Bolivarian twilight: The recolonization of Venezuela

By Luís Bonilla-Molina

Published 2 June, 2026

First published at Phenomenal World.

As US planes, helicopters, and special forces stormed Caracas in the early hours of January 3, Vice President Delcy Rodríguez was nowhere to be seen. Rumor had it she was in Russia, though the Kremlin denied the claim. It was only after the withdrawal of US forces that she reappeared, demanding proof that President Nicolás Maduro was alive. The humiliation brought by Maduro’s capture quickly raised concerns about an eruption of internal conflict, along with speculation that the Revolution had been betrayed.

Hours later, when Donald Trump announced that the United States would henceforth “run Venezuela,” he was already in talks with cooperative authorities in Caracas. In contrast to the mass uprisings against the April 2002 coup orchestrated by the employers’ association Fedecamaras and opposition parties, the streets of the capital remained eerily calm. The silence was broken only briefly by a small, timid mobilization called by the ruling Partido Socialista Unido de Venezuela (United Socialist Party of Venezuela, PSUV) on January 4. The next day, Rodríguez was sworn in as acting president by extra-constitutional fiat. She wasted no time in describing Trump as a friend and partner; her call for sanctions to be lifted was justified in terms of accelerating bilateral cooperation. The Venezuelan government’s prior anti-imperialist rhetoric had vanished overnight. The priority, it seemed, was to rectify twenty-five years of estrangement between Washington and Caracas.

The US now appears to control all the major power blocs in Venezuela: the post-Maduro faction represented by Rodríguez, the right-wing grouping of former assembly member and steel-industry heiress María Corina Machado, and the centrist coalition behind former National Assembly Vice President Enrique Márquez. Venezuela’s new acting President has become the local enforcer of the US National Security Strategy and the Trump Corollary.

How can we explain this seismic reversal in Venezuelan politics, overseen by Maduro’s former right hand? Answers must be sought beyond the spectacular capture and imprisonment of Venezuela’s sitting president. The most recent reforms and realignments since January have served to strengthen an elite orientation to the US, but the conditions for today’s turn to Washington were set in place years before, with the transition from Chavismo to Madurismo. It was at this time that a recomposition of the country’s ruling elite under Maduro exacerbated the structural crises of Venezuela’s rentier development model. Much remains uncertain about Venezuela’s future but for now the revolutionary left, and its anti-imperialist positions, have failed to find popular resonance. We can now say definitively that after twelve years of Madurismo, the US invasion, and the Venezuelan government’s capitulation, the Bolivarian Revolution has come to an end.

Cycles of crisis

The present crisis originates in Venezuela’s oil-based model of capital accumulation. The importance of oil for every sphere of economic activity has generated what the Brazilian economist Celso Furtado in 1974 has called “underdevelopment with an abundance of foreign exchange”: a peculiarity of “the Venezuelan case.”1 This model reflects a persistent struggle for oil revenues, with dollars entering the country from crude oil sales and thereby stifling the productive apparatus. Profits are accrued not through the sale of goods and services, but through access to dollars — the exchange rate differential between the real value of foreign currency and the preferential price obtained by the bureaucratic and business elite.

Venezuela’s rentier state prioritizes imports over domestic production,2 generating massive revenues derived from external rents (oil royalties) and creating distorted economic patterns: exacerbated dependence on oil exploitation, weak incentives for productive diversification, clientelistic redistribution, and a culture typical of what the Venezuelan anthropologist and historian Fernando Coronil has termed the “Magical State.”3 The economist Asdrúbal Baptista has enumerated the main features of the Venezuelan model: deindustrialization, widespread corruption, rapid concentration of wealth, and cyclical crises of severe mass impoverishment.4

The origins of this form of rentier capitalism lie in Venezuela’s bourgeois-democratic revolution of 1958. Between 1942 and 1998, oil nationalism and anti-imperialism were constrained by a push for higher profit margins derived from oil rents. Oil exploitation during the Fourth Republic shaped what can now be termed the “old bourgeoisie,” whose emblematic figures were the so-called “twelve apostles”5 — the group of businessmen closest to the regime — coordinated through Fedecamaras and its satellites.

Rentierism proved successful during periods of rising oil prices, but it was devastating during cycles of falling oil prices. During the oil price boom of 1973 to 1978, Venezuelans experienced an illusion of upward mobility. From 1979 to 1984, however, the dynamics of decline became undeniable, with a contraction of real GDP per capita, inflation exceeding 7 percent, growing external debt, and an emerging fiscal deficit — with the total effect of dragging down the population’s living standards. The model finally collapsed in February 1983. What became known as “Black Friday” marked the onset of a structural crisis that had been building for more than forty years, and which then triggered a series of subsequent conjunctural crises, each with its own distinct character, which set the scene for Venezuela’s present situation.

Chavismo and the Bolivarian Revolution

Up to the arrival of the Bolivarian Revolution, the country’s politics were dominated by puntofijismo: the agreement on governance and presidential succession signed in 1958 by the Acción Democrática (Social Democratic), COPEI (Christian Democratic), and Unión Republicana Democrática (Liberal) parties. Chávez confronted the crisis of the rentier state by championing the national-popular cause. Stemming from two defeated coup attempts in 1992, Chavismo built a movement capable of mobilizing broad segments of the population against this settlement, rallying diverse political, economic, and social sectors behind a regional project with a domestic program that sought to establish a new model of social governance.6 This model would operate through negotiation and conciliation between dominant and subordinate social classes, aided by mediating civil-society bodies like trade unions, peasant organizations, and business associations. Government institutions were positioned as arbiters, guided by the caudillo at the top.

Chávez’s “polyclassism” was a variant of the Fordist models that have often sprung up in Latin America and the Caribbean, including that of Juan Perón in Argentina, Omar Torrijos in Panama, or Juan Velasco Alvarado in Peru. Chavez’s polyclassism went beyond tactical alliances between oppressed classes and aimed to integrate the national bourgeoisie into its governing framework — avoiding the kind of direct confrontation for which many in the socialist tradition had advocated. Following the 2002 military coup against him, Chávez sought to stabilize his power. On the one hand, he promoted participatory democracy through the 2005 call for “twenty-first-century socialism,” the “Communal State,” and a “new International.” On the other, he promoted the rise of a new Bolivarian bourgeoisie that would be aligned with his project, signaling a radical break with the traditional rentier governing class.

