Venezuela, China and the dollar endgame: strategic risks of coercive resource control

BOTTOM LINE UP FRONT: US Special Forces extracted Nicolás Maduro on 3 January, leaving his regime intact under new management—tactical success masking strategic incoherence. The narcotics justification is fiction. The real objective: force China back into dollar systems by controlling hemispheric commodity supply. The contradiction proves fatal: demonstrating that resource access requires accepting US military dominance validates precisely the de-dollarization Beijing pursues. Venezuela supplies 4% of Chinese oil imports; sanctions evasion via cryptocurrency already functions; regional allies condemn the precedent. April’s Trump-Xi summit tests whether armed hegemony can compel subordination—or whether overreach accelerates the multipolar fragmentation Washington aims to prevent.

At 1:01 AM EST on 3 January 2026, Delta Force operators inserted into Venezuela’s Fort Tiuna military complex and extracted Nicolás Maduro from his bedroom. He was sleeping. His wife Cilia Flores was taken simultaneously. By midday they sat in detention cells at Brooklyn’s Metropolitan Detention Center. The operation deployed over 150 aircraft, naval assets from the Caribbean Strike Group and Special Operations teams that had rehearsed the raid for weeks. American casualties: minor. Venezuelan casualties: contested.

Maduro appeared in Manhattan federal court 5 January, pleaded not guilty to narco-terrorism charges, declared himself a “prisoner of war” and stated: “I am still president”. His next hearing is scheduled for 17 March. Yet the operation’s tactical success obscures a deeper strategic incoherence. The Administration pursues four layers of intent: counternarcotics pretext (false); oil acquisition (stated); regime control (operational); and Chinese economic strangulation (concealed). The fundamental contradiction lies in attempting to coerce dollar-dependence through military dominance whilst demonstrating precisely why alternatives to dollar systems appear rational.

Madurismo Without Maduro

Washington decapitated Venezuela’s government but left its body intact. Vice President Delcy Rodríguez assumed interim authority hours after the raid, sworn in by her brother Jorge Rodríguez (National Assembly president) and backed by Venezuela’s Supreme Court. Defence Minister Vladimir Padrino López remains in command. Interior Minister Diosdado Cabello continues operations. Three days after the operation, the Bolivarian government functions with different faces reading from the same script.

This wasn’t regime change. Call it regime control.

Trump announced the US will “run the country” until a “safe, proper and judicious transition” can be arranged. Secretary of State Marco Rubio clarified: no direct governance, but a naval blockade will remain in place to “structure Venezuela’s oil and counternarcotics policies”. When questioned about transition timelines, Trump referenced María Corina Machado—the democratic opposition leader who commands widespread popular support but lacks military backing—then dismissed her: “She doesn’t have the support within or the respect within the country”. The woman Washington championed for eighteen months was sidelined within seventy-two hours of operational success.

What emerges is compliant autocracy managed through a regime stripped of sovereignty but left in nominal power. Rodríguez initially defied Washington, declaring “There is only one president in Venezuela, and his name is Nicolás Maduro”. Yet she remains in office, negotiating terms. On 11 January, she appointed Juan Escalona—Maduro’s former aide-de-camp—as Minister of the Presidency, signalling continuity rather than rupture. Trump threatened: “If she doesn’t do what’s right, she is going to pay a very big price, probably bigger than Maduro”.

The precedent this establishes extends well beyond Caracas.

The China Calculation: Resource Denial as Strategic Weapon

The operation cannot be understood in isolation from Trump’s scheduled April 2026 summit with Xi Jinping. Examining this through the lens of US-China competition, the entire Western Hemisphere campaign functions as preparatory positioning for that negotiation. The strategic logic proceeds thus: if you control the commodity supplies Beijing requires whilst threatening its primary source (the Middle East through potential Iran operations), you create a binary choice: accept US terms for resource access, or accept energy insecurity.

