Since last weekend’s capture by U.S. military of Venezuela President Nicholas Maduro, who was wanted on narco-terrorism charges in New York, the leftist media and liberal politicians have been falsely “fact-checking” President Donald Trump’s recent comments that Venezuela “stole” oil assets from the U.S.
On December 16, Pres. Trump announced a blockade of Venezuela “Until such time as they return to the United States of America all of the Oil, Land, and other Assets that they previously stole from us,” referring to Venezuela’s 2007 expropriation of the oil interests of U.S. companies under then-President Hugo Chavez.
“The illegitimate Maduro regime is using oil from these stolen Oil Fields” to finance drug terrorism and other nefarious acts, Trump wrote in a social media post.
“America…will not allow a Hostile Regime to take our Oil, Land, or any other Assets, all of which must be returned to the United States,” the U.S. president reiterated.
Top Trump adviser Stephen Miller echoed the sentiment in a post the next day:
“American sweat, ingenuity and toil created the oil industry in Venezuela. Its tyrannical expropriation was the largest recorded theft of American wealth and property. These pillaged assets were then used to fund terrorism and flood our streets with killers, mercenaries and drugs.”
Trump has repeatedly said that Venezuela “stole” oil and oil-related assets from the U.S. and emphasized the magnitude of the “theft.”
What Pres. Trump’s critics refuse to acknowledge is that the president’s characterization of Venezuela’s actions as “stealing” and “theft” are figurative, not literal – and that his point is nonetheless valid.
Additionally, when Trump says that Venezuela needs to pay back “us” or “the United States,” he once again appears to be speaking figuratively, since the aggrieved parties were American oil companies, not the U.S. as a nation.
Trump is “referring to when Hugo Chavez forcefully negotiated contracts and made the national company the majority shareholder,” Rice University’s Latin America Energy Program Director Francisco Monaldi explained in an interview published three days after Maduro’s arrest.
Beginning in 1914, U.S. companies spent untold billions of dollars providing the capital, infrastructure, equipment and technology enabling Venezuela to become a major oil-producing nation, in exchange for business ownership, participation in joint ventures and rights to extract, produce and sell the country’s oil.
In the 1970’s, however, Venezuela began to increasingly restrict foreign ownership and profitability, culminating in complete nationalization and expropriation in 2007. Taxes and fees were created or raised, while the percent of ownership U.S. oil companies were allowed to have in their joint ventures with Venezuela was reduced – and, ultimately, eliminated when all assets were fully expropriated in 2007.
Still, Venezuela’s takeover was actually more a breach of a business agreement than outright theft, as Chavez voided existing trade treaties and U.S. companies left rather than accept his new terms. Thus, any offenses committed were contractual, and thus civil, not criminal. A World Bank arbitration tribunal ruled as much in 2014, deciding a lawsuit by Exxon Mobil against the Bolivarian Republic of Venezuela.
“They stole it by force,” Trump said recently, regarding Venezuela’s nationalization. And, indeed, Venezuela offered U.S. oil companies a take-it-or-leave-it deal to continue operating in the country – but, only if they would accept a new agreement greatly curtailing their ownership interests and revenue. The U.S. companies were given four months to accept the onerous, new terms.
Only Chevron took the deal, while Exxon Mobil and Conoco chose to abandon their operations in the country and file suit against Venezuela, requesting arbitration. Today, Chevron produces an estimated 25% of Venezuela’s oil exports.
In the arbitration case, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ruled that Venezuela had the right to expropriate the U.S. oil companies’ interests in its joint ventures with Venezuela.
But, it also ruled that Venezuela committed multiple breaches of its trade treaty with Exxon Mobil and failed to abide by internationally-recognized standards of “Fair and Equitable Treatment” in the execution of its expropriation and the amount of compensation it paid.
Accordingly, the ICSID ruled that Venezuela should pay Exxon Mobil’s subsidiaries a total of $1.6 billion in compensation for its breaches (emphasis added):
- “US$ 9,042,482 (nine million, forty two thousand, four hundred and eighty two United States dollars) in compensation for the production and export curtailments imposed on the Cerro Negro project in 2006 and 2007.”
- “US$ 1,411.7 million (one thousand, four hundred and eleven million, seven hundred thousand United States dollars) in compensation for the expropriation of their investments in the Cerro Negro Project;
- “US$ 179.3 million (one hundred seventy nine million, three hundred thousand United States dollars) in compensation for the expropriation of their investments in the La Ceiba Project.”
The decision also awarded Exxon annual compound interest of 3.25% until Venezuela pays the award in full. To date, the vast majority of the settlement has not been paid.
