By Nick Catoggio
Wednesday, September 02, 2026
I was surprised this week to learn that there’s an
“Office of Strategic Capital” at the Department of Defense. I was more
surprised to learn that it wasn’t created by the current administration.
“Office of Strategic Capital” sounds like an Orwellian
sobriquet for the sort of slushy sovereign wealth fund that many third-world
kleptocracies operate and that our third-world president covets. But it was Joe Biden’s
government, not Donald Trump’s, that launched the OSC in 2022. And it did so
for a legitimate purpose, “to issue and guarantee loans to companies developing
technology ‘vital’ to national security,” per Semafor.
The agency wasn’t designed to be corrupt, in other words,
but it was destined to become corrupt once its management passed from a
liberal regime to a postliberal one. Handing a pot of money with a hazy mandate
and a national security halo to an executive branch run by Trump is like hiring
the local mafia boss to run your charity. What do you suppose will happen?
What ended up happening is exactly what you’d expect would happen.
The OSC is in the news this week because of its role in
the new oil deal struck between the White House and its puppet government in
Venezuela. As Gil
Guerra explains elsewhere on the site today, “Venezuela has granted private
oil producer North American Blue Energy Partners (NABEP) 100-year concessions
to operate 17 fields that the White House says contain more than 65 billion
barrels of proven oil reserves. In return, NABEP granted Washington a 35
percent stake in its parent company, a guaranteed right to buy 20 percent of
production at cost, first refusal on the remaining 80 percent, and veto power
over every board appointment.”
Is any of that legal? You know the
answer to that too.
The arm of the federal government that will formally
acquire America’s 35 percent stake in NABEP is the Office of Strategic Capital,
which means the U.S. military is now—literally—in business with the oppressive
Chavista regime in Venezuela. “It’s basically like the IRGC model of national
defense,” Jonah Goldberg said of the deal on the latest Dispatch
Podcast, referring to the Islamic Revolutionary Guard Corps. “The IRGC
basically owns somewhere between 50 and 80 percent of the Iranian economy, and
that’s one of the reasons why it’s so corrupt and ass-backward now.” We’re now
following Iran’s lead in Venezuela.
To add to the stench: Alejandro Betancourt, the man in
charge at the NABEP, has benefited not once but twice from extraordinary
interventions by people around Trump to shield him from criminal probes. In
2019, according to the Washington Post, the Justice Department was
investigating him for money laundering and bribery; Betancourt had the good
sense to dial up presidential mega-crony Rudy Giuliani to lobby the DOJ on his
behalf, and was never charged.
Last year he became the target of a new investigation
into money laundering by Switzerland and was twice arrested in Great Britain,
where he lives. The Trump administration wanted him as a go-between with Delcy
Rodríguez’s new post-Maduro government in Venezuela, however, and lobbied the Swiss to let him travel internationally—replete
with personal pleas from then-Attorney General Pam Bondi and future Attorney
General Todd Blanche. Once again, with help from presidential allies,
Betancourt got his way.
Now he’s returned the favor with a sweetheart deal
entitling his American patrons to a century’s worth of Venezuelan oil. “Trump’s
favorite brand of partner combines disdain for the law and democratic norms
with an absolute dependence on Trump,” Jonathan Chait noted of the NABEP chief. That’s the sort of
person in whom the U.S. armed forces are now quite literally invested.
Will Americans still recognize their military two years
from now?
Luxury nationalism.
It’s hard to find something to say about the oil deal
that wasn’t said, and said better, by Guerra and the Dispatch Podcast gang.
But I’ll add this: More so than any other Trump gambit since the president
returned to office, it epitomizes “luxury nationalism.”
The hallmark of luxury nationalism, as I’ve argued,
is, well, luxury. Other forms of nationalism celebrate suffering and sacrifice
as the price of restoring the nation to greatness; Trump, a born con man,
naturally promised to achieve that restoration without those costs. Under his
leadership, nationalism would be easy.
And in Venezuela, it was.
Nicolás Maduro was removed in a military operation that
saw no American troops killed. His regime, led by Vice President Delcy
Rodríguez, meekly submitted to U.S. hegemony. Luxury nationalism “supposes that
the United States is so immensely powerful, economically and militarily, that
whether it prevails in any conflict is purely a matter of will,” I wrote last
week. It imagines that, “to return to national greatness, all we had to do was
elect a leader with the will to use national power to compel lesser rivals to
serve our interests. No sacrifice required.”
Venezuela’s submission was proof of concept—so much so,
it appears, that it enticed Trump into attacking Iran expecting the same
result.
What I didn’t say last week, but will say now, is that
luxury nationalism logically obliges Americans to adjust their expectations of
their government in certain ways.