This isn’t speculation. Rubio stated it plainly post-operation: one objective was “to limit investments from US adversaries, particularly China, in Venezuela’s oil sector”. He continued: “This is the Western Hemisphere. We’re not going to allow the Hemisphere to become a base for adversaries and competitors, rivals of the United States”. Not “promote democracy.” Not “combat narcotics.” Deny competitor access—a practical application of what the Administration’s 2025 National Security Strategy terms the “Trump Corollary to the Monroe Doctrine”.

China’s Venezuelan position runs deep. Beijing extended $62.5 billion in loans to Caracas since 2007. Roughly 80% of Venezuela’s oil exports flowed to China before the operation. Chinese state firms hold claims to billions of barrels: Sinopec to 2.8 billion, CNPC to over 1 billion. By seizing control of Venezuela’s government whilst leaving it nominally independent, Washington positions itself as gatekeeper. China can access Venezuelan resources, but as supplicant, not partner.

Trump made the transactional offer explicit on 6 January: Venezuela will supply 30-50 million barrels of crude to the United States, worth approximately $2 billion. “In terms of other countries that want oil, we’re in the oil business. We’re going to sell it to them”. Note the framing. We’re in the oil business. We’re going to sell it. Venezuelan sovereignty isn’t merely compromised; it’s erased through syntax.

Recent intelligence assessments corroborated by shipping data reveal the immediate impact. Two Chinese-flagged supertankers bound for Venezuela turned around mid-Atlantic, their crews awaiting instructions that never arrived. China has received no PDVSA cargo shipments since December. Venezuelan oil production collapsed from approximately 900,000 barrels daily in November to 820,000-880,000 barrels by mid-January, as storage capacity reached saturation under the continuing US naval blockade.

Yet China’s vulnerability appears less acute than Washington assumes. Beijing imports 75% of its oil, but Venezuela supplies only 4% of Chinese seaborne imports. The rapid transition to electric vehicles—China’s oil consumption may have already peaked—reduces pressure. Analysts suggest Chinese refiners will simply redirect purchases to discounted Iranian and Russian barrels. The 82 million barrels of Venezuelan crude currently stored on tankers off Chinese and Malaysian coasts provides buffer for months.

Beijing’s response to Maduro’s capture signals its calculation. Foreign Minister Wang Yi condemned the operation within eight hours: “No country can act as if it is the world’s policeman”. Chinese foreign ministry spokesperson Mao Ning on 12 January termed US actions “bullying” that “seriously violate international law”. Yet the response stopped at rhetoric. No military deployment. No economic sanctions. No Treasury dumping. China’s retaliation consisted of strongly worded denunciations.

China’s position is constrained. It operates two overseas military bases; the US operates 800-plus. Economic retaliation risks triggering the comprehensive decoupling Beijing seeks to delay. The Venezuelan operation thus functions as proof of concept: China lacks the means to defend its economic partnerships when confronted with American military might. The message targets not merely Beijing but every capital across Latin America, Africa and Asia weighing whether Chinese infrastructure investment provides genuine strategic alternatives or mere commercial relationships vulnerable to US pressure.

The Counternarcotics Phantom: Legal Scaffolding Without Foundation

The legal architecture justifying military action collapses immediately upon contact with evidence. Washington prosecutes what it terms “Operation Southern Spear”—officially a counternarcotics campaign targeting the Cartel de los Soles. This designation creates elegant operational permissions: bypass congressional war powers, conduct lethal strikes under terrorism authorities and frame what might otherwise appear as unprovoked aggression as legitimate law enforcement.

Reality intrudes. Intelligence officials privately acknowledge that zero fentanyl originates from Venezuela. None. The synthetic opioid crisis traces to precursor chemicals from China and India, processed in Mexican labs controlled by Sinaloa and Jalisco cartels. Venezuela simply doesn’t appear in the supply chain. The DEA’s 2024 and 2025 National Drug Threat Assessments map production from Asian precursor suppliers to Mexican manufacturing hubs. Venezuela receives no mention.

