Latest / Trumponomics / What Trump's Venezuela Attack Means for the Global Economic Order

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What Trump's Venezuela Attack Means for the Global Economic Order · Trumponomics

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We're going to run it,
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  Speaker 1: fix it. We'll have elections at the right time, but
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  Speaker 1: the main thing you have to fix it's a broken country.
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  Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
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  Speaker 2: and this is Trump Economics, the podcast that looks at
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  Speaker 2: the economic world of Donald Trump, how he's already shaped
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  Speaker 2: the global economy, what on earth is going to happen next?
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  Speaker 2: This week, we're asking what the US operation in Venezuela
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  Speaker 2: means for America's economic statecraft and the global economic order.
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  Speaker 2: So the US government began the year by seizing and
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  Speaker 2: arresting Venezuela's president. His deputy is now formally in charge,
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  Speaker 2: but the country, according to President Trump, is going to
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  Speaker 2: be run by the US for the four seeable future.
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  Speaker 2: No boots on the ground, no US casualties to speak of,
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  Speaker 2: but some pretty weighty implications for what we thought was
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  Speaker 2: the world order, and a slew of questions around what
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  Speaker 2: happens next. Since this is Trumpnomics, we're going to focus
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  Speaker 2: on the more economic part of it here, at least initially,
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  Speaker 2: Venezuela has the largest proven oil reserves on the planet.
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  Speaker 2: And President Trump has talked a lot about that in
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  Speaker 2: his comments since the US went in to extract President
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  Speaker 2: Maduro at the weekend.
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  Speaker 1: We need total access. We need access to the oil
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  Speaker 1: and to other things in their country that allow us
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  Speaker 1: to rebuild their country. I'm also meeting with oil companies.
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  Speaker 1: Let's go. You know what that's about. We're going to
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  Speaker 1: have our very large United States oil companies, the biggest
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  Speaker 1: anywhere in the world, go in, spend billions of dollars,
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  Speaker 1: fix the badly broken infrastructure, the oil infrastructure, and start
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  Speaker 1: making money for the GUADJI.
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  Speaker 2: If the US in effect has control of those reserves
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  Speaker 2: from now on, what does that mean for oil markets
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  Speaker 2: and for America's power. That's my first question, and Javier
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  Speaker 2: Blass here in London is the perfect person to answer it.
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  Speaker 2: Tavier is a Bloomberg opinion columnist covering energy and commodities,
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  Speaker 2: and also the co author of the World for Sale, Money,
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  Speaker 2: Power and the Traders who Barter the Earth's resources. Haveavier
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  Speaker 2: lovely to have you back on the show.
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  Speaker 3: Thank you for having me.
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  Speaker 2: But listening to the way the President and other administration
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  Speaker 2: officials are now talking about US foreign policy, I did
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  Speaker 2: also have a broader question about that whole approach, the
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  Speaker 2: economic state craft that emerges out of this operation. Here's
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  Speaker 2: White House Deputy Chief of Staff Stephen Miller, for example,
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  Speaker 2: on CNN this week.
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  Speaker 4: You can talk all you want about international niceudies and
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  Speaker 4: everything else, but we live in a world, in the
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  Speaker 4: real world, that is governed by strength, that has got
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  Speaker 4: governed by force, that is governed by power.
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  Speaker 2: For decades, most of the US foreign policy machinery outside
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  Speaker 2: the Pentagon spoke mainly in terms of furthering US interests
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  Speaker 2: through global alliances, agreements, rules. Now those so called niceties
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  Speaker 2: have been stripped away. What will it feel like for
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  Speaker 2: the diplomats and others on the inside for US foreign
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  Speaker 2: policy to be considered solely in terms of raw power,
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  Speaker 2: physical control over resources, and territory. Or some might say,
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  Speaker 2: it won't feel so very different because this is what
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  Speaker 2: the US has been doing all along, not least in
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  Speaker 2: Latin America.
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  Speaker 1: Well.
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  Speaker 2: Chris Kennedy was on Secretary of State Marco Rubio's policy
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  Speaker 2: planning staff until last summer, when he joined US as
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  Speaker 2: the lead analyst for economic statecraft at Bloomberg Economics. He
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  Speaker 2: was also director for International Economics on the US National
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  Speaker 2: Security Council under the Biden and Trump administrations, and he's
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  Speaker 2: in the Washington studio today. Chris, thanks for joining us.
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  Speaker 5: Thanks for having me.
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  Speaker 4: Stepanie.
