Finance Desk

Last week, the Deputy Chief of Staff for Policy and Homeland Security offered a sharply different account of Venezuela’s 1976 oil nationalization. It is provocative, but it does not hold up to the record.

President Carlos Andrés Pérez (1974-1979) proclaimed the takeover of the petroleum industry on January 1, 1976. The announcement occurred at the Mene Grande oilfield in Zulia. Crucially, the transfer from private control to a state-run model went smoothly. The major multinationals were compensated, invited to work with the new state-owned company, Petróleos de Venezuela (PDVSA), as service and technology providers, and the process triggered no diplomatic incident with the United States. A brief look at the facts does not support claims of “theft of American wealth and property,” since “the tyrannical expropriation” was precisely engineered to avoid the kind of rupture Miller describes.

The nationalization of the Venezuelan petroleum industry responded to global events unfolding in the Middle East around 1970. To be sure, Venezuelan politicians had long dreamed of granting the state full control over the most important sector of the country’s economy. However, plans for an eventual state takeover of the oil fields remained nebulous, a goal set for a distant future. Muammar Qaddafi (1969-2011) in Libya, of all figures, provided Venezuelan lawmakers with a concrete horizon for materializing full control over the hydrocarbon sector. The Libyan strongman unilaterally increased royalties and taxes on multinationals, with Iran pursuing a similar approach. OPEC then formalized this push for higher prices at its December meeting that year. What followed in 1971 sent shock waves across the world: Libya nationalized its oil industry, followed by Algeria and Iraq. This process quickly expanded to the rest of the Middle East, setting the backdrop for the fuel shortages of that decade and the energy crisis of 1973. 

This global context greeted President Rafael Caldera (1969-1974), a Christian Democrat of COPEI, who was intent on capitalizing on these favorable winds. Soon, every political faction in Congress sought to outdo the other in displaying their anti-corporate credentials. Caldera stood at the top as the most nationalist of the pack, passing an unprecedented package of bills and decrees destined to expand government control over the industry significantly. By the time he handed power to Carlos Andrés Pérez from Acción Democrática (AD), de facto state control over the entire industry was already in place. Nationalization became the only politically safe position when the electoral campaign of 1973 started. Once elected, Carlos Andrés Pérez authorized the creation of a Presidential Commission in charge of studying the state takeover and proposing a bill to that effect, to be approved by Congress in 1975. Ordinary Venezuelans shared this renewed fervor for ownership over the national riches of the country, though in a conflicted way.

Polls by the weekly political magazine Resumen showed broad support for nationalization. Yet respondents also rated working conditions at the foreign oil companies very favorably and many wanted foreign capital to remain involved after the takeover because they trusted the firms’ experienced managers. At the same time, they doubted the state’s capacity to run complex industries, while still believing it could improve over time and that a state-run oil sector was in the nation’s interest. That nuance rarely appeared in Congress.

The nationalization became a fait accompli without antagonism with the U.S. government or the multinationals

COPEI and a constellation of center-left and leftist organizations pushed for an immediate, total takeover without any foreign role. Some opposed compensation altogether and even welcomed a showdown if necessary, seeing local employees working for these multinationals as threats to a “genuine” nationalization of the industry. Venezuelan managers soon came under attack from politicians accused of having “their minds colonized” by the American and British firms. They were also viewed as “centers of anti-Venezuelan activity.” Insults in the press and public spaces galvanized domestic employees to take action. Led by Venezuelan mid-level managers such as Gustavo Coronel from Royal Dutch Shell, the managerial class came together to form Agrupación de Orientación Petrolera (AGROPET). The nonprofit aimed to help the country prepare to take full responsibility for the hydrocarbon sector.

From March 1974 through 1975, AGROPET ran a public campaign for an orderly, compensatory nationalization built on continuity, not a politicized break. Their activities included appearing on radio programs, giving TV interviews, publishing in newspapers, and participating in public forums, including congressional meetings, and talks with members of the  Presidential Commission mandated by President Pérez. The irony of this body is that it gathered representatives from prominent sectors of society. And yet the Commission excluded the people who actually ran the industry.