The contradiction runs deeper than hypocrisy. In December 2025, Trump pardoned former Honduran President Juan Orlando Hernández, a man not merely accused but federally convicted of trafficking 400 tonnes of cocaine into the United States. Hernández received 45 years in federal prison. Trump calls him a victim of political persecution and grants clemency. The message carries unmistakable clarity: drug trafficking, in Trump Administration calculus, isn’t a crime to be punished but a political consideration to be weighed.

Recent reporting on the 2 September 2025 Caribbean strike places legal concerns in sharper relief. According to accounts reviewed by Congressional sources, Defence Secretary Pete Hegseth allegedly issued a verbal instruction to “kill everyone” on a suspected drug-smuggling vessel. Members of Congress who viewed strike footage described targeting shipwrecked survivors as among the most troubling they had encountered. The Pentagon’s own Law of War Manual uses “attacking a shipwreck” as textbook example of manifestly illegal order.

The deeper operational failure extends to the financial scaffolding Washington assumes immobilises hostile regimes. Venezuelan oil payments increasingly flow through Tether’s USDT stablecoin—a mechanism that, whilst nominally dollar-pegged, functions entirely outside traditional banking systems. Intelligence assessments indicate Venezuelan central bank officials and PDVSA operationalised USDT as settlement mechanism for crude exports. Roughly 50% of private-sector oil trade now flows through digital assets, with volume concentrated in USDT. If commodity exporters can function outside dollar-settlement systems, then the premise upon which American financial coercion rests requires radical reassessment.

The Oil Question: Acquisition or Denial?

Venezuela possesses 300 billion barrels of proven reserves—the largest on the planet. Yet the Administration’s strategy fragmented unexpectedly in late 2024. Between September and November, Maduro’s government, through back-channel negotiations facilitated by former envoy Richard Grenell, offered capitulation approaching the total: preferential access for American energy companies; crude exports redirected from China to US markets; military cooperation with Russia and Cuba severed. Economic objectives would be achieved without operational costs of invasion.

Marco Rubio vetoed it. Not because the terms were insufficient—they manifestly weren’t—but because transactional hegemony contradicted ideological commitment to absolute regime change. This rejection clarified something crucial: the endeavour isn’t primarily about resource acquisition. It’s about power assertion and, critically, controlling who else can access those resources—specifically, the ability to condition or deny Chinese purchases.

A compelling interpretation suggests the operation’s strategic logic is fundamentally denialist rather than acquisitive. The objective may not be rebuilding Venezuela’s degraded infrastructure—requiring tens of billions and many years—but severing China’s access to Venezuelan heavy crude reserves. Resource denial as containment strategy designed to degrade Beijing’s energy security partnerships.

The post-operation reality validates concerns. Venezuelan oil production remains offline at major facilities. American companies haven’t deployed the billions Trump promises for infrastructure reconstruction—they’re waiting for legal clarity, security guarantees and political stability that doesn’t exist. The operation captured the regime but didn’t capture functioning oil sector.

Regional Fracture and International Isolation

The operation alienated precisely the regional partners required to make hemispheric dominance sustainable. On 4 January, Brazil, Spain, Chile, Colombia, Mexico and Uruguay issued a joint statement expressing “profound concern and firm rejection of the military actions carried out unilaterally in Venezuelan territory” by the United States. Brazilian President Lula condemned the strikes as a “very serious affront to the sovereignty of Venezuela” and ordered medical supplies to Venezuela whilst deploying National Guard forces to the border.

Colombian President Gustavo Petro initially stated he would “take up arms” if necessary, then commenced dialogue with Trump on 7 January to diffuse tension. On 8 January, thousands protested in Colombian cities against the intervention. Mexico’s President Claudia Sheinbaum “strongly condemns and rejects” the military action, stating the strikes breached the UN Charter.

Brazil’s Lula spoke briefly with Rodríguez on 3 January but hasn’t since, reflecting the delicate position of regional powers caught between condemning US intervention and managing practical realities. His government has issued explicit guidance: officials shouldn’t comment on Venezuela without prior authorisation, and if they do, stick strictly to language defending national sovereignty.

