From Iraq to Libya, and now Venezuela – a pattern emerges. This article examines how challenges to dollar-denominated oil trade intersect with US intervention and why oil and dollar defiance have often led to regime change.
Prof Hamid Naseem Rafiabadi
The language of international intervention is often moral and emotive. Governments speak of democracy, human rights, terrorism, or narcotics trafficking, framing military or coercive actions as reluctant necessities. Yet history suggests that such explanations, while politically useful, rarely capture the deeper structural motivations shaping great-power behaviour. Venezuela’s long and intensifying confrontation with the United States belongs to this category. To understand it fully, one must move beyond surface narratives and examine the global monetary system that underwrites American power itself.
At the heart of this system lies the petrodollar—an arrangement that has quietly sustained US economic dominance for nearly five decades. Venezuela’s attempt to conduct its oil trade outside this framework did not merely challenge Washington politically; it challenged a monetary order upon which the US state, its military reach, and its fiscal model fundamentally depend.
The origins of the petrodollar system date back to the early 1970s, a moment of deep uncertainty for the global financial order. In 1971, the United States abandoned the gold standard, effectively ending the Bretton Woods system. The dollar was no longer backed by gold, and confidence in its long-term value was far from guaranteed. What followed was a strategic recalibration rather than a retreat. In 1974, under the guidance of Secretary of State Henry Kissinger, the United States reached a pivotal agreement with Saudi Arabia. Oil would be priced exclusively in US dollars, and surplus revenues would be recycled into American financial markets. In return, the United States would provide security guarantees to the Saudi monarchy.
This arrangement was soon extended across OPEC, transforming oil into the de facto backing of the dollar. Because oil is indispensable to modern economies, every country needs dollars to purchase it. This created a permanent, global demand for the US currency, allowing Washington to run chronic trade deficits, finance expansive welfare and military expenditures, and issue debt on an unprecedented scale without facing the constraints normally imposed on other states. In effect, the petrodollar replaced gold as the foundation of dollar supremacy.
Over time, this system became so normalised that its political nature was largely obscured. The dollar appeared dominant not because of explicit coercion, but because “there was no alternative.” Yet the absence of alternatives was itself a product of power—economic, diplomatic, and when necessary, military.
Venezuela’s significance emerges precisely at this intersection of energy, sovereignty, and currency. Possessing approximately 303 billion barrels of proven oil reserves—the largest in the world—Venezuela holds an asset that is not merely economic but strategic. Control over oil has always implied influence over trade, finance, and geopolitics. What made Venezuela especially sensitive for Washington was not simply its nationalisation policies or its strained relations with US corporations, but its explicit move toward de-dollarisation.
Beginning in the late 2010s, Venezuelan officials openly declared their intention to reduce dependence on the US dollar. Oil sales were conducted in alternative currencies such as the Chinese yuan and the euro. Financial cooperation between China and Russia intensified, including efforts to circumvent the SWIFT messaging system, which underpins dollar-based global finance. Venezuela also expressed interest in joining BRICS, a grouping increasingly committed—at least rhetorically—to building alternatives to Western-dominated financial institutions.
In isolation, any one of these moves might have been manageable. Taken together, they constituted a structural challenge. A major oil producer trading outside the dollar system, aligned with states already resisting US financial dominance, and seeking entry into an expanding non-Western bloc, was not merely asserting sovereignty; it was testing the limits of an order built on monetary centralisation.
This concern is not without historical precedent. In 2000, Iraq announced that it would sell oil in euros rather than dollars. Three years later, Iraq was invaded. The official justification—weapons of mass destruction—collapsed under scrutiny, but the monetary dimension was rarely discussed. Following regime change, Iraqi oil sales reverted to dollars. Similarly, in 2009, Libya, under Muammar Gaddafi, proposed a gold-backed African currency for oil trade. Western intervention followed within two years, Libya’s state collapsed, and the project vanished. In both cases, leaders who challenged dollar-denominated oil trade were removed, and the existing financial order was restored.
These parallels do not prove causation, but they reveal a consistent pattern: when monetary defiance coincides with strategic resources, tolerance narrows sharply.
What distinguishes the Venezuelan case is timing. The global environment today is markedly different from that of the early 2000s. The dollar remains dominant, but it no longer stands unchallenged. Russia has shifted energy trade toward rubles and yuan. Iran has long operated outside the dollar due to sanctions. China has built the Cross-Border Interbank Payment System (CIPS) as an alternative to SWIFT and has encouraged bilateral trade in local currencies. BRICS countries are actively exploring settlement mechanisms that bypass the dollar altogether, while projects such as mBridge enable direct central-bank settlements without US financial intermediaries.
Even traditional US partners have begun hedging. Saudi Arabia’s willingness to discuss yuan-denominated oil trade—unthinkable a decade ago—signals that dollar exclusivity is no longer sacrosanct. In this context, Venezuela’s alignment with de-dollarisation efforts takes on heightened significance. With oil reserves of such magnitude, Venezuela could have contributed materially to sustaining non-dollar energy trade over the long term.
Official US narratives regarding Venezuela have emphasised narcotics trafficking, authoritarian governance, and democratic deficits. These concerns are not entirely unfounded, but they appear selective and insufficient as comprehensive explanations. Venezuela’s share of US cocaine inflows is marginal, evidence linking the state to international terrorism is limited, and democratic rhetoric sits uneasily alongside Washington’s longstanding alliances with unelected regimes elsewhere. The inconsistency suggests that deeper strategic considerations are at work.
At times, these considerations have surfaced explicitly. Statements by US officials framing Venezuela’s nationalisation of resources as an illegitimate “expropriation” implicitly challenge the principle of sovereign control over natural wealth. Such language reframes economic nationalism as theft and intervention as restitution, revealing how financial interests and geopolitical narratives intertwine.
Yet coercion carries risks. If military or economic pressure is perceived internationally as punishment for trading outside the dollar, the signal is unmistakable: monetary independence invites retaliation. Paradoxically, this may accelerate the very process such actions seek to prevent. States in the Global South are increasingly aware that reliance on the dollar exposes them to sanctions, asset freezes, and political leverage. The logical response is not submission, but diversification.
This is the deeper dilemma confronting the United States. The petrodollar system was sustained for decades not through constant force, but through credibility, institutional dominance, and the absence of viable alternatives. As alternatives emerge, reliance on coercion grows more visible—and more destabilising. A currency that must be defended by military pressure risks losing the legitimacy that it once sustained.
Venezuela, therefore, is not merely a regional crisis or an ideological confrontation. It is a lens through which a larger transformation can be observed: the slow, uneven shift from a unipolar monetary order to a contested, multipolar one. Whether the dollar adapts to this reality through reform and accommodation, or resists it through pressure and intervention, will shape global politics in the decades ahead.
History suggests that empires rarely collapse when they are at their strongest. They falter when the systems that sustained them require ever greater force to maintain. In that sense, Venezuela may not mark the beginning of a new era, but rather a revealing moment at the edge of an old one—a moment when the quiet architecture of dollar dominance became visible precisely because it was under strain.
—Dr Hamid Naseem Rafiabadi (also known as Dr Hamidullah Marazi) is a distinguished contemporary Islamic scholar whose work significantly contributes to the dialogue between Islamic philosophy and modern Western thought. He is the author of several books. Through a rigorous comparative methodology and an emphasis on epistemological integrity grounded in Tawhid (the oneness of God), Marazi critiques secular paradigms and advocates for an integrative intellectual tradition. His scholarship not only critiques Western thought but also calls for mutual enrichment between traditions, emphasising Islamic metaphysics, ethics, and educational reform as central to contemporary challenges.
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