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  Speaker 2: Have you you read a column that I think a
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  Speaker 2: lot of people read at the beginning of this week
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  Speaker 2: as we were all sort of thinking about the implications
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  Speaker 2: of the operation in Venezuela. The headline was Trump now
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  Speaker 2: has his very own oil empire. How big is that empire?
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  Speaker 3: We can do the match, and let's focus on carr
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  Speaker 3: and oil production. Let's not talk about the reserves, because
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  Speaker 3: that's oil that is underground and it may or may
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  Speaker 3: not be produced. And starting with the United States, then
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  Speaker 3: at Canada, then at the whole of Latino American and
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  Speaker 3: obviously that includes Venezuela from Mexico all the way to
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  Speaker 3: Argentina and everyone in between. And that comes to roughly
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  Speaker 3: almost forty percent of the wall's oil production. There is
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  Speaker 3: a question, you know what word you want to use
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  Speaker 3: to what Washington is doing without oil production? Is a
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  Speaker 3: controlling it said, overseeing, It is just simply benefiting from that.
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  Speaker 3: But certainly I think that Trump has put a huge
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  Speaker 3: portion of the world's oil current output under the American umbrella.
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  Speaker 3: That means the US has a lot more leaver to
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  Speaker 3: keep oil prices lower than otherwise, and we are seeing that.
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  Speaker 3: I mean, one of the reasons that the oil price
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  Speaker 3: is around sixty dollars a barrel is because the Americas
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  Speaker 3: is booming today with oil. And that's not just the
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  Speaker 3: United States itself, but production is rising in Canada, is rising,
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  Speaker 3: in Brazil, is rising in Guiana. It's rising in Argentina
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  Speaker 3: of all places. So that's one. The second one is
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  Speaker 3: that and it comes alongside lower oil prices that all
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  Speaker 3: the Southern Typically, the risk of an oil spy was
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  Speaker 3: in the minds of I suppose diplomats like Chris and
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  Speaker 3: particularly military planners in the Pentagon, and that was a
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  Speaker 3: constraint from the ability to the US to conduct foreign policy.
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  Speaker 3: That constraint is now still there, but it's certainly a
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  Speaker 3: lot lower they used to be. And we have seen
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  Speaker 3: some examples. You look back to twenty twenty five, we
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  Speaker 3: have some actions in American military power that really indicate
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  Speaker 3: that oil is no longer than constrained the use. One
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  Speaker 3: was the bombing of the nuclear facilities in Iran. The
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  Speaker 3: other one is that effectively the White House gave Ukraine
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  Speaker 3: the green light to attack Russian oil refineries. Both would
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  Speaker 3: not have happened if the Americas, and particularly the United States.
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  Speaker 3: Let's not forget that of that forty half of that
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  Speaker 3: is US oil productiony on, if the Americas was not
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  Speaker 3: really booming with oil.
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  Speaker 2: You've immediately moved on to some of the foreign policy implications.
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  Speaker 2: So I'm interested whether Chris Kennedy reads it the same way,
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  Speaker 2: just in terms of how effective control, which is not
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  Speaker 2: completely changed by Venezuela. As Heavier points out, the US
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  Speaker 2: already had a lot more kind of room for maneuver
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  Speaker 2: around oil thanks to the shale boom, thanks to all
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  Speaker 2: these other things. Do you agree, Chris, that has effected
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  Speaker 2: in a real way what the US feels able to
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  Speaker 2: do or comfortable doing, for example.
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  Speaker 5: In I absolutely agree. So I think if you go
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  Speaker 5: back to the conversations around the oil price cap after
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  Speaker 5: Russia's invasion of Ukraine a few years ago, we saw
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  Speaker 5: there was a real constraint put on the ability of
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  Speaker 5: the Biden administration to implement strong sanctions on Russia's oil industry,
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  Speaker 5: in part because of concerns over energy prices. Oil prices
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  Speaker 5: were much higher at that point. Now we've seen prices
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  Speaker 5: come down, but you know, this is part of a
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  Speaker 5: longer term trend. You know, for many decades, our foreign
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  Speaker 5: policy was very much constrained and even focused on ensuring
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  Speaker 5: that we had consistent, reliable access to energy for both
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  Speaker 5: US and our allies, and that has changed. I think
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  Speaker 5: that Trump very much understands leverage. I think that this
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  Speaker 5: administration very much understands leverage, and so being able to
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  Speaker 5: exercise control over an additional large source of production in
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  Speaker 5: the Western hemisphere, of course that increases leverage, but I
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  Speaker 5: think in Venezuela it's also a unique case because it's
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  Speaker 5: very much denying other adversaries access to this oil, which
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  Speaker 5: our prior approach to simply sanctioning wasn't really effective at doing.
