Venezuela Regroups With New President, Old Repression Tactics

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1:46Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily. reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus, global business, finance and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. While the U.S. rate that captured Venezuelan President Nicolas Maduro put America's allies and adversaries definitely unnoticed, President Trump has a new world to order, Tim, of his own. At least that's how it's been reporting out.

2:28Carol Massar:Yeah, in the aftermath of the stunning late night operation that saw Maduro and his wife whisked from a guarded military base near Caracas to a New York jail, President Trump demonstrated just how far the U.S. is willing to go to eliminate a leader seen as a threat to American interests and security. So we're looking at the challenges that come next. Those are the ones that are presented by the U.S. raid on Venezuela. We welcome Rockford Weitz, professor of practice and director of the Maritime Studies Program at Tufts University's Fletcher School of Law and Diplomacy. He joins us from Tucson, Arizona.

3:01Carol Massar:Professor, good to have you on the program. What do you believe is the true motivation of the U.S. when it comes to Venezuela? Great question. What we're looking at here is this is a geopolitical competition between the United States and China and Russia over who is the main ally of Venezuela in the Caribbean. Wow. OK, so before what we saw late Friday and early Saturday, what would you have said is the true ally? Who would you have said is a true ally? And then now after, how does the U.S. become the true ally? OK. All right. So great. I love these questions. So before it was a combination of China was their geo-economic ally, helping them with infrastructure.

3:50Russia was a military ally with basing rights there and supporting their military. And even Iran, even though it's not a great power, was helping helping Venezuela. So they had that was their sort of cast of characters as well as Cuba. Cuba is, frankly, a little bit more reliant on Venezuela than vice versa. Everything has changed since Saturday morning in the sense that there's obviously new leadership in Venezuela, a transition leadership. It's unclear who will be in charge in the long run, but it's very clear that the great power that's going to have the most influence over Venezuela is now the United States.

4:30Carol Massar:What I'm wondering, Professor Weitz, you know, what's the international precedent for doing something like this? I mean, how should we read what is essentially a kidnapping of a leader of a foreign country and his wife, removal of that leader from said country? What's it akin to in our past history or recent past history? And to be fair, it's not the first time the U.S. or others have removed a global leader or worked behind the scenes to support U.S.-friendly groups, leaders in foreign countries. So we get that. We're not all naive. But I'm just curious, are we setting up for kind of a leader grab around the world among countries and among global powers?

5:14Another great question. Thank you. So let me try to answer it using history. So it was actually, ironically, 36 years ago to the day that the United States took Noriega from Panama. And that's the closest parallel. So he also was charged with narco trafficking. He was also then taken to the United States for prosecution. They also justified it in exactly the same way. There was an indictment against him in the United States. So that covered the domestic law piece. And then under the U.N. charter, countries are allowed self-defense and also self-defense of their population. So it was framed. This was back in 1990 under Bush senior as Noriega is a narco trafficker, therefore must be taken care of to protect the American people from the drug trade.

6:04That is allowed under the U.N. charter as self-defense. So that covers you under international law. Again, every legal issue is gray. So people will say it's against international law, but you can make a case that it's consistent with international law in the U.N. Charter. You can make a case that it's consistent with domestic law. And I would say it does set a precedent that other narco trafficking leaders around the world could be taken not just by the United States, but by others. But this doesn't really apply to Taiwan. I've spent a lot of time in Taiwan and narco trafficking is not their game.

6:39And so I think that the precedent can be narrowed, but it doesn't. It also means that other large countries, other great powers like China and Russia will look at this to see how they can use it to their advantage.

6:53Carol Massar:Well, you mentioned Taiwan, but but what about Russia and what about Vladimir Putin in Russia? Could he use this as justification for doing something to Zelensky? So Putin will try to come up with any justification to go after Zelensky, but Zelensky clearly is not a narco trafficker. I don't think anyone's saying that. So we can argue not. The other thing is Zelensky has very powerful friends right next door. The NATO, the North Atlantic Treaty Organization, Poland borders Ukraine. The U.S., although Trump, you know, has not supported as much as maybe previous presidents have, we're behind Zelensky.

7:31Zelensky's got powerful friends. Venezuela really didn't have powerful friends in this part of the world. China is a very strong navy around Taiwan, for example. They don't have a major naval presence in the Caribbean. Russia as well is a naval power. It's not nearly as strong as either China or the United States, but it doesn't have a major Caribbean presence. So what's fundamentally happened is in the Americas, the U.S. is the major great power with the major military. And I will just note this because it is important for the bigger conversation. The Trump administration did issue its national security strategy just last month.

8:09It said we're going to focus more attention on the Americas. And it was consistent with this operation in Venezuela, though I will admit I was surprised at how much force was used to take Maduro and his wife, 150 aircraft. I mean, this was a major operation on Saturday. Wow.