Unlike the Fedecamaras, which for decades had constructed a narrative around its class lineage, the post-2002 bourgeoisies was comprised of political figures aligned with the revolution, as well as individuals from its intimate circle. These were “down-to-earth” types who — seemingly overnight — had become wealthy owners of land, mansions, and banks. This new bourgeoisie camouflaged itself with the political and social codes of the Bolivarian Revolution, yet it increasingly felt the need to assert its position in the class hierarchy. This caste included figures like Arné Chacón (a former military officer linked to Banco Real and Baninvest during the 2009 banking crisis), Ricardo Fernández Barrueco (a former state supplier accused of being involved in the purchase of banks), Alejandro Andrade (the country’s former treasurer, who was detained in the US), Raúl Gorrín (a key business man involved in overcoming the 2002 oil strike), and Alex Saab (a prisoner in the US, repatriated to Venezuela in a negotiation between Maduro and the Biden administration).

The emerging national bourgeoisie was distinct from its predecessor. It had greater access to institutional mechanisms for capturing oil revenues, and was closely linked to the military. The Chávez government aimed to ensure that the two new political projects — the development of the Bolivarian bourgeoisie and the path to twenty-first-century socialism — could continue to coexist, even if the balance was inevitably precarious. The task became much more difficult in 2009, when a banking crisis revealed the extent of bank ownership among important figures from the Chavista camp and clarified why elements of the bureaucracy had a vested interest in opposing the expansion of popular power through the communes.

On the international stage, Chávez advocated the emergence of a new multipolar and decentralized world order. His continental leadership succeeded in building a coalition of regional forces that defeated the Free Trade Agreement of the Americas (FTAA) in 2005. In this, the Caribbean Community (CARICOM) played a pivotal role, especially thanks to Cuba’s subregional influence. Venezuela began supplying the oil necessary for Cuban survival in exchange for cooperation in education and health, as well as in the military and intelligence spheres, creating a strong regional partnership that Washington soon became determined to undermine.

Maduro comes to power

Madurismo was the outcome of a sudden and destabilizing event: the death of Chávez in 2013. Unlike his predecessor, Nicolás Maduro was no hero. He had not been part of the military leadership, had never led a significant workers’ struggle, and had never been recognized as a leader by the main centers of power. It was precisely because of his somewhat apolitical profile that Maduro was thought to be the ideal inheritor of the polyclassist system. Lacking any preexisting networks, he was forced to construct new alliances at a rapid pace, relying on figures like Cilia Flores, the Rodríguez siblings, Diosdado Cabello, and Padrino López to strengthen his authority. At the same time, he removed from government all figures in the PSUV who were seen as attached to Chávez’s multi-class national-popular project. The result was a regime that brought together powerful figures from the political, media, and economic spheres who were committed to a reconstitution of the Venezuelan elite.

Maduro lacked the political strength or ideological will to maintain the balance between the two power blocs that emerged out of the uneven and combined development of the Bolivarian Revolution. Instead, he dismantled the agenda of twenty-first century socialism based on community councils, worker-owned factories, cooperatives, and participatory democracy, and focused his energy on consolidating elite support through a revival of the rentier model. The construction of this new governing bloc represented a final break with Chavismo. It guaranteed elite access to oil revenues and thereby opened up possibilities of collaboration with the traditional bourgeoisie. In 2014, when a drop in oil prices made it impossible to sustain the existing exchange-rate scheme, the price of the dollar surged and unleashed runaway inflation that caused a significant decline in the population’s purchasing power. Declining resources exacerbated the problem, shifting the economic burden onto the population. Then, the following year, Obama declared Venezuela a threat to US national security, which allowed Trump to impose unilateral coercive measures during his first term. This increased the pressure on Maduro to rebuild the economic relationship between the old and new bourgeoisie. Delcy Rodríguez became the unifying figure among these various elite factions, helping to broker a compromise between them.7

The inter-bourgeois agreement was articulated in the 2022 public reconciliation between the new Bolivarian bourgeoisie and the Fedecamaras employers’ association. Yet this was not a simple process of reconciliation. The government’s aim was, rather, to co-opt a significant section of political representatives of the ancien régime and the opposition leadership, while crushing the more implacable ones. Amid the devastating impact of US sanctions — collapsing oil production, the sale of oil at near production cost levels, financial and commercial isolation — Maduro passed legislation limiting political freedoms and took legal action against right-wing and centrist opposition parties. He also used the civic-military-police alliance to suppress the street uprisings known as “La Salida,” led by Leopoldo López, Antonio Ledezma, and María Corina Machado in 2014. These were followed by subsequent waves of protest: against shortages in 2015, against the suspension of the recall referendum in 2016, and against the launch of the new constituent assembly in 2017. The unrest resulted in more than 160 deaths, mostly among young people.

US sanctions were also used to justify Maduro’s IMF-inspired structural adjustment program in 2018. Trade union organization was restricted, wages were standardized downward, and all left-wing parties were taken over by ad hoc leaders loyal to the government. With this scheme, Maduro tried to demonstrate to the old bourgeoisie and the ruling elite in the US that, unlike Chávez, he was willing to use a firm hand not only against his right-wing opponents, but also against workers and the left, using the institutional means at his disposal to limit their capacity for political action.

The downfall

In the 2024 presidential elections, Maduro disqualified Machado, along with all other opponents who might have removed him from Miraflores. Crackdowns on the media intensified, and repressive legal instruments like the “Law Against Hatred” were introduced. Candidates’ freedom of movement within the country was restricted, with the most violent parts of the repressive apparatus kicking into gear. Only in a scenario of high abstention could Maduro have had a real chance of winning, yet the official results indicated that 12,386,669 citizens had voted. The government had resorted to outright fraud.

The election represented a forced agreement among the various factions of the Venezuelan bourgeoisie. Machado was seen as a loose cannon who threatened oil profits and therefore could not be allowed to win. This period represented the decline of electoral democracy and the escalation of authoritarianism, with more than two thousand political activists jailed in just a few months.8 Madurismo gradually evolved into a sui generis breed of Bonapartism, guaranteeing the various elite factions the continuity of the rentier profit model. Yet, crucially, it failed to correctly assess either the character of the second Trump administration or the role of energy in the reconfiguration of the world order: two lapses which set the stage for its downfall.