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  Speaker 5: I think Cuba is a very good example of this.
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  Speaker 5: Heavily reliant on Venezuela, has a long term agreement with
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  Speaker 5: Venezuela to exchange medical and other services for oil, and
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  Speaker 5: now Cuba is really in a tough spot. So it's
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  Speaker 5: both the macro side being able to control this resource
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  Speaker 5: and not being constrained by potential shocks to oil prices
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  Speaker 5: that would have domestic ramifications, but it's also denying adversaries
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  Speaker 5: access to what has been a very consistent source of energy.
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  Speaker 2: Of course, we've all been sort of thinking about what
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  Speaker 2: the meaning of the word run is. You know, when
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  Speaker 2: you talk about running empire, it does seem that Secretary
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  Speaker 2: of State Rubia has a slightly different sort of spin
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  Speaker 2: on it than many others. I wonder whether it's we
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  Speaker 2: could end up thinking that they are running quote unquote
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  Speaker 2: Venezuela the way they've been running Mexico in the sense
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  Speaker 2: of just using leverage to massively influence the administration there,
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  Speaker 2: or you could say running the UK more controversially, we
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  Speaker 2: certainly have enormous influence over over UK policy and key areas.
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  Speaker 2: But have you the piece of this, the immediate piece,
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  Speaker 2: And you mentioned in your column that that as well
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  Speaker 2: as a game change, and not because of the oil
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  Speaker 2: it's producing now, but the oil it could potentially produce
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  Speaker 2: in the future more similar to what it had in
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  Speaker 2: the past. So what's the difference in scale and how
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  Speaker 2: difficult will it be to ramp up production.
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  Speaker 3: Well, let's take first a look at the history of
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  Speaker 3: what Venezuela has done. Is one of the places that
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  Speaker 3: we have been producing oil for a longer period that
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  Speaker 3: the oil industry really starts at the beginning of the
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  Speaker 3: previous century, and oil productions start around nineteen twenty by
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  Speaker 3: American and Riti's Dutch companies are both what is to
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  Speaker 3: their exomobile and Shell and the heyday of Venezuela was
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  Speaker 3: the nineteen seventy where it produced juice over three point
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  Speaker 3: seven million borrows a day of oil. It was another
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  Speaker 3: big recovery in the nineteen nineties and around the time
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  Speaker 3: that Ugo Chabe has won elections in December nineteenninety eight,
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  Speaker 3: Venezuela was producing over three and a half million barrows
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  Speaker 3: a day. Today is less than a million barrels a day.
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  Speaker 3: So the potential for increasing production is there, the geology
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  Speaker 3: is there, but obviously going back to that is very difficult.
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  Speaker 3: But here is the thing. A lot of people are
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  Speaker 3: talking about, Oh, we're going to take ten years to
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  Speaker 3: go back to what it used to be and we
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  Speaker 3: will need one hundred billion dollars, and that's true. But
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  Speaker 3: at this moment, every oil analyst when they were penciling
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  Speaker 3: their forecast for twenty thirty, Venezuela and oil production have
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  Speaker 3: used a million barrels a day or perhaps even less
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  Speaker 3: than that. So any additional barrels that you are put in,
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  Speaker 3: they are really tilting the market into potentially sartpluses because
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  Speaker 3: you are putting more oil coming from Venezuela and there
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  Speaker 3: are some barrels that they can come relatively easy. And
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  Speaker 3: I emphasize relatively, and talking about relatively in the oil
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  Speaker 3: industry means a lot of effort and a lot of money.
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  Speaker 3: But you could increase production by focusing on the conventional
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  Speaker 3: oil in Venezuela. Whether you could do two hundred four
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  Speaker 3: hundred thousand bars of the incremental over a period of
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  Speaker 3: say eighteen to twenty four months is a bit of
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  Speaker 3: a question mark, but certainly you could increase production somewhat
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  Speaker 3: in the near term. You want to go back to
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  Speaker 3: what Venezuela wants, you know, in the seventies or in
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  Speaker 3: the late nineteen nineties. That's going to take a lot
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  Speaker 3: more effort. But I think that at this point the
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  Speaker 3: biggest obstacle for any oil recovery in Venezuela is not
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  Speaker 3: what is underground, but is what is above ground. Executives
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  Speaker 3: are going to need to know who is going to
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  Speaker 3: be in charge and not what Rubio or Trump is
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  Speaker 3: in charge, But who actually in Venezuela is in charge
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  Speaker 3: and who is going to be in charge six hours
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  Speaker 3: from today, six days from today, six months from today,
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  Speaker 3: and we don't know. I mean a lot of people
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  Speaker 3: I speak to in the oil market have a number
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  Speaker 3: of scenarios of how this plays out. We can see
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  Speaker 3: any time I couldeta. There are a number of permutations
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  Speaker 3: that everyone is looking at, and we get a bit
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  Speaker 3: of clarity on that. We are not going to see
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  Speaker 3: much action other than various speculative attempts to raise some money,
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  Speaker 3: see if we can grab something, et cetera, et cetera.