AGROPET quickly steered the nationalization debate back toward a technocratic solution. The organization’s pivotal moment came in January 1975, when its leaders met with President Pérez and laid out what became the blueprint for the 1976 nationalization. They argued for an industry built on administrative efficiency, technological progress, apoliticism, and sound management not a politicized rupture. Their model envisioned a holding company with four affiliates that would absorb concessionaire operations. The new organizational culture would blend practices inherited from the Creole Petroleum Corporation and Shell, and the nationalized industry would retain ties to its foreign predecessors. Under this proposal, Petróleos de Venezuela (PDVSA) became, in effect, the direct descendant of the multinationals that built Venezuela’s modern oil industry. It perpetuated the business philosophy of the multinationals. Persuaded by Venezuelan managers, Pérez sided with the technocrats and sent an amended nationalization bill to Congress, crucially allowing foreign capital to return under Article 5. The AD-dominated legislature defended the bill and enacted it in August 1975. Two months later, Creole and the other firms accepted a compensation package of about $1 billion for their expropriated assets.

The nationalization became a fait accompli without antagonism with the U.S. government or the multinationals. It constituted less a watershed than a continuation of relationships the Venezuelan state and foreign oil companies had built across the twentieth century on new terms. PDVSA quickly signed service and technology agreements with the very companies it had expropriated. What’s more striking is that this smooth outcome became, in part, an unintended consequence of Venezolanization: the deliberate integration of Venezuelans at every level of the corporate ladder, a policy initiated by Creole and Shell in the 1940s. Unusual in the industry at the time, it stood out as a strand within a broader set of corporate social responsibility practices these companies implemented in Venezuela. Locals trained through that system helped make the transition to state control orderly and broadly beneficial.

For much of the political opposition, however, the outcome felt bittersweet. They denounced its chucuta nature (a “half-baked” nationalization) and framed Article 5 as outright betrayal. Many wanted the kind of dramatic showdown associated with Cárdenas in Mexico, Mossadegh in Iran, or Velasco Alvarado in Peru, cases where claims of expropriation and “theft” of U.S. property could at least be mounted. Venezuela in 1976 stood far away from that drama, and once the transfer was complete, business continued as usual despite the lamentations of certain congressmen. Venezuela’s 1976 oil nationalization was engineered to preclude confrontation. Getting the history right matters. If the current U.S. administration wants to cite this episode to justify pressure, escalation, or exceptional measures, it has chosen a poor example, precisely because the process avoided the kind of rupture Mr. Miller invokes. So, por este camino no es.

Toyota is revving up its US manufacturing ambitions. Last month, it announced—or seemed to announce—plans to invest up to $10 billion across its American operations over the next five years: a pledge that arrived just as its first US-based electric-vehicle battery plant officially began production. The Japanese automaker, which has been building cars in the US since the 1970s, framed the expansion as a milestone moment in its long American road trip.

The new battery facility in Liberty, North Carolina—Toyota’s only such plant outside Japan—comes with a separate $14 billion price tag. It also promises to create up to 5,100 jobs. Production has already begun on batteries for the Camry HEV, Corolla Cross HEV, RAV4 HEV, and a still-secret EV model. 

“Today’s launch of Toyota’s first US battery plant and additional US investment up to $10 billion marks a pivotal moment in our company’s history,” Ted Ogawa, CEO of Toyota Motor North America, said in a statement. “Toyota is a pioneer in electrified vehicles, and the company’s significant manufacturing investment in the US and North Carolina further solidifies our commitment to team members, customers, dealers, communities, and suppliers.”

Transportation Secretary Sean Duffy applauded the expansion, calling it “the latest show of confidence” in the Trump administration’s reshoring efforts. 