During the Biden administration, the Maduro government moved toward a stabilization agreement with the US — only for Trump’s second administration to tear it up again. Driven by a deep ideological investment in anti-communist regime change and a desire to demonize Venezuelan migrants as part of its domestic immigration crackdown, in September 2025 the US imposed a naval blockade in the southern Caribbean. This prompted Maduro to accelerate his efforts to reach a conciliatory agreement with the Trump administration. Yet he overplayed his hand, failing to realize the extent to which he could be felled by the US President’s lust for media spectacle — what Adam Tooze aptly describes as “cosplay resource imperialism,” carried out more for the news cameras than for the resources themselves.

In trying to appease the Chavista base and obscure his rupture with the foundational promises of the Revolution, Maduro began to engage in rhetorical escalation with Washington: mocking Trump, insisting on the defense of national sovereignty, and invoking the legacy of Chavismo. This pushed the notoriously volatile Trump toward the decision to authorize the January 3 assault. The ease with which it was carried out has led to reasonable speculation that an agreement between Venezuela and the US had already been reached — with high-ranking Venezuelan officials collaborating with counterparts in the Southern Command, the State Department, and the CIA. Certainly, the immediate détente between the two countries in the wake of the kidnapping suggests that a number of conditions had been put in place beforehand. But this agreement between the US and the Madurista government was made without the figure of Maduro himself.

A Trumpist recolonization

The US assault has a regional logic. Washington has been increasingly concerned about the volume of Chinese investment in Latin America, estimated by the UN Economic Commission for Latin America and the Caribbean (ECLAC) at approximately $650 billion. Trump’s National Security Strategy identified Venezuela not only as a geostrategic priority but as a clear opportunity to advance regional recolonization. The country that championed the Bolivarian Revolution also boasts the world’s largest proven oil reserves, gold and rare-earth deposits, and one of the planet’s most significant reservoirs of biodiversity and water. The onset of the US blockade in the Southern Caribbean beginning in August 2025 eroded regional alliances within organizations such as the Community of Latin American and Caribbean States (CELAC) and the Bolivarian Alliance for the Peoples of Our America agreement (ALBA).9

On January 7, US Secretary of State Marco Rubio announced a three-phase strategy for the Venezuelan transition. First, stabilization: guaranteeing that oil supplies are not disrupted by the turbulence of a potential social conflict. To that end, Trump and his team have demanded the release of political prisoners, the creation of political and legal conditions for the return of exiles, and the enactment of legal reforms guaranteeing legal security for foreign investors. The second phase is economic recovery and reconciliation. It seeks to revive the economy by opening the energy market to transnational oil companies and other foreign capital interested in exploring new opportunities for extractivism: gold, rare earths, and the biodiversity market. The third phase is political transition. It aims to consolidate structural reforms — the legalization of political parties, transparency, and freedom of the press, and the construction of a new National Electoral Council. The position of the Venezuelan ruling elites in this new political constellation is yet to be determined.

There is, however, a fundamental tension between the national rentier model represented by Madurismo and the transnational economic model that the US intends to implement. Rodriguismo appears to want to bridge the two.

Among Bolivarian revolutionaries, Delcy Rodríguez was long known as a radical. Her career as a bureaucrat began in 2003, when she became director of international affairs at the Ministry of Energy and Mines. Despite having served as head of Hugo Chávez’s office, she never earned the leader’s confidence. It was only after Chávez’s death and with Maduro’s presidency that her star began to rise, with a post at the head of the Ministry of Communication and Information (2013–14) followed by a post at the Ministry for Foreign Affairs (2014–17). Her anti-diplomatic and confrontational style on the international stage masks what has been described as a more pragmatic, dealmaking approach behind the scenes.10

Now, Rodríguez’s outlook on the rearrangement of domestic political power is gradually coming into focus. The removal of Padrino López from the Ministry of Defense — a position he held since 2014 — and the appointment of General Gustavo González López, who was tasked with receiving the CIA director, signal an intention to weed out any elements in Venezuela’s governing caste that might be reluctant to accept full-scale capitulation to the US. In the last two months, the faces of uniformed military officers — emblematic of the post-2002 realignment — have practically disappeared from official addresses. The head of the US Southern Command has effectively replaced Padrino López, the Bolivarian military high command, and the strategic operational command. The resignations of Attorney General Tarek William Saab and Ombudsman Alfredo Ruiz are also indicative of the dismantling of old loyalties. At the beginning of the year, the Minister for Health was replaced, and figures like Maduro’s former Deputy Minister of Sports, Alexander “Mimou” Vargas, were arrested.

Yet Rodriguismo’s attempt to build a purely patronage-based system of power, propped up externally by Washington, may not be enough to ensure its survival, given the new rulers’ relatively weak network of elites. The Rodríguez siblings’ capacity to lead a transition will likely require them to govern in a more pluralistic fashion, rather than further narrowing the inner circle of the governing caste. One figure who is well-placed to exploit this contradiction is Enrique Márquez of the Centrados party, who is promising national reconstruction and political consensus to a population that has grown weary of polarization.11

And yet this fragmentation poses problems for any challenge to the government. State control of political parties has largely severed their territorial ties and undermined their legitimacy. The traditional Venezuelan right has long been experiencing a crisis of credibility thanks to the functional co-optation of its leaders and its collaboration with the Maduro regime. Repression of mid-level and grassroots cadre has weakened Machado’s more intransigent Vente Venezuela party. Meanwhile, the PSUV has eradicated the possibility of an independent left.

Horizons

The violent undoing of Chavismo since January 3 has not unraveled the rentierism at the heart of Venezuela’s economy. Yet it has created a new set of perils. The government’s recent Hydrocarbons Law strips Venezuela of control over extraction and commercialization, allowing the US to become the principal seller of its oil, and giving Washington the right to determine both the percentage and allocation of revenues entering the country. The launch of the so-called Workers’ Constituent Assembly, meanwhile, seeks to advance the flexibilization and precariousness of waged work. Political prisoners have begun to be released with the passage of an Amnesty Law, while trade reforms have been announced to facilitate foreign investment and overhaul the legal framework that governs it.