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  Speaker 3: But the oil is there, the geology is there, the
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  Speaker 3: reservoirs are there, and some of them are easier than others.
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  Speaker 3: There is low hanging fruit, quick winds, and there is
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  Speaker 3: things that they will take a lot of it for.
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  Speaker 2: And I'm just trying to get a sense of perspective.
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  Speaker 2: When you talk about they're now producing about one million,
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  Speaker 2: but it was moved through three and a half billion
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  Speaker 2: in the heyday. Saudi production is what day or nine?
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  Speaker 3: Yeah, it's about nine. It's a big country. We need
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  Speaker 3: to also take in account one thing, and is we
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  Speaker 3: are not back in the nineteen nineties in terms of
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  Speaker 3: what the incremental oil demand growth is going to be.
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  Speaker 3: This is a limited market, so the oil market doesn't
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  Speaker 3: need perhaps two or three million borrows a day of
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  Speaker 3: incremental Venezuela and oil. A few hundred thousand borrows a
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  Speaker 3: day of incremental oil from Venezuela over the next ten
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  Speaker 3: years could make a difference of where the price is
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  Speaker 3: just because the growth in oil demand over the next
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  Speaker 3: few yes, particularly the moment that we reach nine twenty thirty,
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  Speaker 3: changed materially from what we have been used to. Whether
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  Speaker 3: do you believe peakcoil or not? On demand growth is
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  Speaker 3: going to low a lot.
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  Speaker 2: Okay, Chris Javier was saying rightly that it's going to
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  Speaker 2: matter an awful lot to these oil companies. Even though
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  Speaker 2: they're getting assurances from the president and one gathers meetings
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  Speaker 2: with the Energy Secretary and other things, it does matter
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  Speaker 2: who they think is going to be in charge in
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  Speaker 2: a few weeks or a few months or even a year.
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  Speaker 2: Do you think that if your former colleagues in the
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  Speaker 2: State Department know who's going to be in charge or
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  Speaker 2: even what the policy is in Venezuela.
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  Speaker 5: I do think that there has been a lot of
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  Speaker 5: thought that's gone into Postmaduro Venezuela, But as Javier pointed out,
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  Speaker 5: the situation is very fluid, and Moduro's deputy, Dulcie Rodriguez,
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  Speaker 5: is in a very tight spot having to placate the
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  Speaker 5: United States while managing factions on the ground. Also, Javier
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  Speaker 5: pointed out, it's going to take a lot of invest
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  Speaker 5: into Venezuela to really materially change the oil production in
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  Speaker 5: the near term. There is some low hanging fruit, but
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  Speaker 5: we're in a very low oil price environment right now,
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  Speaker 5: and for these companies to take these sorts of risks
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  Speaker 5: in the country, I think they're going to want to
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  Speaker 5: have a better sense of where things are in terms
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  Speaker 5: of what the State Department knows. I think it's going
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  Speaker 5: to be very challenging. Clearly, the State Department and the
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  Speaker 5: Trump administration have decided that Vice President Delsea, now the
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  Speaker 5: acting ruler of Venezuela, is best positioned to ensure the
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  Speaker 5: country does not in the near term devolve into chaos.
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  Speaker 5: I think Trump is counting on leverage, but Rubia has
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  Speaker 5: obviously been speaking a lot about this in the past
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  Speaker 5: couple days. The blockade will still be in place. There's
• 14:45
  Speaker 5: the threat of additional potential military action if Rorigaz does
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  Speaker 5: not follow through on requests from the Trump administration, including
• 14:53
  Speaker 5: going after the drug trafficking, expelling Iranian and Colombian gangs
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  Speaker 5: from the country, and allowing infrastructure to come in. But
• 15:02
  Speaker 5: of course, if we do see something resembling a more
• 15:05
  Speaker 5: stable environment emerge over the next month or so, and
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  Speaker 5: perhaps a credible plan for a democratic transition, that might
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  Speaker 5: whet the appetite for US oil majors to make some
• 15:16
  Speaker 5: more solid commitments.