Not So Fast

According to Reuters, Toyota public affairs officer Hiroyuki Ueda then clarified that the company never explicitly promised the new investment. 

Turns out, Toyota only confirmed that it invested roughly $10 billion in the US during President Trump’s first term: and despite Trump suggesting a new pledge, the company says no such commitment was made, noting instead that by 2021 under President Biden, it had already boosted its total planned US investment to nearly $13 billion, including some 600 new manufacturing jobs.

“We didn’t specifically say that we’ll invest $10 billion over the next few years,” Ogawa said, adding that Toyota remains committed to its ongoing US investment and job creation.

But with global automakers increasingly seeking American factory space—Hyundai, Honda, Nissan, Rolls-Royce, Volvo, and Volkswagen among them—Toyota’s announcement underscores an industry-wide trend: In the age of tariffs, supply-chain anxiety, and political whiplash, expanding in the US is the path of least resistance. 

There were long faces in Brussels in early October when Czech parliamentary elections handed a victory to Andrej Babiš’s ANO party. And even longer ones a month later when Babiš, short of a majority, announced plans to form a coalition with the far right, pro-Russian SPD and the eccentric, libertarian Motorists alliance. 

Although the jury is still out on whether this new populist government will join those in Slovakia and Hungary to form an anti-EU front in Central Europe, it will look very different from the pro-EU, pro-Ukraine Spoulu (Together) government it replaces, headed by Petr Fiala. 

Babiš Returns to The Czech Republic — and Repositions Himself

Returning to the premiership—Babiš, aged 71, was prime minister from 2017 to 2021 and before that deputy prime minister and finance minister from 2014—is a major personal victory for the Czech Republic’s richest man, estimated to be worth over $4 billion. Babiš’ made his fortune through his holding company, Agrofert, the now-huge agribusiness and chemicals powerhouse he founded in 1993. 

Babiš has moved steadily to the right, with ANO’s populism a long way from the centrist positions ANO (YES) championed when Babiš set up the party in 2012. Although dubbed the Czech Trump for his anti-establishment outbursts and authoritarian rhetoric, observers believe Babiš Mark II will be more measured, favoring stability and prioritizing his business interests and those of the Czech Republic. 

“An ANO-led government will face institutional constraints on its near-term ability to implement significant policy shifts, notably the outgoing coalition’s constitutional majority in the upper house [the Senate], where it holds 60 of 81 seats,” argues Malgorzata Krzywicka, director, Sovereigns at Fitch Ratings. “[We expect] a broadly prudent fiscal policy, although it is likely to adjust foreign policy, notably regarding alignment with some EU priorities.”

Babiš, Like Trump, Has a Second Act

Another potential issue for Babiš is centrist, pro-EU President Petr Pavel’s power to veto ministerial appoints and legislation. Meanwhile, the prospect of a populist anti-EU front amongst the four Visegrad countries must be measured against next April’s parliamentary elections in Hungary. Polls suggest Prime Minister Viktor Orban is running well behind his pro-EU challenger, Péter Magyar. 

That said, Babiš’s return to power—like US President Donald Trump’s, after a gap of four years—will likely mean change. 

“Divergence from Spolu’s strongly pro-Western stance is likely, for example over providing munitions to Ukraine,” reckons Krzywicka. It could lead to disputes with the EU in such areas as energy or migration, she added.

That said, “we think these are highly unlikely to intensify sufficiently to have consequences, such as the suspension of EU funds.” 

In a historic appointment, Satsuki Katayama became Japan’s first female finance minister in October, taking the reins of the powerful portfolio at a moment of acute economic tension in the country.  

A veteran bureaucrat and politician, she brings deep institutional knowledge. Katayama previously climbed the ranks of the Ministry of Finance (MoF), including a high-profile role in the influential Budget Bureau. That’s a rare feat for a woman in the 1980s and 1990s. 

Katayama’s immediate challenge is managing newly seated Prime Minister Sanae Takaichi’s core economic priority: growth through fiscal expansion.

