensure that there was not the perception or reality that this had to do with oil. To stabilize Iraq they had to get outflow up again, but it was made clear to US multinationals that they were not going to get a privileged position.”

A focus on oil in Venezuela

In stark contrast, the Trump administration’s central focus in Venezuela is the oil. It is a point that Trump made clear in his speech immediately following Maduro’s capture — as well as in his administration’s subsequent moves.

In recent weeks, the administration has brokered deals to sell millions of barrels of formerly sanctioned Venezuelan oil on global markets, routing the proceeds into a US-controlled account in Qatar and using that leverage to shape Caracas’s transition and stabilization strategy. The US completed the first sale of Venezuelan oil earlier this month, valued at $500 million.

The interim Venezuelan government has been allowed to use those funds for critical expenditures Rubio told lawmakers on the Senate Foreign Relations Committee Wednesday.

“They were facing a fiscal crunch. They needed money in the immediacy to fund the police officer, the sanitation workers, the daily operations of government,” Rubio said. “This is a short-term mechanism in which the needs of the Venezuelan people can be met through a process that we’ve created where they will submit every month a budget of, this is what we need funded.”

While some US officials and oil experts are skeptical of how this will unfold, there are pockets of hope that US oil companies could be able to forge better relationships in Venezuela.

“The sentiment of distrust in Venezuela will exist at the political level, but at the working level American (oil companies) have been in Venezuela for the better part of 100 years, so you do have some of that reservoir of trust which could be built on,” said the former Bush administration official.

Iraq was hard. Venezuela could be harder

Even while Trump’s approach Venezuela’s oil industry is radically different than how Bush approached Iraq’s oil resources, current US officials have some concerns about the US repeating past mistakes.

The Iraqi oil sector boosted production back to upwards of 2.5 million barrels a day in the early 2000s following the plummet in output after the 1991 Gulf War. It took about 10 years to get back to those levels of output following the 2003 US invasion.

“It was a circumstance where a set of technocrats believed that they could manage the sector quite capably, on their own. Most of them did not think foreign support was vital,” said Alkadiri, the veteran oil consultant.

Though the State Department briefing in December included details about the situation in Iraq, it did not explicitly compare Iraq and Venezuela, according to one of the sources familiar with the briefing. There also have not been similar followup briefings, signaling the White House’s effort to keep decision-making and information flow limited as the Venezuela policy is shaped. The State Department did not provide a comment on the briefing to CNN.

At the time of Maduro’s capture, Venezuela’s production hovered around 800,000 barrels a day after, a huge drop off from the past 25 years following the election of Hugo Chavez.

US distrust could be a major impediment to effectively revitalizing the sector in Venezuela just like it was in Iraq, US officials and experts warned.

Developing trust and genuine collaboration will be particularly critical in Venezuela due to geological and security challenges that could make its industry even harder to revitalize than Iraq’s, experts said.

“Iraq was incredibly difficult but restoring Venezuela’s oil could potentially be even harder,” said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University.

Jaffe advised the Bush administration on the difficulties of restoring Iraq’s damaged oil fields. The state of some of Venezuela’s fields are in worse shape, she said.

“There has been massive destruction to Venezuela’s oil infrastructure and the environmental damage in and around the key Lake Maracaibo reservoirs is monumental. Cleaning up that devastation and restoring the fields there would be a massive undertaking. It’s hard to explain the extent of this challenge,” said Jaffe.

How to create a “normal oil economy’

While Trump has encouraged US oil CEOs to invest in Venezuela, and appeared to pledge that they will, a key hurdle will be securing their commitment.

Rubio told lawmakers on Wednesday that the US would not subsidize oil companies’ investment, still the administration is putting in tremendous efforts to stabilize the country so that it could attract that investment.

“Right now what you have in Venezuela is a corrupt and broken oil company run by the government,” Rubio said on Wednesday. “We want it to become a normal oil economy.”

The problem with some of the smaller firms known informally as wildcatters is that they are good at projects on small fields that do not have huge technical challenges, but that they lack capital and the ability to move infrastructure of various types, experts and current officials said. Many of them may have to rely on subcontractors which could get messy, they added.

Still, these firms could boost short-term production and give the administration early wins making them an attractive option to the administration.

“There are some wins to be had with smaller firms because they can be agile and effective. But looking at sizable production and what is required in terms of infrastructure, that will require investments at scale and those companies won’t be able to do that,” Alkadiri said.

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