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  Speaker 2: I am interested because you were sitting inside various bits
• 15:20
  Speaker 2: of the foreign policy machinery of the US for so
• 15:23
  Speaker 2: many years. Is the State Department well geared to working
• 15:27
  Speaker 2: with companies to pursue US corporate objectives, which is clearly
• 15:33
  Speaker 2: going to be the case here. You're going to be
• 15:34
  Speaker 2: helping American oil companies find a way into Venezuela navigate
• 15:39
  Speaker 2: the difficulties. Is a good machinery for doing that in
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  Speaker 2: the State Department or elsewhere.
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  Speaker 5: So the State Department has obviously been hit with cuts,
• 15:48
  Speaker 5: like the rest of the administration. I will say that
• 15:52
  Speaker 5: what I see in the Trump administration right now is
• 15:56
  Speaker 5: a pretty unified approach delivering on what the president wants.
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  Speaker 5: The objectives are clear. At State, Yes, there are certainly
• 16:04
  Speaker 5: leaders with a lot of history working with companies. I
• 16:08
  Speaker 5: think Deputy Secretary Chris Landau is one of those. I
• 16:12
  Speaker 5: think Rubio is certainly in regular conversation with industry. Chris Wright,
• 16:17
  Speaker 5: the Secretary of Energy, comes from that world. Does the
• 16:20
  Speaker 5: State Department alone have this No, but we have other
• 16:23
  Speaker 5: agencies that can support. The US Export Import Bank, the
• 16:26
  Speaker 5: Development Finance Corporation doesn't necessarily have the resources to really
• 16:30
  Speaker 5: make a huge dent in the oil infrastructure needs. But
• 16:34
  Speaker 5: I do think that this administration is very much in
• 16:38
  Speaker 5: constant contact with industry, which does mark I think a
• 16:42
  Speaker 5: substantial departure from the previous administration. Obviously, the priorities were
• 16:47
  Speaker 5: different for that administration, so we'll see. But in the end,
• 16:51
  Speaker 5: these companies are going to have to make their own
• 16:52
  Speaker 5: decisions on how much and where to invest, and market
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  Speaker 5: conditions are going to be one factor. And then, of
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  Speaker 5: course Xavier said, what's happening on the ground in Venezuela
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  Speaker 5: is going to be very important to the path of
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  Speaker 5: investment that we see over the next twelve to eighteen months.
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  Speaker 2: Avier, we were talking earlier. I mean although it does
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  Speaker 2: seem to be all in line with the US policy,
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  Speaker 2: and that one can say there's a sort of consistency
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  Speaker 2: here in the US approach. But one thing that's missing
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  Speaker 2: is usaid. Would that be helpful right now?
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  Speaker 3: It would be massively helpful. I think that the State
• 17:37
  Speaker 3: Department is going to come to really not to use
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  Speaker 3: the State Department, but the whole US government is going
• 17:42
  Speaker 3: to come to me USA. The Venezuela is a hungry country.
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  Speaker 3: It has been a hungry country for a number of years.
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  Speaker 3: There are shortages of all kinds of basic staples and
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  Speaker 3: be able to parachute or these charts by poor and
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  Speaker 3: those famous bags that we have seen in other places,
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  Speaker 3: mostly in Africa and some places in Asia, the bags
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  Speaker 3: full of wheat or American food with American flag on
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  Speaker 3: the bags. I think it will go a long way
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  Speaker 3: to compensate for the capture of Maduro, even through Maduro loyalists.
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  Speaker 3: Is a bad business to try to do anything on
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  Speaker 3: a hungry country. We have seen that that they're famous.
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  Speaker 3: Says in the commodities industry that revolutions start with the stomach,
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  Speaker 3: with an anti stomach, and I think that's the part
• 18:28
  Speaker 3: of the American diplomatic apparatus that I'm missing now the most.
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  Speaker 3: It could come very handy whether the current administration of
• 18:36
  Speaker 3: what we think is administery and Venezuela will admit accept
• 18:39
  Speaker 3: that that does handouts. It's a question matter. I don't know,
• 18:42
  Speaker 3: but I think that it will be good for the
• 18:44
  Speaker 3: US to be able to provide basic aid to the population.
