The New South American Calculus

By Vaibhav Tandon

Mao Zedong once warned that power grows out of the barrel of a gun. In recent decades, global institutions and markets that make kinetic interventions less common. But when those mechanisms fail, power will fill the void.

Venezuela offers a clear illustration of that dynamic. Markets and international sanctions punished the country, but did not bring down its regime. This led Washington to use force. While the political ramifications of President Nicolás Maduro's arrest are still not clear, the economic consequences are taking shape.

Venezuela sits atop the world's largest proven crude reserves, totaling over 300 billion barrels or about 17% of the global total. Despite that heft, the country now produces less than 1 million barrels per day (mbpd) of oil, down from nearly 3.5 mbpd (8% of global supply) in the late 1990s.

Venezuela's global economic footprint has shrunk in parallel. It now accounts for barely 0.1% of world gross domestic product (GDP), compared with roughly 1% in the 1970s. The country's GDP in 2025 stood almost 70% below its 2013 peak.