Power Plays: Is Might Right?

Most of you have been following our Scenario map since Donald Trump’s inauguration as the 47th President of the United States. We defined the major drivers of the future as the extent to which international rules will continue to shape world affairs and the USA’s relative ability to maintain its dominant role in shaping the global narrative.

Come January 3, 2026, the US conducted strikes under Operation Absolute Resolve and removed Nicolas Maduro and his wife, Cilia Flores, from Venezuela, to face charges in Federal Court in Manhattan. The US is claiming this was a law enforcement or counter-terrorism act, but Trump’s public statement that “we are now running the country” undermines the legal basis for the raid.

Then there is oil. Venezuela’s vast oil reserves are interdependent with American refineries. And yes, Trump has publicly said this is about energy stability and that we must protect it. “We need it for ourselves.” The oil story covers US oil infrastructure. Texas alone accounts for 43% of US crude oil production and about 31% of US refining capacity. These facilities sit right on the Gulf Coast. Zooming further out, what happens when a hostile power can hold the Gulf Coast at risk with a long-range precision strike or an in-range drone base? Trump also said, “We want to surround ourselves with good neighbors and stability.”

This shifts the conversation to China. Somehow, the original statements of democracy in Caracas or the repeated drug war rhetoric fade, and the hemispheric security moves on the geopolitical chessboard, focusing on China. China’s competition with the US is both in the South China Sea and the Caribbean.

For China, it’s about positioning, basing, dual-use infrastructure, and access to Latin America. Note that Venezuela accounts for about 44% of China’s total development finance in this region since 2005.

It’s also about the threat of Chinese bombers, missiles, ISR, intelligence, and long-range reconnaissance in Venezuela. We have 3,300 km between the Panama Canal and the US Gulf Coast refineries, with Venezuela right in the middle. A long-range military presence there will be able to choke off all seaborne trade.

We are reminded of the 1983 Operation Urgent Fury in Grenada, which was conducted to save some medical students, but really because Cuba was building an airfield on Grenada that could host Soviet bombers.

So we think about Taiwan and consider a single threat far away, or we see the dual threat: one, the risk of Taiwan losing its republic; the other, the denial of access to transit through the Panama Canal and of the ability to produce and export oil and gas products from the Gulf Coast. You could imagine capturing Maduro as phase two of an operation that began with the Panama Canal and the ports that support it. CK Hutchinson agreed to sell 90% of its stake in the Panama ports to a consortium that includes BlackRock Capital. Panama operates the canal itself. The ports on either side will now effectively change hands from Chinese to American control.

So what now? The US treats Venezuela’s Vice President, Delcy Rodriguez, as the new leader, and she cooperates to rebuild a legitimate democracy with accelerated oil and gas trade to pay for it all. Another option is to support the Edmundo Gonzalez Urrutia party, which legitimately won the 2024 election. In each case, the US may decide, as in Iraq, to a full “deepathification” — removing all of Maduro’s technocrats, thereby risking a similar chaotic outcome as in Iraq. Or, choose to work with the existing bureaucracy and clean it up whilst leveraging the existing state apparatus. There is no best pathway, just a gamble. Like Ukraine and South Africa, trying to convert an intrinsically corrupt democratic government machinery may be the best of a string of terrible choices.

Thus far, we can say the winners of Maduro’s removal are, firstly, the Venezuelans. They get a shot at everyday life again with an operating democracy. Then, the US energy and logistics will be able to grow and prosper without military threats at its chokepoints. Columbia can also expect some relief with the reduction of refugees. An interesting winner is also Russia. Russia’s invasion of Ukraine was a big, bad break from the current rules-based order of nations. Now it can claim moral equivalency — see others do it as well, thereby normalizing its actions. But this will hurt them on the energy side. This is significant to our Scenarios, shifting more to a world where the rules don’t exist, and brute force becomes universal.

The losers are certainly Maduro and his inner circle. Iran is a loser as they used Venezuela for influence and logistics. Iranian agents would go to Venezuela, pick up a Venezuelan passport, and travel the world. Hezbollah is also in Venezuela for training alongside the FARC. Cuba is a loser that is heavily dependent on Iranian oil, which is now gone.

Then there is China, historically the largest oil buyer. And strategically, well, losing a friendly regime in the Caribbean is bad for Beijing’s influence map, especially if the new government pivots hard toward Washington.

So, where does this leave us with our Scenarios…?

We are looking at another step down for the integrity of a rules-based world order with more “might is right” risks. Expect an increase in this behavior from all primary players, the US, China, and Russia. But more so, look for proxy plays, like in the Israel-Palestinian conflict, Syria, Yemen, the Iran-US/Israel regional confrontation, Eastern DRC (via Rwanda-Congo regional rivalry), and Sudan (increasingly, via Egypt/UAE and others).

Economic exposure cover both oil and mining. The Red Sea/Gaza/Yemen/Iran cluster includes freight oil and container costs, with knock-on effects on metals via shipping and energy input prices. The Russia-Ukraine conflict increases the risk in the Black Sea for grains/fertilizers, as well as broader energy geopolitics. DRC + Sahel (Mali, Burkina Faso, Niger) links directly to Cu/Co/gold/uranium supply and project risk. Lastly, Myanmar, although a niche, is a meaningful source of tin/rare earths, with some copper optionality.

As for the US maintaining control over the global narrative, although more ambiguous, we see hard power continue to be dominated by the US. In contrast, soft power (primarily through economic means) will continue to lean toward China’s expansion. As the Scenarios continue to play out, business leaders should heed this insight, as they must continue to walk the razor-thin line between nurturing commercial alliances and the American military’s Monroe-esque bias.

Our Scenarios are standing the test of time.