• 18:48
  Speaker 3: Let's not forget that about a third of Venezuela population
• 18:51
  Speaker 3: has fled the countries. About eight million people have left
• 18:54
  Speaker 3: the country over the last few years.
• 18:57
  Speaker 2: It would be good for US farmers as well, or
• 18:58
  Speaker 2: a few of them.
• 18:59
  Speaker 3: And it's always good business for the US farmers, which
• 19:01
  Speaker 3: are facing low prices for the commodities. So it has
• 19:04
  Speaker 3: many wins. And particularly you are thinking of the midterms,
• 19:08
  Speaker 3: buying from farmers in the Midwest maybe one thing that
• 19:10
  Speaker 3: it could facilitate trums also electoral objectives.
• 19:14
  Speaker 2: We broaden it out again in the spirit of this
• 19:17
  Speaker 2: sort of accumulative tendency that the administration has expressed. If
• 19:22
  Speaker 2: you're just thinking in terms of valuable commodities in today's world,
• 19:26
  Speaker 2: and then you think of the countries or territories that
• 19:30
  Speaker 2: have been mentioned as possible targets for President Trump. How
• 19:35
  Speaker 2: would you rank them? How does Greenland look versus Cuba?
• 19:38
  Speaker 2: If we're really thinking in those terms, you.
• 19:40
  Speaker 3: Are thinking only in terms of natural resources or commodities.
• 19:43
  Speaker 3: I mean, Greenland doesn't rank unless you are in the
• 19:45
  Speaker 3: business of buying a lot of eyes on a snow.
• 19:48
  Speaker 2: I remember you pointing this out to people previous.
• 19:50
  Speaker 3: Are not that many. Yes, there are some deposits of
• 19:54
  Speaker 3: rare arth that they will require quite a lot of investment,
• 19:56
  Speaker 3: but they are not that material in the greatest scheme things.
• 20:00
  Speaker 3: I mean, you are after red Earth. You are much
• 20:02
  Speaker 3: better use trying to develop the resources that they are
• 20:04
  Speaker 3: already in the United States, in Canada where on red albs,
• 20:08
  Speaker 3: and in Australia. Cuba has on notatur resources, has used
• 20:12
  Speaker 3: to have a booming sugar industry. It has on Nicol,
• 20:15
  Speaker 3: which is also valuable today, but Nichol.
• 20:17
  Speaker 2: It's one of the biggest producers.
• 20:18
  Speaker 3: Yeah, it used to be a big producer. It has
• 20:20
  Speaker 3: come down significantly just because mismanagement, etceterac. But I don't
• 20:24
  Speaker 3: think that either Greenland or Cuba are interesting for not
• 20:28
  Speaker 3: what resources perspective, Chris.
• 20:30
  Speaker 2: I mean, obviously, the Secretor of State does have a
• 20:31
  Speaker 2: particular interest in Cuba, and there's a sense that he's
• 20:36
  Speaker 2: been very influential in this policy. But it's also true
• 20:41
  Speaker 2: that the way he describes the policy and the way
• 20:43
  Speaker 2: that the president describes the policy is pretty different. I'm fascinated,
• 20:47
  Speaker 2: given that you've were sitting in his state department for
• 20:49
  Speaker 2: a while, how you view his influence right now, because
• 20:54
  Speaker 2: he really does seem to be saying things that are slightly
• 20:56
  Speaker 2: different from the president.
• 20:58
  Speaker 5: It's been striking to me watching how Rubio has evolved
• 21:01
  Speaker 5: over the past year in this administration. I remember meeting
• 21:04
  Speaker 5: with some European diplomats during the transition last winter who
• 21:09
  Speaker 5: had been at a briefing from a MAGA aligned think tank,
• 21:12
  Speaker 5: and we're told that Rubio would last a couple months
• 21:14
  Speaker 5: and he was only appointed to free up his Senate
• 21:17
  Speaker 5: seat for somebody who would be more aligned with the president.
• 21:20
  Speaker 5: Obviously that has not come to fruition. I think Rubio
• 21:23
  Speaker 5: has been very effective. He's executed on the president's agenda,
• 21:26
  Speaker 5: He's proven himself to be loyal, he hasn't embarrassed the president,
• 21:30
  Speaker 5: and there's been a lot of missteps from other cabinet secretaries.
• 21:33
  Speaker 5: But I think more importantly, he hasn't really made news,
• 21:37
  Speaker 5: he hasn't taken the spotlight away, and I think that
• 21:39
  Speaker 5: he's been able to consolidate control over a lot of
• 21:44
  Speaker 5: the foreign policy vision of this administration, the National Security Strategy,
• 21:48
  Speaker 5: which was released in early December, Western Hemisphere, Front and Center.