This is an unprecedented set of counter-reforms that make the 1999 constitutional process seem timid by comparison. The red berets of the Bolivarian military are no longer seen in the Miraflores Palace. Instead, honors are bestowed on visiting officials like CIA Director John Ratcliffe, Southern Command Chief General Francis Denovan, and Energy Secretary Chris Wright, who stride through the halls like the country’s new sovereigns.

What will be decisive for the fate of US imperial strategy is its understanding of the vulnerabilities of rentierism. Changing the figures at the helm of the government — and even its ideological orientation — does not guarantee Venezuela’s governability, much less the United States’ project to gain control over its energy and mineral reserves. Chávez’s polyclassist project, combining rentierism with popular participation, had formed the basis of Venezuelan governance for decades. Now, in this emerging conjuncture, rentier profits will likely be disrupted by the introduction of global capital. This risks putting the new Venezuelan bourgeoisie under severe pressure, while further impoverishing the popular classes who desperately need higher wages. (The labor movement has already reached a unified agreement to push for better pay and greater freedoms this year.) We may therefore see renewed unrest at both the elite and mass levels.

The Bolivarian Revolution is dead, but the yearning for structural change is not. The abrupt shift to colonial power relations that began on January 3 represents a culmination of longstanding shifts in Venezuela’s ruling class. As such, forging a political response that overcomes this model of accumulation and reconstructs a viable model of sovereignty represents the great collective challenge. But will this be possible with the loss of the Republic and the onset of the colonial establishment?

• 1

  Celso Furtado, Essays on Venezuela: Underdevelopment Amid Abundant Foreign Exchange (Brazil: Editorial Lumen, 2008).

• 2

  Hossein Mahdavy, “The Patterns and Problems of Economic Development in Rentier States: The Case of Iran,” in Studies in the Economic History of the Middle East, ed. M. A. Cook (London: Routledge, 2004).

• 3

  Fernando Coronil, The Magical State: Nature, Money, and Modernity in Venezuela (Venezuela: Ediciones Alfa, 1997).

• 4

  Asdrúbal Baptista, El relevo del capitalismo rentístico. Hacia un nuevo balance de poder (Venezuela: Ediciones Polar, 1997).

• 5

  The twelve apostles were denounced by the leftist intellectual and politician Domingo Alberto Rangel and include Gustavo Cisneros, Lorenzo Mendoza Fleury, Eugenio Mendoza, Diego Cisneros, Ricardo Zuloaga, and Miguel Ángel Capriles, among others.

• 6

   Luis Bonilla-Molina, La historia de la Revolución Bolivariana (Venezuela: Ediciones MinCi, 2005).

• 7

  This initiative bore fruit beginning in 2021, when Rodríguez was invited as a special guest to inaugurate the 77th Annual Assembly of the Fedecamaras. Fedecamaras led the 2002 coup d’état and placed its then-president, Carmona Estanga, at the head of the brief “national salvation” government, whose decree of establishment was signed by María Corina Machado. 

• 8

  According to figures from the Venezuelan Penal Forum, there are currently some 644 political prisoners in jail. However, at the grassroots level, there is talk of three categories of detainees imprisoned for expressing opinions or participating in anti-government demonstrations, whose numbers could reach several thousand: imprisoned politicians, citizens jailed for political views, and imprisoned military dissidents.

• 9

  The government of Trinidad and Tobago made its territory available for military operations prior to the January 3 attack, which terminated its agreement for the supply of Venezuelan gas.

• 10

  That is why it was surprising that Rodríguez was the driving force behind the $500,000 donation — from Citgo — made by the Venezuelan government in 2017 to help cover the costs of Donald Trump’s first presidential inauguration. Some critics believe that the good relationship between Delcy Rodríguez and Donald Trump began to take shape at that time. During the Biden administration, she served as the representative for the Boston Group, a network of US politicians and political figures, in this effort, while her brother and president of the National Assembly, Jorge Rodríguez, coordinated negotiations with the opposition facilitated by Norway, Mexico, the Vatican, and other members of the international community. 

• 11

  Donald Trump invited Márquez to his State of the Union address in 2026. Márquez is a recently released political prisoner in Caracas and was a presidential candidate in the 2024 elections, in which his party received less than 1 percent of the vote.

Bolivia into the abyss

By Angus McNelly

Published 2 June, 2026

First published at NACLA.

In May 2026, Bolivia once again found itself staring into the precipice of a deep economic and political crisis. Blockades from various social sectors shut down vital highways, leading to food and fuel shortages. The Bolivian Workers’ Confederation (COB), the Ponchos Rojos militant highland Indigenous movement, supporters of former Movement Towards Socialism (MAS) president Evo Morales, and residents from the city of El Alto all marched on La Paz, demanding the resignation of center-right President Rodrigo Paz, who was inaugurated last November. They were joined by cooperative miners, rural and urban teachers, and a campesino march that arrived from the Pando department in the northern reaches of Bolivia in early May. For their part, residents from the “rebel” city of El Alto shut down the major thoroughfares in and out of La Paz and the area around the gas refinery in Senkata.

The tell-tale sounds of dynamite explosions and petardos echoed through the mountainous bowl of La Paz as protesters battled with the police. The acrid smell of tear gas accompanied this soundtrack of protest as the economic crisis that began before the Covid-19 pandemic assumed political form.

Some on the international left hailed these protests as a renewed round of anti-neoliberal protests, a rerun of the 2000 to 2005 cycle of social movement protest that captured the hearts and minds of the anti-globalization movement. On the other side of the political divide, former conservative Latin American leaders, members of Donald Trump’s newly formed “Shield of the Americas,” and domestic right-wing figures decried the alleged overthrow of Bolivian democracy.

Unsurprisingly, neither of these two positions accurately reflect the on-the-ground reality of events. The blockades are not part of a wider national project, nor are they driven by a collation of social forces capable of leading and dominating. They represent the socio-political response to crisis in a context where large swathes of the Bolivian population lack representation in formal political institutions and social movements are fragmented. Let’s turn to each of these facets of the protests in turn.