The selective support reveals stark divisions. Argentina’s Javier Milei celebrated Maduro’s capture, posting “¡Viva la libertad, carajo!” and expressed support for US control of Venezuelan oil to “cut supply of communists”. Most NATO members supported the action. But most condemnations came from Africa, Asia and Latin America.

UN High Commissioner for Human Rights Volker Türk expressed concern about “grave human rights violations”. At Venezuela and Colombia’s request, with Russian and Chinese support, the UN Security Council convened on 5 January. Representatives of Russia and China called for Maduro’s immediate release whilst the US representative rejected characterisations of aggression, describing the operation as targeted law enforcement.

The April Test: Coercion or Decoupling?

The fundamental question facing Trump’s Administration is whether militarising resource control can successfully coerce Chinese subordination to dollar hegemony. The April 2026 summit with Xi Jinping will test this proposition. Trump’s calculus envisions presenting Beijing with a transactional proposition: “We control Venezuela, but we will allow you to go into Venezuela and build the oil infrastructure so you can extract it and buy from us with US dollars”. Chinese capital to rebuild production. Chinese technology to restore output. But American control over access, pricing and currency denomination.

Yet the contradictions accumulate rapidly. You cannot simultaneously build trust in dollar-based systems whilst demonstrating that dollar access requires accepting US military dominance over supply chains. China’s strategic community views the operation as confirmation that US systems are weaponised instruments of hegemony, not neutral platforms for trade. This accelerates exactly the decoupling Washington claims to prevent.

The operation aims to force China back into dollar-denominated commodity purchases by demonstrating US control over supply. But the operational mechanism—naval blockades, military occupation, subordination of democratic transitions to corporate interests—produces precisely the “imperialist resource grab” narrative that justifies alternatives to dollar systems. Every Latin American nation, every African commodity exporter, every Asian economy now watches and calculates: is dollar-system participation worth the sovereignty cost?

Pre-operation, 70% of Americans opposed Venezuelan intervention. Post-operation, 36% support, 39% oppose. The operation’s tactical success temporarily muted domestic opposition, but none of the underlying concerns have been addressed: fiscal cost, mission creep, occupation duration, casualty tolerance. The operation consumes resources whilst attempting to coerce the largest potential buyer of US debt into purchasing more. Treasury must issue $3 trillion in new debt annually against declining foreign appetite for dollar-denominated assets.

Conclusion: The Strategic Bet

Washington crossed the Rubicon on 3 January 2026. Maduro sits in Brooklyn detention. Yet the strategic incoherence has not resolved—it has intensified. The US now “runs” Venezuela through a regime it claims to consider illegitimate, having dismissed the democratic opposition it once championed. Oil infrastructure remains broken. China’s access remains uncertain. The fiscal burden of occupation is just beginning.

The operation revealed objectives in layers. Surface narrative: counternarcotics (false). Stated objective: Venezuelan oil for American companies (partially true but insufficient). Operational reality: regime control to structure resource flows (accurate but incomplete). Concealed imperative: economic strangulation of China by controlling hemispheric commodity supply chains.

Trump’s wager is that sufficient pressure, correctly applied, forces capitulation. China’s calculation appears to be that accepting capitulation establishes precedent worse than short-term economic pain. One side will be proven correct. The other will face the consequences of strategic miscalculation on civilisational scale.

The test arrives in April. Sixteen weeks to determine whether coercion or decoupling defines the next phase of great power competition. Whether dollar hegemony can be sustained through military dominance or whether alternatives emerge from necessity. Whether the United States possesses the fiscal, political and operational capacity to enforce the global economic architecture it demands or whether that architecture fractures under the weight of its enforcement costs.

At the time of writing, eleven days after the operation, these outcomes remain contingent. Venezuelan streets remain tense. Delcy Rodríguez governs under American supervision. Chinese officials draft responses. Regional powers recalculate partnerships. And April approaches, carrying with it questions no briefing paper can answer: Can hegemony be maintained through force? Or does force, when overextended, accelerate the decline it seeks to prevent?

The Venezuela operation provides one answer. The April summit will provide another. The verdict of history will require longer still.