8:29Carol Massar:So many different places to go. Well, having said that, you know, listening to a lot of the coverage here on Bloomberg, Professor Weitz, it sounds also like that the U.S. intelligence has been on the ground for some time. We're going to talk about this a little bit later on on our broadcast. But that they had help in kind of pulling this together. Is that a bad assumption or read into the U.S. getting an assist from other leaders in Venezuela? I think it's an accurate read. I've been following this basically night and day since Saturday. A lot of coffee. But basically what has happened is it's not surprising.

9:10The United States has been focused on Maduro and his regime. Really, it's been bipartisan. Biden also had a bounty out for Maduro to be removed. So Maduro is not popular internationally. He's not popular domestically. He was essentially clinging on to power. I thought one of the most interesting thing was that his almost his entire security staff were Cubans. This has come out from multiple sources. So it's not surprising that the United States would spend a couple months gathering intelligence. I have to say that this was almost perfectly executed from a special operations perspective. They had one mission kidnapped, well, not kidnapped, but seized Maduro and his wife, take them to the United States.

9:58At the same time, essentially take out the Venezuelan military. So the Venezuelan Navy essentially no longer exists. Same for the Air Force. No more radar. Any tanks they had are probably gone. So this was executed very well. And of course, intelligence was involved. So and Trump even said that publicly. CIA is already there. So I would say public sources have verified it. Multiple sources. I think it's probably accurate to say that's correct. Well, that's one part of the mission.

10:30Carol Massar:And that was that was certainly this mission. But I think many critics out there and even observers saying now comes the hard part, the potential power vacuum. And we've seen what, quote unquote, nation building for the United States has looked like in the past. How does that play out? What is the right way for the U.S. to do that? But this is literally what I think is the most important question for today. So I call this the day after challenge. This is a big deal. It's going to be very difficult to smoothly create a transition to a new government in a peaceful way without triggering an insurgency.

11:11The Venezuelan military wasn't really strong before Saturday. They're really not strong now. That being said, similar to Vietnam, similar to Colombia. I used to live in Colombia. I know the country well. I've been to Venezuela as well as a tourist in the 90s. There's parts of Venezuela that are the perfect guerrilla warfare area. The United States has, I think, no interest in a long-term occupation of Venezuela because it would not be pretty, and it would look similar to some of our misadventures in the Middle East. I think the model to look at is Panama. You have in Venezuela a recognized opposition.

11:49You have Maria Carina Machado, who is the recent Nobel Peace Prize winner. You have Edmundo Gonzalez, who is the declared winner internationally recognized of the last presidential election. They're friends. They're a good opposition. I think what can happen is that they can be brought into this process and that the U.S. can help them establish some level of control. Probably involves a few hundred, maybe a few thousand elite American troops guarding, say, the presidential palace in Caracas and essentially having a presence at all the major military bases, certainly around Caracas. And then eventually that gets transitioned over to to the new government.

12:36It's going to be hard. The essentially Venezuela has had a dysfunctional government since 1999. Maduro was in power for over 10 years as a dictator. All of his allies are in the National Assembly. They're in the government. They're in the military. There's narco traffickers who are well armed. So it's not going to be easy, but I do think it's possible. I also think it's very different from Iraq or Afghanistan because there's no religious element here. Venezuelans, not only are they all Christian, they're all Catholic. So there's no that's not a piece of it. Doesn't mean it's easy. I think it's going to take a lot of bandwidth to do it well.

13:13I'm not sure if the Trump administration is ready to do it, but we will see. We will see.

13:20Carol Massar:Stay with us. More from Bloomberg Businessweek Daily coming up after this.

13:27Carol Massar:They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit lifemd.com slash goodlife.

14:22Carol Massar:deep in the work that moves the business. Let's create smarter business. IBM. For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In Season 3 of The Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare. You're listening to the Bloomberg Business Week Daily Podcast.

15:02Carol Massar:Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Money managers, they've been loading up on Venezuelan debt. This is one of the stories that we've been reporting out here at Bloomberg. This has been happening in the past few months as President Trump ramped up pressure on President Maduro, with some investors seeing the potential for restructuring as early as this year. And then, of course, Tim, then we had the weekend happen. So with more on that, let's head to Sarasota, Florida, and to Mike Collins, Managing Director and Executive Portfolio Advisor on the multi-sector team over at PGM.

15:38Carol Massar:PGM Fixed Income, approximately$1.5 trillion in total assets under management. For PGM Fixed Income, it's more than$1 billion. dollars. Mike, big picture. How big of a deal is it what happened in Venezuela, especially when it comes to the global market and investing landscape? How are you looking at it? Yeah, Tim and Carol, happy New Year. Great, great to be here. You know, I get these questions all the time whenever you have these geopolitical flare ups around the world, whether they're in Asia, the Middle East or Latin America. And my answer is always the same, you know, kind of fade the headlines is generally the knee jerk instinct that you should have as an investor, you should really focus on the fundamentals of the global economy, the fundamentals of the US economy, where growth is going to be, where inflation is going to be.