Economic crisis

The economic crisis confronting Bolivia is due, in large part, to the collapse of state-led capital accumulation in the hydrocarbons sector. From 2014 onwards, a fall in international commodity prices, the exhaustion of the four mega gas fields underpinning Bolivian gas production, and the discovery of non-conventional hydrocarbon deposits in its two export markets, Argentina and Brazil, significantly reduced the fiscal revenue of the Bolivian state. The lithium sector has, thus far, failed to get off the ground, while agribusiness, the heart of elite capital accumulation in the eastern lowlands, does not produce dollar reserves for the Bolivian state to the same extent as hydrocarbons. Neither, for that matter, does the mining sector, which has much lower royalty and taxation rates both in the industrial segment led by transnational capital and in the small-scale cooperative segment.

The MAS government of Luis Arce Catacora (2020–2025) attempted to stave off inflation in the wake of the Covid-19 pandemic by spending its dollar reserves to maintain Bolivia’s de facto dollar peg. Hydrocarbon imports ironically ate further and further into the fiscal deficit thanks to fuel subsidies that proved politically impossible to remove. By last year, the country’s mounting economic crisis had crystallized in acute shortages of fuel and dollars, alongside the emergence of a black-market dollar exchange rate double that of the official rate.

While the dollar shortage has eased somewhat in recent months and the black-market exchange rate is much closer to the official rate of 7.90 Bolivianos to the dollar, inflation is eroding Bolivians’ purchasing power. The Paz government has attempted to introduce a series of measures to tackle the crisis. However, his government has proved incompetent, attempting to pass a raft of measures amounting to a neoliberal economic program in a single Supreme Decree 5503 with over 100 articles. The decree was littered with errors and omissions, and was eventually rescinded following weeks of protest at the turn of the year. In early 2026, the Bolivian state-controlled petroleum company (YPFB) imported cheap, contaminated gasoline that damaged engines, leading to a national scandal and angering social sectors dependent on motor vehicles for their livelihoods.

It is this threat to livelihoods and the rising cost of social reproduction that forms the backdrop of the unrest. Across a wide range of heterogeneous social sectors, Bolivians feel poorer. The high rate of employment in the popular economy where most Bolivians work means that the majority of the population is very exposed to the effects of the crisis. The scant social safety net provided by the Bolivian state also offers little respite from the mounting economic pain, further exacerbating precarity.

From economic to political crisis

The incompetence of the Paz government has been compounded by its class character. Last October’s elections went off relatively smoothly, without mass protests. However, this obscured cracks in the system. Several candidates that would have represented popular sectors, including Morales, were struck off the electoral roll and prevented from running. The collapse of the MAS in the wake of infighting between Arce and Morales left a political vacuum that split the popular vote. The result was a final round run-off between two candidates representing the traditional political elite, which forced popular sectors to hold their nose and vote strategically. Paz, the beneficiary of being the “least worse” candidate, took this as a popular mandate to govern for his class. Paz’s first act was to remove an inheritance tax, a move that benefited a small sector of elite and middle-class groups. His first port of call was Santa Cruz and a meeting with the conservative city’s Chamber of Industry, Commerce, Services and Tourism (CAINCO), signaling that this was a government for private capital.

As alteño sociologist Pablo Mamani astutely states, the Indigenous population “has already been part of the government; there is no going back… No government is viable without [them].” The exclusion of popular sectors and agendas from formal politics has curtailed representation and closed institutional fora where the polyphonic voices of Bolivia’s heterogeneous society are heard. In this context, the only outlet for political frustrations in times of crisis is the street. In a sense, it should come as no surprise that blockades and marches have become, once again, the modus operandi of popular politics.

Social fragmentation

This is, however, only half of the story. While a vibrant civil society, particularly in a society marked by de facto apartheid only three decades earlier, is an essential part of democracy in Bolivia, these protests do not represent a political flourishing or alternative project. On the one hand, the recent demonstrations do not represent a unified movement. They are more akin to a cascade of sectoral protests in the context of crisis.

The protests began with heavy transport blockading roads to demand a resolution to fuel shortages and the issues caused by poor quality gasoline. They were joined by peasant sectors, particularly the coca growers in the Yungas, some of whom extended their blockades after the government had reached a deal with their sectoral representatives until the government sent machinery to repave the roads. Urban teachers were the first working class sector to protest in La Paz over inflation and the falling purchasing power of their salaries. They were eventually joined by the COB, but only after weeks of protest. The COB quickly radicalized and moved from demanding higher wages to the president’s resignation. Cooperative miners have also been in La Paz protesting the lack of fuel and dynamite, and demanding a loosening of regulations around new gold mining sites and recognition as an economic, rather than social, sector.

Parallel to working-class and petit bourgeois sectors, Indigenous and peasant groups have been protesting the introduction in April of a new land Law 1720. This would have eliminated the land regularization process, making it harder to make small-scale individual and collective claims on territory and easier for wealthier landowners to transform small-scale property into medium property to increase their access to credit. Critics highlighted how the law would facilitate the concentration of landownership and rollback protections for collectively held land. A 28-day march from the northern Pando department garnered support from the “Tupak Katari” Federation of Peasant Workers of La Paz and was welcomed by the COB upon its arrival in La Paz. The march successfully forced the abrogation of Law 1720, but many of the protesters were not placated and called for Paz to go. Their efforts were undercut, however, when the Confederation of Indigenous Peoples of Eastern Bolivia (CIDOB) reached a separate agreement with Paz’s government over the law while the march was still underway, a move many participants viewed as a betrayal.

Many of the blockades have been concentrated in El Alto, with marches descending from the Ceja toward Plaza Murillo, the seat of government in La Paz. The military and police forcefully broke these blockades on May 16, using violence against protesters. The crackdown evoked memories of the state violence unleashed against alteños during the 2003 Gas War and following the November 2019 coup d’état. Yet, as in those earlier moments, residents of El Alto emerged from the dust of the military operation to reinstate the blockades autonomously. El Alto, initially conspicuous in its absence from the struggle, was the final actor to join the protests.