One way, conveniently for the president, is to be more
tolerant of corruption. Trump could have tried to oust Maduro “by the book,”
sending the Marines into battle against Venezuelan forces. And sure, they would
have ultimately succeeded. But at what price? How much American blood would
have been spilled?
Instead, by conspiring with lowlifes like Rodríguez and
Betancourt to orchestrate a bloodless coup, the president achieved the same
result with no loss of life. He kept his promise of national glory without
sacrifice. Why should the Americans who voted for that question his methods?
The other shift in expectations has to do with the
concept of luxury. A population that’s been primed to expect easy, costless
national victories has also been primed, I suspect, to think of “victory” in
material terms more so than it used to. “We will liberate the people of
Venezuela from socialist tyranny” is an altruistic, even noble, battle cry—but
nothing about it says “luxury.”
“We will subjugate the socialist tyrants in Venezuela and
take their oil,” though? Now that’s luxurious. It’s not a coincidence that
Trump is forever justifying military policy in terms of tangible wealth that
might be extracted from the target, from land in Greenland to minerals in Ukraine to oil in Venezuela, Iraq, and even Iran. “The Defense Department, of all agencies, should not
be acting as a hedge fund unconstrained by law,” National Review recently declared, but that’s not
true under an ethos as rapacious as luxury nationalism. A lawless hedge fund
backed by tanks is basically the platonic form of the concept.
A leader who sold nationalism to Americans as something
that would make their lives more, not less, comfortable needs something to
point to as proof. A 35 percent stake in billions of barrels of Venezuelan
black gold is something he can point to. You wanted luxury? You got it.
Leverage.
When I say “you got it,” I’m speaking figuratively. The
reality is that the United States doesn’t have Venezuela’s oil yet and stands a
high chance of never having it.
That’s another point worth stressing about the deal. For
all the “America First” blowhardery in defense of the arrangement, the main
beneficiary is likely to be—surprise—Trump himself.
Read the fine print in the reporting on Venezuela’s
petroleum industry and you’ll find that it’s years away from being able to
produce crude in volume again, having long ago fallen into disrepair from
decades of socialist management. Even if it’s fixed up (at the American
taxpayer’s expense?), any benefit to the United States will start to accrue
only after the president has left office. Which is highly uncharacteristic
of him.
We’re talking about a guy who absconded with reams of
sensitive national security documents after he left office in 2021 and who intends to abscond with the private jet that the Qatari
government gifted to America last year in 2029. Whenever his official duties
lead to something valuable being placed in his hands, he expects to benefit
personally from it. How will he benefit personally from oil that will remain in
the ground until after he’s retired?
More to the point, how will he benefit from it if America
elects a Democrat in 2028? It’s unthinkable that a left-wing president would
leave the deal fully intact; a party hellbent on tearing down everything Trump
has touched, from the White House ballroom to ICE to a nine-justice Supreme Court, is unlikely to make an
exception for his postliberal shakedown of a poor, left-wing Latin American
country.
The oil deal might not survive his presidency, in which
case what’s in it for him?
What’s in it for him, of course, is influence. It’s not
the oil itself that’s valuable to Trump, it’s the political leverage he’s
gained from the rights to it. He now controls a sizable share of a very
lucrative international asset that might come to fruition if his party
remains in charge of the government in 2029. If you want a cut of it, you need
to come to him. And he’ll expect something in return.
That explains 95 percent of his fascination with tariffs
too, I think. There’s probably some earnest protectionist argle-bargle clanking
around in his head that helps him justify his trade policy to himself, but he
plainly relishes the power tariffs give him to punish foreign antagonists and
reward courtiers with waivers as he desires. Every new levy he issues
incentivizes some poor sap out there to kneel before him and beg for relief.
And relief is available, depending on what sort of favors
they might be willing to do for him.
The Venezuela oil shakedown is just a means to an end of
many smaller shakedowns, in other words. It was driven by the same mentality
that drives Trump’s appetite for acquiring stakes in domestic companies, which
I described last year as “socialism
without socialism.” For all his populist pretensions, the president doesn’t
share socialism’s goal of redistributing wealth to “the forgotten man” of the
underclass. But he does, emphatically, share its fondness for a
command-and-control economy in which one’s livelihood depends on earning and
retaining the leader’s favor.
If you’re looking for a theory of why a Democratic
president might not tear up the deal with Caracas, there it is. Having
inherited a “portfolio” of diverse foreign and domestic “holdings” from Trump,
how many politicians would lightly disgorge it?
Subjugation, not liberation.
The last point to make about the deal is that it’s part
of the corruption of the U.S. military. That corruption has been ongoing since
January 2025 and shows no signs of slowing down.
Americans take pride in their armed forces for two
reasons. One is that they’re the most capable in the world and have been so
since at least the end of the Cold War. The other is that their most glorious
victories have always been as a liberating force.