Takaichi is betting big on a stimulus package, estimated at over $65 billion, that aims to bolster household consumption, energize regional economies, and spur the “virtuous cycle” of sustained wage and price growth.

Such aggressive spending puts Katayama at cross-purposes with economists concerned about Japan’s financial health, however. 

With the country holding the world’s highest debt-to-GDP ratio and committed to achieving a primary surplus in fiscal 2025, she must convince financial markets that the new spending is both “proactive and responsible” while working to reduce the debt-to-GDP ratio. 

The external environment adds layers of complexity. The Bank of Japan held its policy rate steady, focusing on securing its 2% inflation target. But the recent economic contraction and pressure from Takaichi for cautious rate hikes create a difficult path for monetary normalization. The prime minister recently voiced concern over the yen’s “very one-sided, rapid” weakening, a development that threatens to undermine consumer purchasing power and exacerbate import costs just as the government rolls out its spending plan. 

The Bank of Japan subsequently increased its benchmark interest rate to 0.75 percent.

Looking ahead, the finance minister’s success hinges on her ability to walk this policy tightrope: reconciling the MoF’s mandate for fiscal discipline with the political imperative for bold, stimulus-led growth. Katayama’s task is about execution.

We live in an interdependent world where no country or region is exempt from the effects of developments elsewhere. The transition into autocracies in other countries is not the exception. Autocratisation has escalated into a global wave. According to the latest V-Dem report, 45 countries are currently moving towards autocracy, up from just 16 in 2009, while only 19 are democratising. By 2024, 40% of the world’s population lived in autocratising countries.

Autocratic expansion represents a threat to liberal democracies in Europe and beyond, as political science’s only near-lawlike finding holds: democracies do not wage war against each other. In contrast, an autocratic Russia invades Ukraine and might quite possibly very soon attack the rest of Europe, as NATO’s General Secretary Mark Rutte alerted in Berlin on December 12: “We are Russia’s next target, and we are already in harm’s way… we must act to defend our way of life now”.

The link between democracy and peace was also at the centre of this year’s Nobel Peace Prize ceremony. In his address, Jørgen Watne Frydnes, Chair of the Norwegian Nobel Committee, emphasised that democracy is not only essential for peace within national borders, but also for peace beyond them. The award to Venezuelan opposition leader María Corina Machado, who insisted that the prize belongs to all Venezuelans, underscored that message.

Russia illustrates this connection with unusual clarity, and the Maduro regime is a close ally of the regime directly threatening Europe. Since Chávez, under whose rule Venezuelan democracy collapsed no later than between 2002 and 2007 (according to V-Dem), the Venezuelan regime has deepened its ties with China and Russia. The latter, particularly, became an important partner in the military and security realms. By providing weapons, equipment and intelligence support, Russia secured a geopolitically strategic foothold in South America. This allows Putin to project power into the Western hemisphere and to undermine US and European strategic interests.

Venezuela’s partnership with Russia follows a foreign policy logic of influence projection within the United States’ regional sphere, much as Washington has done in Eastern Europe. This relationship has taken the form of military cooperation, with Venezuela—alongside Nicaragua—becoming one of Russia’s main partners in Latin America.

A democratic Venezuela could reintegrate into Mercosur, opening an additional market under the forthcoming EU-Mercosur agreement—one of the EU’s tools for diversifying trade partners and reducing excessive economic dependencies.

While earlier cooperation included a visit of nuclear-capable Russian bombers to Venezuela in 2018, more recent ties have focused on military diplomacy: high-level defence meetings, training exchanges, and joint participation in initiatives such as the International Army Games. But despite Russia’s growing resource constraints following its invasion of Ukraine, reports of the construction of a new ammunition factory in Maracay (Aragua) and the presence of Russian “Wagner” mercenaries in Venezuela exemplify the possibility of going back to further military cooperation. The ammunition factory would specifically produce a version of the AK-130 assault rifle (developed in the Soviet Union) and a “steady supply” of 7.62mm ordnance under Russian license in spite of sanctions to avoid Russian ammunition exports.