What this picture demonstrates is that, despite the threads that tie some of these movements together, they remain fragmented. There is no articulating demand like there was in 2003: no “nationalization of gas” or “constituent assembly” to channel popular anger. What about “resign” Rodrigo Paz? There is no political organization to direct popular rejection into a generative political force. Some of the sectors are not even what we would call progressive. The cooperative miners are stratified along class lines and responsible for socio-environmental destruction in the Amazonian regions of northern La Paz, the Beni and Pando. While it is difficult to generalize, their representative, the National Federation of Cooperative Miners (FENCOMIN), is pursuing sectoral interests above all else. As are the COB and the urban and rural teachers, although the latter have entered into alliance with the peasant movement. Moreover, other social actors are actively working to break the blockades, either through clearing the barriers in El Alto or marching in “defence of democracy” in Santa Cruz.

This fragmented political scene does not have a political force capable of replacing Paz — although it may prove capable of removing him. They have no proposals to confront the crisis, let alone resolve it. Without a unifying political project or an institutional vehicle, there is a real danger that these movements create a political vacuum they are unable to fill, paving the way for further instability. Reports that the CIA is working behind the scenes to capture Morales — who was once again targeted with an arrest warrant by the Paz government in early May — would prove to be a troubling development if confirmed. One possible exit to the current crisis is a military coup d’état, a scenario all too familiar in Bolivian history.

In short, the current protests in Bolivia are not a unified anti-neoliberal movement. They represent a disorganized, largely sectoral response to the current economic crisis. This fragmentation is largely due to the legacies of social movement incorporation and repression under the MAS governments, which used organizations supportive of its policies as an important political vehicle in civil society. The lack of Indigenous, working-class, or peasant representation in last October’s presidential elections closed off channels for popular discontent in formal political spheres. Popular anger and concern in the midst of crisis have, in this context, spilled over into the streets. As of yet, no new political movement has emerged capable of presenting a genuine political alternative. There is no MAS-equivalent able to capture and direct popular protest and no apparent exit to this political and economic crisis in sight.

Angus McNelly is a Lecture in International Development at King’s College London, UK. He is the author of “Now We Are in Power: The Politics of Passive Revolution in Twenty First Century Bolivia” (University of Pittsburgh Press, 2023), and is currently researching the longue durée of natural resource led development in Bolivia.

 

The Rule of One Price and the Donald’s ‘F’ In Energy Economics 101

by David Stockman | Jun 3, 2026 | Antiwar.com

The Donald seems to think he has all the time in the world to end the conflagration he and Bibi started in the Persian Gulf. Today he even told the mullahs to take a hike when they suspended any further negotiations owing to Bibi’s brutal strikes on civilian targets in southern Lebanon and continued violations of the so-called April 13th truce in the Persian Gulf.

Thus, regarding the meandering negotiations of the last 45 days, the Donald averred,

“I don’t care if they’re over, honestly… I really don’t care. I couldn’t care less,”

Brave words, these. And completely, totally and hideously out to lunch, too.

What’s actually just around the corner is an explosion of oil and related energy prices that will make the 1970s look like a Sunday school picnic, but here we have the Donald talking just plain barking idiocy about what comes next:

He also said he wasn’t worried about oil prices, which spiked following the report in Iranian state media that Tehran is vowing to “completely block” the Strait of Hormuz in addition to halting negotiations.

“I think the oil will be dropping like a rock in the very near, you know, the very near distance,” Trump said.

The president of the United States – the alleged sagacious businessman we have purportedly been waiting for – couldn’t be more sadly mistaken about something as basic and straight forward as the price of crude oil, its refined products and related energy commodities: To wit, the Donald is absolutely clueless about the cardinal fact that there is one world oil market and ONE PRICE the planet over.

And that’s regardless of the fact that the US is now a large scale net exporter of crude oil, refined products and nat gas liquids. In recent weeks, in fact, the Persian Gulf outages have caused exports to soar 12.9 mb/d, which is up nearly 20% from the 10.8 mb/d average during 2025. In all, current net exports of petroleum liquids at 5.7 mb/d leave not doubt that the USA is solidly “energy independent”.

But when it comes to the massive Persian Gulf supply outage of upwards of 13 million barrels per day – even after leakage thru both the Iranian and US Navy blockades – so what!

No matter the origin, the destination, the mode of transportation, the precise grade of the crude oil or the mix of refinery output from asphalt to diesel fuel, jet fuel, naphtha and gasoline, it all comes out in the same global supply/demand wash. To wit, traders, producers, consumers, middle men and speculators the world over everywhere and always are on the look out to buy something lower and sell it higher – even after dickering over price adjustments for grade, quality, transportation costs and other incidentals of commerce.

To be sure, there are some leads and lags in the process, but in today’s information rich and instantaneous world, it does not take long for a few missing barrels of supply from the massive petroleum basins upstream of the SOH to work their way through worldwide tradings systems and supply chains and show up at the diesel fuel pumps at corn planting time in Podunk, Iowa.

In fact, not withstanding so-called USA energy “dominance” the booming level of total liquids exports shown above, diesel fuel prices on the US domestic market are up by an average of +46% since December 2024, from $3.52 per gallon to $5.71 per gallon. And, as shown in the chart, the latter stands barely a plug nickel below the $5.76 per gallon peak price registered under Sleepy Joe in June 2022.

Needless to say, that upcharge of $2.19 per gallon does not fall silently upon the US supply chain silently like the proverbial tree falling in the empty forest. To the contrary, the US consumes about 170 million gallons of diesel fuel per day in various work fleets which criss-cross the warp and woof of the nation’s $30 trillion GDP. This includes:

• 15 million diesel-fueled work trucks, ranging from rancher pick-ups, to medium and heavy-duty class 4-8 freight haulers vehicles, to semi-trailer-trucks.
• About 2.0 million construction vehicles including excavators, bulldozers, loaders, backhoes, cranes etc.
• Around 4 million diesel-fueled farm tractors, self-propelled combines, balers, forage harvesters and similar equipment.
• Around 39,000 diesel-powered railroad locomotives and and 7,000 work boats operating on rivers, lakes and coastal waterways.

At length, of course, the $170 million per day diesel fuel cost increase incurred by these work fleets get passed on in part or while to customers and their customers down the line to the food aisles and furniture departments of Walmart superstores. In turn, some production doesn’t happen, some weaker links in the supply chains have their profit margins squeeze and some of this $1.2 billion per week up-charge for diesel fuel alone is hitting the bank accounts of retail consumers.

