President Donald Trump has assured the people of Venezuela that his undertaking to restore the country’s oil infrastructure will be mutually beneficial to both them and the U.S.
Ricardo Hausmann, professor of the practice of international political economy at the Harvard Kennedy School, isn’t convinced.
“There’s a reason why there’s no profit motive in government,” Hausmann told Fortune, referring to the U.S. controlling the Venezuelan oil market. “Profit motive in government is what we call corruption.”
“This is one of the countless good energy deals President Trump has brokered to restore American energy dominance that will benefit the American people, American energy companies, and the Venezuelan people,” White House spokesperson Taylor Rogers told Fortune in a statement.
Hausmann, who served as the Venezuelan minister of planning from 1992 to 1993, argued Trump’s heavy hand in market affairs is counter to the purpose of government, which is not supposed to make money, but rather provide stability and policy that allow businesses to thrive.
In the case of Venezuela, Hausmann said, Trump’s prioritization of extracting oil for a short-term profit is not just a philosophical misalignment with his vision of government; it’s plain a bad idea.
“Having a policy because you want to make money, you’re going to be dramatically disappointed in any scenario you want to imagine,” Hausmann said. “If you want Venezuela to recover, money is going to go into Venezuela, not out of Venezuela. Venezuela is going to need to attract resources. It’s not [that] resources are going to go away.”
Hausmann noted that Trump’s strategy of leveraging oil to return Venezuela to economic prosperity is futile without restoring democratic leadership to the country, which can implement credible policy to stabilize the oil industry.
The steep costs of rebuilding the oil industry means U.S. companies are going to need assurance that their investments will be worth it, Miguel Tinker Salas, a professor emeritus of history at Pamona College and author of The Enduring Legacy: Oil, Culture, and Society in Venezuela, told Fortune.
“I don’t think any large U.S. major company is going to want to invest without a series of guarantees, because you’re talking about billions of dollars of investment,” Tinker Salas said. “This is an investment for the long term, not for the short term.”
“These are self-inflicted wounds. If you want to recover oil, you need to go back to rule of law,” he said. “Let’s be very mechanical: You need to change the hydrocarbons law. And to change the hydrocarbons law, you need a congress that people think is legitimate.”
“Venezuela has become much, much bigger than its oil, and Venezuela has an enormous potential in many other things,” Hausmann said. “You might say that the easiest thing would be oil, but even oil is not that simple.”