Beyond the military sphere, Venezuela currently cooperates with Russia to mitigate the effects of Western sanctions. Together with Iran, both countries share shadow shipping networks that allow sanctioned oil exports to continue flowing, primarily towards China (surprise! Another autocratic country). 

Thus, from a European Security perspective, Venezuela isn’t really a distant or marginal case. A Russia-aligned autocracy in South America strengthens Moscow’s global reach at a time when Europe is already struggling to contain Russian aggression on its own continent. Supporting democratic survival or democratisation abroad is not only a normative commitment, but a strategic interest: Europe’s democratic stability—and its own way of life—are reinforced when democracies elsewhere endure.

Democratisation in Venezuela could bring concrete benefits. It would weaken Russia’s standing among authoritarian partners that depend on its support and reduce diplomatic alignment against European priorities in multilateral forums. Such alignment was evident, for example, in the 2014 UN resolution condemning Russia’s annexation of Crimea, where several Latin American governments sided with Moscow. Moreover, a democratic Venezuela could reduce the US’ attention diversion from the Russia war on Ukraine, and it could weaken Russia’s potential leverage when looking for US-concessions, in exchange for their own concessions in Venezuela.

But this is also about not missing opportunities. A democratic Venezuela could reintegrate into Mercosur, opening an additional market under the forthcoming EU-Mercosur agreement—one of the EU’s tools for diversifying trade partners and reducing excessive economic dependencies. At a time when economic strength has become an existential priority for Europe amid rising geopolitical tensions, this matters. Before Mercosur, and in the more immediate period following a transition, Venezuela would require substantial investment to rebuild its economy. Historical economic and social ties already exist, shaped in large part by post–Second World War European migration to the country.

Repression is not confined to Venezuelan citizens. More than 80 foreign political prisoners have been reported, including Europeans from Italy, Spain, Poland, Portugal, Hungary, Ukraine and the Czech Republic.

In the path towards the stabilisation of Venezuela as a partner to democracies—instead of being a source of autocratic threat—the democratic mandate expressed by Venezuelans on 28 July 2024, when we elected Edmundo González Urrutia as president, is a crucial element to consider. González has since identified María Corina Machado as his intended vice-president in a potential transition. 

In regards to the question about how to get there, the equation toward a democratic Venezuela does not only include measures to weaken the Maduro regime’s repressive capacity, but also strengthening democratic actors inside and outside the country. Many of these active citizens often move within resource-limited bounds—juggling work, precarious living situations and scarce resources for essential tools such as websites, digital security, travel for advocacy, and organisational infrastructure. Migrants in early integration phases do not necessarily count with abundant financial resources, yet they invest what they have into their democratic efforts.

At the same time, the regime’s repressive reach extends beyond Venezuela’s borders. Recent transnational attacks like the murder attempt against Luis Alejandro Peche and Yendri Velásquez in Colombia, the attempted attack on Vente Venezuela’s Alexander Maita, and the assassination of Ronald Ojeda in Chile highlight efforts to intimidate political mobilization even outside the country. 

But repression is not confined to Venezuelan citizens. More than 80 foreign political prisoners have been reported until this month, including Europeans from Italy, Spain, Poland, Portugal, Hungary, Ukraine and the Czech Republic. Thus, limiting the regime’s repressive capacity is vital to incentivize crucial pro-democracy mobilization.In summary, Europe faces a choice. Supporting Venezuelan democratisation is not only a matter of global democratic solidarity, human rights, or European soft power in Latin America. It is a matter of self-preservation. The collapse of Venezuela’s once-stable 40-year democracy and Russia’s war on Ukraine both serve as reminders that democracy—and the peace it sustains—is not a given. It must be embodied, defended, and actively built when necessary.