Accordingly, it can be well and truly said that the Donald is just plain out-to-lunch when he thinks that because the US is “energy independent” he therefore has all the time in the world to bring his insane war to a close. In fact, rarely has any POTUS been as dead wrong as is the Donald on the matter of Persian Gulf petroleum supplies:

“We don’t need oil, don’t need the Strait, don’t need anything.” (While touting inflated claims of U.S. production surpassing Russia and Saudi Arabia combined).

In this context, we have focused the case on middle distillates like #2 diesel fuel because it powerfully illustrates the principle of one market and one price in the global petroleum world. In this case, the twist is the broad range of refineries in the world produce vastly different slates of refined products, depending upon their configuration of process equipment; and also upon their input crude oil, which includes a huge range of global supplies ranging from high to low sulfur and heavy to light gravity or molecular structure.

Accordingly, the percentage of asphalt, middle distillates, jet fuel, gasoline, naptha and petrochemical feed stocks which come out of the refinery depend upon the crude oil grades and qualities going in and the configuration of high capital cost and energy intensive process equipment thru which the crude oil passes on its way to the refined product mix.

Needless to say, the Persian Gulf is huge supplier of a wide range of crudes and is also home to upwards of 9 mb/d of refinery capacity – again, with a wide range of process equipment and normal product slates.

Accordingly, the 14-20 mb/d supply outage has had a complex ripple impact on global crude oil and refined product markets. And one of these impacts has been to generate an especially dire shortages of middle distillates in both the Asian industrial economies, as well as Europe. These huge shortages – far higher proportionately for middle distillates than for crude oil overall – have then ricocheted through global markets, causing a huge increase in demand for US based distillate exports, which, in turn, has caused the US domestic diesel fuel price level shown above to rise in lockstep with the worldwide distillate price surge – “drill baby drill” to the contrary notwithstanding.

The graphics below provide a simplified version of the product off-take form the front-end or basic refinery distillation tower. This is just the first of a multiplicity of downstream processing units that then shape the mix final refined product, but the point here is that the crude oil input to the distillation tower will generate a wide range of product mixes depending upon its gravity level and other characteristics.

Under today’s refinery technology and economics, however, the product mix yielded from the distillation tower is just the first cut of the crude barrel. Increasing levels of costly downstream processing equipment and stages can alter the initial product yield substantially – again based on both capital investment, cost economics and crude oil characteristics. For instance, yields of gasoline arise from numerous process routes (#2 in green) as does distillate (#5 in blue).

These equipment and process streams, in turn, are optimized to what might be called “steady state” crude oil and product markets and relative pricing among these flows. But when normal crude oil and product flows are drastically and unevenly interrupted around the world, you get a mismatch between the steady state economics of a typical refinery and the altered relative price matrix after the disruption.

In turn, that triggers wide-ranging adjustment in product slates, equipment utilization and the mix of crude oil acquired by refiners and input into the refining run. In the macro sense, Mr. Market goes to work on a worldwide basis.

That is what has happened in the global crude oil and refinery markets in spades. The ordinary bafflingly complex flows of crude oil and products through the global refinery market have now been destabilized seven ways to Sunday. As a result, relative product supply imbalances have reached extreme levels, causing prices and shipment flows to shift in sweeping and unpredictable ways.

Still, what cannot be gainsaid is that all the while the rule of one price is generating constant arbitrage among market geographies and product segments in search of a new equilibrium. The problem, of course, is that a madman and passel of doofuses are calling the shots when it comes to the US War Machine and Washington’s diplomatic posture, meaning that the markets can’t settle down – even as the billiard table of war policy and faux diplomacy in Washington continues to vibrate it radically.

Illustration of the Complexity Of The Global Refinery and Product Markets

In short, the Donald/Bibi attack on Iran on February 28 triggered the most severe disruption to global refined product markets in modern history, particularly for middle distillates – diesel (gasoil) and jet fuel (kerosene). So while the crude oil flows through the Strait of Hormuz (SOH) have dominated headlines, there have been disproportionate impacts on middle distillates stemming from the unique configuration of Persian Gulf refineries and the above described physics of refinery crude yields.

So we next examine the structural differences between the Persian Gulf slates, which are now way short, and U.S. refinery slates – as well as the resulting divergence in distillate versus gasoline crack spreads and volumetric evidence of the disruption’s ripple effects.

Persian Gulf Refineries: Tilted Toward Middle Distillates

The Persian Gulf refineries process predominantly medium-sour crudes (e.g., Arab Light, Arab Medium, Basra grades) with API gravities typically in the 28–34 range and moderate sulfur content. These crudes naturally yield a high proportion of middle distillates include #2 diesel oil upon distillation.

Typical yields for Persian Gulf crudes include roughly 50–60% middle distillates (diesel, jet/kerosene, and gasoil) and only about 20% light ends (gasoline and naphtha), with the balance in heavier residues. Moreover, Gulf refinery equipment configurations amplify this bias. Thus, many facilities, built or upgraded for export-oriented markets in Asia and Europe, emphasize hydrocracking and catalytic cracking optimized for distillate maximization.

In contrast, average U.S. refinery slates lean toward gasoline. U.S. domestic production is dominated by light sweet crudes like WTI (API ~39–42, very low sulfur), which yield approximately 40% light ends (favoring gasoline) and only about 30–40% middle distillates. U.S. refineries, particularly on the Gulf Coast, blend light shale based crude oils with imported medium/heavy sours for optimization, but the overall product slate prioritizes gasoline (often 45–47% of output) over distillates (around 30%).

This mismatch is structural. Persian Gulf refiners are “distillate heavy” by crude chemistry and design, serving export markets hungry for trucking and aviation fuels. U.S. refiners are more “gasoline heavy,” reflecting strong domestic driving demand. When Gulf supply vanished, the world lost barrels disproportionately rich in the products already in tightest supply.

The Post-February 28 SOH Supply Disruption

Following the renewed breakout of kinetic warfare on February 28, 2026, Iranian actions and related hostilities effectively closed or severely restricted the Strait of Hormuz to most commercial traffic. Pre-crisis, the strait carried over 20 million barrels per day (mb/d) of crude and products – about one-fifth of global oil consumption. Post-disruption, loadings plummeted: crude and products through the strait fell from ~20+ mb/d to under 4 mb/d in March and lesser levels in April-May, with alternative routes (Red Sea, pipelines) unable to compensate fully.

