Trump's biggest energy bet isn't in Venezuela

WASHINGTON, DC: US President Donald Trump’s naval blockade of Venezuela, his administration’s recent capture of its president, Nicolás Maduro, and Trump’s efforts to assert control over the country’s oil reserves are the kind of aggressive unilateral moves that often dominate news headlines. Framed by Trump as a modern revival of the Monroe Doctrine, the so-called Donroe Doctrine evokes a 19th-century imperial playbook focused on securing territory, removing destabilizing adversaries, and seizing natural resources.

All of that makes for dramatic television, but a potentially more consequential shift in American foreign policy may be unfolding off-camera. Over the past few weeks, the State Department has outlined a framework for a multinational alliance designed to secure the entire value chain of the AI economy. While the US intervention in Venezuela seeks to resolve a geopolitical crisis that has simmered for decades, the “Pax Silica” project aims to build the industrial architecture needed to confront future shocks.

These contradictory objectives reveal a fundamental tension in the administration’s foreign-policy agenda. At its core, the intervention in Venezuela is a military operation wrapped in the language of energy security. While removing a regime heavily involved in drug trafficking and open to Iranian and Russian influence addresses a genuine source of regional instability, and alleviating the suffering of the Venezuelan people is a worthy goal, the administration’s public case has focused overwhelmingly on oil.

Yet Venezuelan oil is ultimately a distressed asset. The sector is technologically outdated, capital-intensive, and feeds into a global market that is already well supplied. Even if production could be restored and tightly controlled, the payoff – more oil – offers limited strategic upside for the United States, which already holds abundant reserves. At the same time, the burden of reconstruction would fall largely on America’s shoulders.

Pax Silica, by contrast, reflects a growing recognition that energy dominance is no longer just about extracting hydrocarbons but also about converting energy and raw materials into computational power. Announced with relatively little fanfare, the alliance – initially comprising the US, Japan, South Korea, the Netherlands, the United Kingdom, Australia, Israel, and Singapore – aims to secure every link in the AI supply chain, from mineral extraction to advanced manufacturing and data-center logistics. The recent accession of the United Arab Emirates and Qatar, together with India’s likely entry, underscores the momentum behind this positive-sum partnership.

Unlike the unilateralist Donroe Doctrine, Pax Silica functions as a buyers’ club: it spreads risk, builds capacity, and links countries through comparative advantage. In doing so, it mirrors the vertically integrated industrial strategies that powered China’s rise as a manufacturing colossus.

For years, volatile commodity prices and uncertain demand have underpinned Western capital markets’ reluctance to finance upstream mining projects. Pax Silica seeks to overcome this constraint by hardwiring supply and demand, linking Australian lithium mines directly to South Korean battery factories and Dutch lithography firms. By offering a clear line of sight from the mine shaft to the server rack, the alliance reduces uncertainty and assures investors that upstream resources have a guaranteed downstream destination. Crucially, it treats energy not as an end in itself, but as a key input required to power supply chains and expand computing capacity.

This approach marks a sharp departure from the long-held neoliberal belief that efficient markets alone can deliver strategic security. Instead, Pax Silica rests on the premise that competing with state-led economies requires active coordination across borders and industries.

For the alliance to succeed, however, that insight must be matched by the same level of political commitment and enthusiasm (minus the military and coercive tactics) that the administration has shown for its more news-friendly Venezuela intervention. In practice, this would require progress on three fronts.

The first is capital. The US and its partners must demonstrate that Pax Silica is backed by real investment, not merely parallel domestic initiatives. Large-scale public and private financing should reflect a shared strategic vision and be capable of accelerating project development, expanding markets, and supporting trade.

Second, the alliance must continue to expand in order to close persistent capability gaps. While its current members command substantial financial resources and advanced manufacturing capacity, they lack certain critical material inputs and sufficient labour. The exclusion of Canada, despite its mineral wealth and deep integration with the US defence industrial base, is a serious strategic oversight that should be addressed before Canada strengthens its strategic ties with China, as the two countries’ recent bilateral trade agreement suggests it might.

There are encouraging signs that expansion is already underway. The new US-Taiwan trade agreement, in particular, offers a pathway to integrate Taiwan’s indispensable manufacturing-process expertise. Without it, the alliance can design semiconductors and build machines, but cannot reliably mass-produce the advanced chips that underpin today’s global economy. Bringing in Vietnam and India would further challenge China’s monopoly on rare-earth permanent magnets while providing the skilled industrial workforce needed to scale production.

The third requirement is effective enforcement. Building an AI supply chain is futile if state-subsidized competitors can flood the market and drive new entrants into insolvency. Preventing domestic producers from being wiped out by below-cost dumping requires coordinated trade tools, strategic price floors, and other flexible arrangements aimed at countering predatory pricing.

The Donroe Doctrine and Pax Silica serve very different ends. In Venezuela, the US has flexed geopolitical muscle to reduce the influence of external actors in the Western Hemisphere. Pax Silica, meanwhile, is global in scope and represents a strategic investment in future drivers of growth and innovation.

Ultimately, directing energy resources toward AI and advanced manufacturing offers a far more durable foundation for global influence than controlling oil reserves whose long-term value is questionable at best. With its Venezuela intervention, the Trump administration has demonstrated its willingness to assert US power in Latin America and the Caribbean. Whether it can muster the diplomatic and economic skill needed to shape the economy of tomorrow, however, remains an open question.

Copyright: Project Syndicate, 2026.
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