Always. They overthrew a monarchy in the 18th century,
overran a slaveholding regime in the 19th, and smashed two
diabolical fascist empires on opposite sides of the world simultaneously in the
20th. When the U.S. Army comes knocking on a tyrant’s door, freedom
is close behind.
But not anymore. Not in Venezuela.
Twice this year the military has intervened in Caracas in
ways that will extend, not end, the immiseration of the Venezuelan people. One
was executing Trump’s scheme to bring Rodríguez to power. Now that the White
House is a friend to the Chavistas rather than a sworn enemy, the regime’s
grasp on the country is likely stronger than it was a year ago.
The other is the oil deal, which gives our military a
financial reason to oppose elections in Venezuela. Resentful at seeing their
oil wealth expropriated by los Yanquis, especially under a bargain
negotiated at gunpoint involving a hated
oligarch like Betancourt, the people there might plausibly prefer a leader
who’ll cancel the agreement. (“An illegitimate interim government with an
illegitimate hydrocarbons law has no legitimacy to strike this unconstitutional
deal,” one former official tweeted.) Given how the U.S. stands to profit from the
status quo, that means democracy in Venezuela has become a threat to American
interests.
Read that again: Democracy in Venezuela is now a
threat to American interests. And the president hasn’t been coy about it, either.
The White House is so worried about Rodríguez being
replaced if free elections are held that it’s begun meddling in local politics
to ensure that “the opposition” is also led by a U.S. puppet. Talks have begun
in Caracas about a transition to democracy, but it isn’t Nobel laureate María
Corina Machado who’s representing the anti-Chavistas at the table. It’s a
former lawmaker named Dinorah Figueira who isn’t prominent in the pro-democracy
faction yet was “plucked by the Trump administration out of obscurity” to
negotiate on its behalf, per Politico.
“No one in the Venezuelan opposition, no one, would have
selected her as the opposition representative,” former diplomat Elliott Abrams
told the outlet of Figueira. Obviously, Trump believes that Figueira will
prioritize his interests—namely, America’s rights to the country’s oil—more
aggressively than Machado would, so he’s trying to sideline the latter. If that
turns out to be a prelude to disqualifying Machado from running in a future
election, then Jonah’s point earlier about the IRGC won’t be the only way in
which America is behaving like Iran in this matter.
Its financial and now political stake in the current
regime means that the U.S. military has become a force for the subjugation, not
liberation, of the Venezuelan people. It was the muscle in a gangster’s
shakedown scheme, and now, via the OSC, it’s getting its own cut of the action.
Americans in uniform have done worse things, but this has to be the first case
in my lifetime of the armed forces intervening somewhere for such nakedly
rapacious reasons.
That’s destined to influence how the military and its
personnel think of their organization and themselves in years to come. Mike
Nelson put it well on The Dispatch Podcast: “I think what we’re seeing
now is … we are not going to try to change Venezuela for the better. We are
going to allow Venezuela to change us for the worse.”
Declining competence.
Then again, changing for the worse was baked in, no?
News about the oil deal played out this week alongside
daily revelations about the wrecking ball Pete Hegseth is taking to the
Pentagon. Before resigning a few days ago, Army Secretary Dan Driscoll
reportedly staged an intervention with Trump himself to warn him that
Hegseth had fired, forced out, or blocked the promotions of so many senior
leaders that the Army now faced a
crisis of readiness. The sort of institutional expertise needed to
transform the branch to fight wars in the age of drones is being immolated.
The president was reportedly “surprised” to hear that
despite the extensive coverage Hegseth’s moves have received in major
newspapers. (That’s what happens when a
“human printer” is controlling your access to information, I guess.) Case
in point: The New York Times revealed just this morning that seven
more top Army officers have been denied promotions for reasons the defense
secretary refuses to disclose.
One, described as “one of the best combat leaders in the
infantry,” was allegedly nixed because “Mr. Hegseth’s office erroneously
believed he had allowed a mentorship group for female paratroopers to exist in
his unit and conduct an all-women’s airborne jump.”
Combine that with the other shocks to the U.S. military’s
prestige this year—the infamous munitions
shortage, the surprising vulnerability to Iranian missile attacks, the alarming slowfootedness in adapting to modern warfare, the secretary’s sneering
contempt for protecting civilians—and the other traditional source of pride
America has had in its armed forces is also suddenly wobbly. They might still
be the most capable on Earth, but under the current leadership, no one wants any further
tests of that assumption.
The people who elected Donald Trump understood they were
voting to degrade the country, I think, in return for what they hoped would be
cheaper groceries. I doubt many expected that they were also voting to degrade
the world’s greatest military, morally and operationally, by supporting a
leader who preached “toughness” at every turn. But that’s the thing about
degradation: Once you get comfortable with it, it tends to spread. Our
military’s degradation is its legacy as much as it is the president’s.
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