In this context, refined product exports from the Gulf were hit hardest. GCC product exports dropped from ~5.0 mb/d in February to 2.1 mb/d in March, with diesel and jet fuel accounting for the bulk of the loss. GCC jet fuel exports to the EU alone fell about 70%, or 370,000 b/d.

Overall Middle East refining runs declined by ~3.1 mb/d in March, part of a global refining cut exceeding 5–6.5 mb/d. This was not merely a crude shock. The displaced crude was medium-sour or precisely the grade yielding the highest middle distillate volumes. Lighter replacement crudes (e.g., WTI, West African) available to other refiners produced more gasoline/naphtha but fewer distillates, exacerbating the imbalance.

Divergence in Crack Spreads: Distillates Surge Relative to Gasoline

The supply shock immediately widened distillate crack spreads (i.e. difference in cost per barrel of crude coming in and the weighted average value per barrel of the product slate coming out of the refinery) far more than gasoline cracks. In global benchmarks like Rotterdam and Singapore, diesel/gasoil and jet fuel premiums to crude skyrocketed in March. U.S. Gulf Coast (USCG) ultra-low sulfur cracks reached peaks around $65–86/bbl, while jet cracks were similarly elevated.

Gasoline cracks, by contrast, also rose (to ~$30–40/bbl range) but lagged significantly. This divergence reflected scarcity: middle distillates faced structural tightness (high export reliance from disrupted Gulf, limited spare capacity elsewhere, and inelastic demand from freight/aviation). Refineries worldwide “flipped the barrel,” maximizing distillate yields by adjusting cuts and conversion units – sometimes by 7–10% of the barrel – sacrificing gasoline output.

The result was a powerful price signal. Distillate cracks strengthened dramatically relative to gasoline, incentivizing complex refiners (especially USGC) to prioritize diesel and jet production for export. This dynamic persisted into April–May, with cracks easing from March peaks but remaining elevated.

Volume Impacts: Reduction from Gulf, Shortages Elsewhere, U.S. Export Surge

On a pre-crisis footing, Persian Gulf product exports (heavily middle distillates) exceeded 3–5 mb/d in key flows. Post-SOH restrictions and refinery outages, GCC refined product exports fell sharply, with diesel and jet comprising the majority of losses.

Europe and the Pacific Rim felt immediate pain. Europe saw GCC diesel/jet arrivals drop 70%, pushing inventories toward critical lows and prompting warnings of systemic jet fuel shortages by summer 2026. Airlines cut flights and raised fares; governments coordinated responses.

In Asia (Singapore hub, India, China), diesel and jet premiums surged, with some countries imposing export curbs or rationing. Pacific Rim buyers competed aggressively for alternative cargoes, diverting barrels from other routes.

The U.S. filled the void. USGC refiners ran at 94–96% utilization, optimizing for distillates. U.S. clean product exports hit records (~3.11 mb/d+ in March, with distillates surging). Distillate exports (diesel + jet) climbed to records of ~1.4–1.9 mb/d in peak weeks/months, up significantly from pre-war February levels.

Jet fuel exports alone more than doubled.As a share of combined U.S. crude and refined product exports, middle distillates rose markedly. Total U.S. energy exports reached all-time highs (~14 mb/d combined in peaks), with distillates commanding a larger portion amid global arbitrage to Rotterdam and Asia. This shift tightened some domestic balances but boosted refining

The Middle Distillate Disruption of 2026: Refinery Slates, Strait of Hormuz Shock, and Global Rebalancing

The sharp rise in global middle distillate crack spreads transmitted rapidly to U.S. refineries, demonstrating that the United States is not an “energy island,” despite the Donald’s constant claims emphasizing complete domestic self-sufficiency. As we have indicated, international product markets operate under the rule of one price, where arbitrage by traders, shippers, and suppliers quickly equalizes values across regions, with only limited time lags driven by freight rates and logistics.

When Rotterdam (ARA) and Singapore diesel and jet fuel cracks surged in March 2026 due to the loss of Persian Gulf supply, the premium created immediate incentives for U.S. Gulf Coast (USGC) refiners to divert barrels toward export. USGC low sulfer (ULSD) diesel cracks, which had been in the $15–25/bbl range pre-disruption, exploded to $60–86/bbl peaks in March before settling but remained highly elevated into May (diesel cracks still averaging well above $50/bbl in recent weeks).

Needless to say, this is not a case of abstract economics. Traders chartered tankers within days, loading ULSD and jet fuel in Houston and Corpus Christi for delivery to Europe and Asia. U.S. refiners, facing the same global benchmarks for products, adjusted operations accordingly: maximizing distillate yields, minimizing gasoline where flexible, and running at 94–96% utilization. The result was higher realized margins at the refinery gate for middle distillates, which in turn fed directly into domestic wholesale and retail prices. The U.S. cannot shield itself from global product pricing signals when it is the world’s largest exporter of refined fuels.

As we showed above, refinery-level distillate cracks and prices have translated into surging diesel fuel prices at the pump for American consumers and businesses. In the most recent weeks of May 2026, the U.S. national average on-highway diesel price hovered between $5.52 and $5.64 per gallon – roughly $1.50–$2.00 above typical pre-crisis 2025 levels and more than 60% higher year-over-year in some measures.

As we indicated, trucking, agriculture, and manufacturing—sectors heavily reliant on diesel – face immediate cost pressures that are now rippling through supply chains. Accordingly, this episode underscores a key reality that the Donald has missed entirely notwithstanding his endless braggadocio about his business acumen: to wit, in integrated global markets for refined products, a supply shock halfway around the world can elevate costs for U.S. drivers and businesses within weeks through arbitrage-driven flows.

Claims of total energy independence overlook this interconnectedness; while the U.S. is a net exporter, domestic prices for middle distillates remain tethered to international benchmarks. And, needless to say, when it comes to the business economics of energy, the Donald well and truly deserves an “F”.

David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution Failed, The Great Deformation: The Corruption of Capitalism in America, TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back, and the recently released Great Money Bubble: Protect Yourself From The Coming Inflation Storm. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.