You Can’t Bomb a Currency: Why the Venezuela Narrative Misreads Power in 2026

 

A story has been circulating, asserted confidently in some quarters, that the United States struck Venezuela on January 3, 2026, seized Nicolás Maduro, and announced plans to “run” the country during a transition. Whether framed as breaking news or treated as fait accompli, the narrative is revealing regardless of its factual status. It exposes how readily we reach for an old explanatory crutch, the petrodollar. The claim goes like this, Washington, fearing de-dollarization, used force to reassert control over oil and thereby defend the dollar’s supremacy.

That reading is seductive. It is also wrong.

To see why, it helps to separate myth from mechanism and to ground the analysis in history, real, documented cases where oil, currency, and U.S. power intersected. When we do, a different picture emerges, one in which spectacle, domestic politics, and performative dominance matter far more than any coherent strategy to “save” the dollar.

Start with the petrodollar mythos itself. Yes, in the mid-1970s the U.S. and Saudi Arabia struck arrangements that entrenched dollar invoicing in global oil trade. And yes, “petrodollar recycling” channelled oil exporters’ surpluses into U.S. Treasuries, helping finance American deficits. But even at its peak, oil pricing was never the sole pillar of dollar dominance. The dollar prevailed because the United States offered what others could not, deep and liquid capital markets, a credible legal system, and unmatched financial infrastructure.

History is instructive here. When Iraq under Saddam Hussein switched some oil sales to euros in 2000, it did not dent the dollar’s reserve status. The euro did not surge, the dollar did not fall. Likewise, when Libya experimented with non-dollar oil transactions in the 2000s, global currency markets barely noticed. These episodes mattered symbolically, not structurally. Currency hegemony is not a light switch you flip by changing the invoicing unit of a few million barrels a day.

Contrast that with moments when the dollar truly wobbled. The Nixon Shock of 1971, ending gold convertibility, was a monetary event, not an oil war. The Volcker shock of the early 1980s, which restored confidence in the dollar through punishing interest rates, had nothing to do with crude supply. More recently, the dollar’s resilience after the 2008 financial crisis rested on the Federal Reserve’s role as global dollar lender of last resort, not on any assertion of control over hydrocarbons. When stress hits, the world runs toward dollar liquidity, not toward oil fields.

Oil itself has also changed position in the hierarchy of power. The 1973 oil embargo could bring advanced economies to their knees, the 2020 pandemic oil crash could not. Electrification, efficiency gains, and diversified energy portfolios have reduced the leverage of any single producer. The United States, now one of the world’s largest oil producers, is less vulnerable to supply shocks than at any point since World War II. If oil were still the master lever of monetary power, the shale revolution would have translated into an unassailable petrodollar renaissance. It didn’t, because the lever no longer works that way.

What has changed, and where real pressure on U.S. financial power exists, is payments architecture. This is where de-dollarization actually lives. China’s Cross-Border Interbank Payment System (CIPS) has grown steadily as a renminbi clearing layer. The BIS-backed mBridge project has demonstrated real-time, atomic settlement across central bank digital currencies. These systems don’t require oil, coups, or airstrikes. They require code, coordination, and patient institutional buy in. History again offers a parallel, SWIFT did not become dominant because NATO bombed Brussels, it became dominant because banks voluntarily joined the most efficient network available.

Venezuela’s role in this landscape is often overstated. It does hold vast reserves. over 300 billion barrels by common estimates, and it has talked loudly about escaping the dollar, pricing oil in yuan, and aligning with BRICS-adjacent initiatives. But talk is not transformation. Venezuela’s production capacity has been crippled for years by mismanagement and sanctions. Even at full tilt, Venezuelan crude cannot anchor a new monetary order. If controlling barrels were sufficient, Russia, one of the world’s top energy exporters, would not feel pressure to build alternative payment rails, oil wealth alone has not insulated it from financial sanctions.

This is where the rhetoric attributed to U.S. officials in the circulating story matters more than the mechanics. The emphasis was not on balance of payments stability or reserve composition. It was on “getting the oil flowing,” “capturing” a leader, and “running” a country. That language echoes past interventions driven less by systemic necessity than by political theatre.

Consider Panama in 1989. Manuel Noriega was removed under the banner of drug enforcement and democracy, but the operation also served as a dramatic assertion of U.S. dominance at the end of the Cold War. It was fast, overwhelming, and symbolic. It did not secure a currency regime or an economic doctrine, it secured a moment. Or look at Iraq in 2003. The war was sold on weapons of mass destruction, later reframed around democracy, and endlessly speculated about oil. Yet two decades on, the invasion weakened U.S. legitimacy, destabilized a region, and did nothing to fortify dollar hegemony. If anything, it accelerated global scepticism about American stewardship.

Even the narcotics pretext, often invoked in Latin American interventions, has a thin empirical record. In the 1980s, drug rhetoric justified militarization from Colombia to Panama without reducing U.S. demand or overdose deaths. Today, the opioid crisis is driven primarily by synthetic drugs produced and trafficked through networks far removed from Venezuelan territory. History shows that “drug wars” abroad are politically useful narratives at home, not effective strategies.

Seen through this lens, the Venezuela story, real or rumoured, fits a familiar pattern. Oil becomes a prop. Currency becomes a post-hoc justification. The underlying logic is exhibitionist, demonstrate power, punish defiance, create a made for television victory. That is politics of spectacle, not monetary statecraft.

And the irony is sharp. If the lesson absorbed by the rest of the world is that challenging U.S. financial dominance invites coercion, the rational response is not submission, it is diversification. After the freezing of Russian reserves in 2022, central banks openly discussed reducing exposure to dollar assets. That debate did not require bombs, it required precedent. Force, far from preserving hegemony, can hasten the search for exits.

The dollar remains dominant because it is useful, liquid, and embedded in institutions people trust. Those qualities cannot be enforced at gunpoint. They can only be maintained by law, openness, and predictability. History tells us that when empires confuse spectacle for strategy, they win headlines and lose foundations.

If the goal were truly to defend the dollar, the battlefield would be regulatory standards, financial plumbing, and digital rails, not Caracas. You can seize a refinery. You can even topple a government. But you cannot bomb a payment protocol.

Cheers.

ravivarmmankkanniappan@12520501263.1491° N, 101.6534° E

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