From Oil to Systems: Venezuela, China, and the Post-2007 Global South

Author: Small Drops Balananthini Balasubramaniam

© 2026 Small Drops Balananthini Balasubramaniam. All rights reserved.

Abstract

Traditional narratives of contemporary geopolitics frame the United States as fighting wars primarily to capture oil. This article challenges this perspective, situating Venezuela’s crisis within a century-long resource economy and the broader post-2007 reconfiguration of the Global South. Integrating rentier-state theory, critical geopolitics, post-colonial political economy, and energy transition literature, the article demonstrates that China’s engagement via oil-for-loans agreements and infrastructural penetration restructured Venezuelan sovereignty and regional influence. The study argues that modern geopolitical competition is less about commodities and more about control over systemic power—financial, infrastructural, and political. Comparative evidence from Sri Lanka, Pakistan, and Africa situates Venezuela as part of a wider global pattern.

Keywords: Venezuela, China, Global South, rentier state, geopolitics, energy transition, US foreign policy, systemic influence

1. Introduction

For over a century, Venezuela has been central to the global hydrocarbon economy. Commercial extraction began in the 1910s, rapidly expanding by the interwar period, and by the mid-20th century the nation was one of the world’s largest oil exporters (Coronil, 1997). U.S. and European markets enjoyed stable access for decades, long before Hugo Chávez’s rise, long before sanctions, and long before the recent humanitarian crisis.

Yet much of public discourse continues to assert that the United States acts primarily to secure oil. This article contends that such explanations are outdated and inadequate. Instead, the crisis is best understood through a system-centric lens, combining structural fragility with post-2007 geopolitical realignment.

The framework draws explicitly on:

T. L. Karl’s rentier-state theory (1997),

Robert Cox’s neo-Gramscian perspective on historical structures (1981),

Susan Strange’s systemic power concept (1996).

It further integrates energy transition literature, showing how electric vehicles and renewable infrastructure redefine the strategic value of oil.

2. Venezuela as a Rentier State

Venezuela exemplifies a classical rentier state, deriving most income from external resource rents rather than domestic productive capacity (Beblawi & Luciani, 1987). This produces persistent vulnerabilities:

Weak accountability due to low taxation.

Chronic underinvestment in manufacturing and agriculture.

Political legitimacy derived from redistribution rather than productivity.

Oil booms created the illusion of sovereign autonomy while hollowing out institutional resilience. When prices collapsed after 2014, Venezuela lacked the capacity to adapt (Karl, 1997). Importantly, the problem was structural, not contingent: oil was abundant, yet governance could not manage it.

3. The “Oil War” Myth

Popular discourse attributes contemporary U.S. intervention to oil scarcity. This argument is flawed. Oil has been plentiful in Venezuela for over a century, with secure access for Western powers. Wars framed around oil ignore the structural shift in global strategic resources:

Lithium and battery minerals

Renewable energy grids

Electric vehicle infrastructure

Digital and financial systems

These define twenty-first-century strategic advantage (Bridge & Le Billon, 2017). Oil remains important but no longer dominates global power calculation.

4. China’s Post-2007 Systemic Entry

The year 2007 marks a pivotal point: China’s global expansion accelerated following the financial crisis, offering financing without governance conditionality (Gallagher, 2016). Venezuela became a primary site for China’s oil-for-loans model:

Over USD 60 billion in loans (2007–2015)

Oil as repayment, not cash

No institutional reform requirements

China’s objective was not development per se but embedding influence, locking future production and revenue streams to secure access and strategic alignment. This aligns with Strange’s concept of structural power, where control over the rules of the system is more decisive than control over raw materials (Strange, 1996).

5. Comparative Global South Cases

5.1 Sri Lanka

Large infrastructure loans for ports, highways, and energy

Hambantota port lease exemplifies debt-for-access

Structural dependency on Chinese financing mirrors Venezuela’s oil-for-loans, but without resource collateral (Alden & Large, 2019)

5.2 Pakistan

China–Pakistan Economic Corridor (CPEC) integrates energy, infrastructure, and strategic alignment

Civilian economic governance weakened, while military institutions remain strong

Mirrors Venezuela in systemic dependency, but differs in strategic military balance (Small, 2020)

5.3 Africa (Angola, Ethiopia, Kenya)

Resource-backed loans, infrastructure-for-access agreements

Limited technology transfer or domestic labour integration

States remain functional but structurally constrained, a pattern repeated globally (Brautigam, 2020)

Synthesis: Across cases, China’s post-2007 strategy exhibits:

Entry during fiscal/political crisis

Financing without reform conditions

Long-term asset/resource lock-in

Elite insulation from domestic accountability

Deferred structural reform

6. Energy Transition and the New Strategic Paradigm

The rise of electric vehicles, renewables, and digital infrastructure changes the geopolitical calculus. Oil is no longer the singular driver of intervention. Instead, strategic competition is systemic: controlling finance, infrastructure, political alignment, and digital governance (Bridge & Le Billon, 2017). Venezuela illustrates this shift: oil remains, but power is exercised through systemic embedding rather than extraction.

7. Counter-Arguments

7.1 U.S. Intervention as Oil-Driven

While some scholars continue to argue that U.S. intervention is oil-centric, the evidence contradicts this:

Oil supplies were historically secure

Intervention often occurs when access is not threatened

7.2 China as Benevolent Actor

Critics may claim China is a developmental partner. Empirical evidence shows that:

China embeds dependency

Sovereignty is constrained

Structural reform is deferred

Thus, China stabilises dysfunction rather than transforms states.

8. Conclusion

Venezuela’s crisis cannot be reduced to oil scarcity, sanctions, or ideology. It arises from a structurally weak rentier state, embedded within a post-2007 global system where China uses financial and infrastructural penetration to exercise systemic power. The United States’ response is not about crude oil; it is about protecting influence over the architecture of global governance. The real story is therefore not about resources, but about control over systems in the 21st century.

References

Alden, C., & Large, D. (2019). New Directions in Africa–China Studies. London: Routledge.

Beblawi, H., & Luciani, G. (1987). The Rentier State. London: Croom Helm.

Brautigam, D. (2020). The Dragon’s Gift: The Real Story of China in Africa. Oxford: Oxford University Press.

Bridge, G., & Le Billon, P. (2017). Oil. Cambridge: Polity Press.

Coronil, F. (1997). The Magical State: Nature, Money, and Modernity in Venezuela. Chicago: University of Chicago Press.

Gallagher, K. P. (2016). The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus. Oxford: Oxford University Press.

Karl, T. L. (1997). The Paradox of Plenty: Oil Booms and Petro-States. Berkeley: University of California Press.

Small, A. (2020). The China–Pakistan Axis. Oxford: Oxford University Press.

Strange, S. (1996). The Retreat of the State: The Diffusion of Power in the World Economy. Cambridge: Cambridge University Press.

Copyright

© 2026 Small Drops Balananthini Balasubramaniam.

Original scholarly work. No part may be reproduced or adapted without permission.