• 21:52
  Speaker 5: That's obviously been a focus of Mark or Rubio's career
• 21:54
  Speaker 5: from the time he was in the Senate. He's Cuban,
• 21:57
  Speaker 5: and he's had a very close connection a strong understanding
• 22:01
  Speaker 5: of Latin America. He may not be the sort of
• 22:04
  Speaker 5: insider still with Trump, but he's also made some really
• 22:07
  Speaker 5: good and strategic alliances with people like Stephen Miller and
• 22:11
  Speaker 5: been able to frame his policy preferences in the context
• 22:15
  Speaker 5: of things like immigration and cracking down on drug trafficking.
• 22:18
  Speaker 5: And I think that's been quite effective in helping to
• 22:21
  Speaker 5: direct the focus of this administration. So I see a
• 22:25
  Speaker 5: lot of fingerprints from Rubio on the actions so far
• 22:29
  Speaker 5: and to Trump's language versus actions. I have to always
• 22:33
  Speaker 5: remind myself every morning to not take them literally. I
• 22:36
  Speaker 5: think if you look at this operation, it has and
• 22:39
  Speaker 5: is being framed by other administration officials as a law
• 22:42
  Speaker 5: enforcement operation. You know, they used FBI officials to come
• 22:46
  Speaker 5: and arrest Maduro. It's similar to the arrest of Noriega
• 22:50
  Speaker 5: in nineteen eighty nine in many ways. I think you
• 22:53
  Speaker 5: could point to the invasion of Iraq in the early
• 22:55
  Speaker 5: two thousands as much more of a departure from the
• 22:58
  Speaker 5: rules based order as compared to this operation in Venezuela,
• 23:03
  Speaker 5: and Rubio has been very careful in the way he's
• 23:05
  Speaker 5: been describing this, and for that reason Bloomberg on our
• 23:08
  Speaker 5: geoeconomics team, we don't think we're necessarily going to see
• 23:12
  Speaker 5: a move to one of these other countries that has
• 23:14
  Speaker 5: been mentioned, whether it's Greenland, Colombia, Cuba, Iran, Mexico. The
• 23:20
  Speaker 5: list is probably growing as we're speaking. In the case
• 23:23
  Speaker 5: of Cuba, though, I think Rubio certainly has his eyes
• 23:26
  Speaker 5: set on Cuba and he would love to see regime
• 23:29
  Speaker 5: change in Cuba. I think he's cautious, though, and right now,
• 23:33
  Speaker 5: the trajectory in Cuba, as Javier can probably speak to,
• 23:35
  Speaker 5: is not great. Cuba was heavily dependent on Venezuela and oil,
• 23:39
  Speaker 5: not just for energy, but diverting some of that oil
• 23:42
  Speaker 5: for hard currency to China, and so they're in a
• 23:45
  Speaker 5: very tough spot. Cuba's other traditional allies don't appear to
• 23:49
  Speaker 5: be stepping up in any real way at the moment,
• 23:51
  Speaker 5: and I think what we're going to see from this administration, well,
• 23:55
  Speaker 5: nothing is certain but a wait and see for a
• 23:57
  Speaker 5: little bit, and that makes sense. They have their hands
• 24:00
  Speaker 5: fall then as well as going to be a real
• 24:02
  Speaker 5: challenge over the next couple months.
• 24:04
  Speaker 2: Okay, So I'm going to channel the more political parts
• 24:08
  Speaker 2: of the administration now and think about whether we think
• 24:11
  Speaker 2: in ten months time that this operation has helped or
• 24:16
  Speaker 2: hurt the president in terms of his mid term prospects.
• 24:20
  Speaker 2: And it seems to me that there's kind of two
• 24:23
  Speaker 2: big things that would come out of that. My first
• 24:25
  Speaker 2: question to you, Chris is what are the chances that
• 24:28
  Speaker 2: he can keep this quote unquote control over Venezuela, this
• 24:33
  Speaker 2: operation virtual, Because one gets the sense that what would
• 24:37
  Speaker 2: be costly to him is this sense of a foreign entanglement,
• 24:40
  Speaker 2: which was a quagmire that was involving casualties, boots on
• 24:43
  Speaker 2: the ground. If it's just asserting control with very little
• 24:48
  Speaker 2: physical manifestation in the country, then that seems, you know,
• 24:51
  Speaker 2: for his base, that would seem to be much safer.
• 24:54
  Speaker 2: Do you think he can keep this virtual.
• 24:56
  Speaker 5: I don't know, but I think there's other options. I mean,
• 25:01
  Speaker 5: Erik Princess, for instance, has talked a lot about Venezuela,
• 25:04
  Speaker 5: and he's close to certain individuals and the administration. That's right, Yeah,
• 25:09
  Speaker 5: and so there are other private military contract options. I
• 25:12
  Speaker 5: think that would be really challenging in terms of the
• 25:16
  Speaker 5: view of the US among other parts of the world
• 25:19
  Speaker 5: and in the region especially. But I don't predict US
• 25:23
  Speaker 5: having boots on the ground in Venezuela in the near term.
• 25:26
  Speaker 2: Okay, but of.
• 25:27
  Speaker 5: Course things could, things could be chaotic potentially.
• 25:31
  Speaker 2: It's not a quo mile. Can he deliver cheaper oil
• 25:33
  Speaker 2: out of this, because that would be the other cheaper
• 25:35
  Speaker 2: gas price has already gone down. He's already very proud.
• 25:37
  Speaker 3: I think that he is almost there. I mean, you
• 25:39
  Speaker 3: look at the price that really matters for the next
• 25:42
  Speaker 3: midterne election. That's not the price of oil. It's the
• 25:44
  Speaker 3: price of gasoline. At the pomp the average price in
• 25:47
  Speaker 3: the United States is about two dollars on eighty tens
• 25:50
  Speaker 3: per gallon. If Trump can get down that to two
• 25:55
  Speaker 3: and a half dollars per gallon, he's there. I don't
• 25:58
  Speaker 3: think that he needs much lower price. Perhaps it needs
• 26:01
  Speaker 3: a bit of a drop in refining margins, but the
• 26:04
  Speaker 3: world's economy seems to be gearing towards a lower oil
• 26:08
  Speaker 3: price because things are slower in China, they are not
• 26:11
  Speaker 3: really picking up a lot in India, and the production
• 26:13
  Speaker 3: continues to boom everywhere. There are big question marks because
• 26:18
  Speaker 3: it's not just Venezuela. There are demonstrations in Iran as
• 26:22
  Speaker 3: we speak that we don't know where they're going to go.
• 26:24
  Speaker 3: And I think that you are in the oil market,
• 26:26
  Speaker 3: and I've been talking to a lot of traders over
• 26:28
  Speaker 3: the last few days. I mean a lot of them
• 26:30
  Speaker 3: were completely focused on Venezuela, but a number of them
• 26:33
  Speaker 3: were saying, don't lose sight of what's happening in Iran.
• 26:36
  Speaker 3: We don't know where the conversations between Ukraine and Russia
• 26:39
  Speaker 3: and the United States are going, and whether the sanctions
• 26:41
  Speaker 3: are going to be lifted at any point in the
• 26:43
  Speaker 3: oil market. If I have learned anything in the last
• 26:45
  Speaker 3: twenty five years, and suturally there was a good reminder,
• 26:48
  Speaker 3: is that anything could happen at any point. I was
• 26:50
  Speaker 3: not really expecting to wake up and you know, visiting
• 26:53
  Speaker 3: my relatives in Spain to the news of my father
• 26:56
  Speaker 3: saying the Americans are bombing Kracas.
• 27:00
  Speaker 2: Anything can happen. Have you a blast, Chris Kennedy, Thank
• 27:02
  Speaker 2: you so much. I was fascinating.
• 27:04
  Speaker 3: Thank you, Thank you, Stepani.
• 27:16
  Speaker 2: Thanks for listening to Trumponomics from Bloomberg. It was hosted
• 27:18
  Speaker 2: by me, Stephanie Flanders, and I was joined by Bloomberg
• 27:21
  Speaker 2: opinion columnist Javier Blast and Bloomberg geoeconomics analyst Chris Kennedy.
• 27:26
  Speaker 2: Trumponomics was produced by Samasadi and Moses and with help
• 27:30
  Speaker 2: from Amy Keen and special thanks this week to Rachel
• 27:33
  Speaker 2: Lewis Chriskey in Washington. The sound design was by Blake
• 27:36
  Speaker 2: Maples and Aaron Casper and Sage Bowman is Bloomberg's head
• 27:41
  Speaker 2: of podcasts. To help others find this show, please rate
• 27:44
  Speaker 2: it and review it highly wherever you listen