16:24Obviously, commodity prices are in the headlines today with the Venezuela thing. But remember, Venezuela is producing now less than 1 % of global oil. Remember, 60 years ago, back when I was born, they were producing 15 % of the world's oil. And now they're less than 1%, right? So they have taken a huge fall from grace. They They do not have a big impact economically on the global stage. Sixty years ago, believe it or not, Venezuela was in the top quartile of all countries in terms of GDP per capita. Today, they are at the bottom of the list. And you think of other countries where they've been geopolitical flare-ups.

17:01Typically, these countries don't have huge international economic implications. So that's why the markets are just kind of whistling past the graveyard here and just ignoring the geopolitical risk. That is the standard playbook.

17:14Carol Massar:And Michael, just forgive me. I want to go back more than a trillion dollars over at PGM fixed income under management. I misspoke earlier. OK, so if that's why we're seeing sort of a relative calm today, let's then focus on kind of what comes next and the political and potential implications for that. Because I think that is a big question that investors have right now. I mean, certainly people don't want to see some prolonged and, you know, dare I say, boots on the ground mission in the country. But but I think that meaning me going into this week, that was a big concern that I thought investors would have.

17:51Carol Massar:What if this actually gets turns into something akin to like we've seen with past, quote unquote, nation building activities from the U.S.? We've spent most of the weekend and a lot of this morning doing deep dives into the situation in Venezuela. I mean, I'm fortunate to work on this gigantic team where we have geopolitical analysts. We have really deep economic and analytical resources. We have people who've been in the military. So we have a lot of great color just from our own team and our contacts. And there's really two scenarios. One, Tim, is the one you pointed out, that things do get ugly, that Venezuela kind of gets worse, conditions get worse, that the U.S.

18:34tries to do a more aggressive takeover and it gets really messy, a la some of the situations in the Middle East that your last guest was talking about. But there's also this upside scenario, right? And I think it kind of confirms the fact that we're moving into this, you know, G3-ish type of world. And the U.S. is certainly trying to take the lead there and showing that, hey, we have control of the Americas here, which could result in better outcomes for countries like Venezuela, could result in better outcomes for the U.S., could result in better outcomes for other Latin American countries, right?

19:11And I think that's what the markets are focusing on. I mean, we're looking at all the emerging market debt quotes and runs out there right now. And generally, the bonds are trading better, right? And I think they're looking at this as potentially the upside scenario, not the downside. But you're absolutely right. I mean, we really have to keep our radar attentive to those potential downside risks.

19:33Carol Massar:Yeah, Mike, on that point, a raft of investment firms eyeing opportunities in Venezuela after that U.S. strike. Tribeca Investment Partners is sending a team to Caracas this week to inspect potential assets, calling it a gold rush. Have you guys changed any of your investment theses when it comes to Venezuela at this point or not yet? Well, remember, they've been pretty heavily sanctioned in terms of trading and also trading some of their securities. So, good news is for people who have a huge emerging market debt team and big investments around the world in emerging market debt, you know, this could potentially free up trading opportunities and relative value opportunities.

20:15I mean, again, these bonds, some of their bonds have, you know, doubled or tripled over the last few weeks. So, they're still trading at really distressed levels, right? We're talking, you know, 20, 30 cents on the dollar. But, you know, there are opportunities for sure. There are going to be a lot of relative opportunities. We're looking at even places like Columbia today we're talking about, where their local interest rates are really high and their credit spreads are pretty wide. And so, you know, I think it sets up the world for better relative value trading opportunities. And that's something we're really looking to capitalize on.

20:47Carol Massar:So, Mike, if you had to kind of make a bet, I mean, is it 50 % that the fortunes and maybe economic and investment outlook for Venezuela are changing for the better at this point? Or is it? You know, I would say it's a little better than a coin toss, Carol. I would probably put higher odds. Maybe I'm just, you know, talking our book or agreeing with the market's reaction so far. But yeah, but it certainly feels like, you know, when you're having more private sector resources coming to a country that's been totally mismanaged in terms of their natural resources and their politics, you know, there is, I think, a higher likelihood of a better outcome there.

21:25But, you know, the road to that better outcome can be really long and fought with all kinds of problems.

21:31Carol Massar:Right. Lots of bumps can always happen, certainly in a situation like this. Many would agree with that. Hey, Mike, before you go, I'm thinking about the U.S. this week. We do get a jobs report on Friday. We have a bunch of economic news. We did see the U.S. Treasury curve move down today. A little bit of economics news today. What is more important, though, in terms of the U.S. Treasury trade at this point? Is it the U.S. economy, what the Fed does ultimately? Just give us about 30, 40 seconds on that, if you would. Yeah, again, it's going back to the fundamentals, Carol, right? And if you're looking at U.S.

22:04growth, I mean, if anything, expectations for growth this year have ticked up over the last few months. We're entering 2026 with really strong kind of real GDP or consumption and capital expenditure expectations, you know, momentum going into this year. So most forecasts now for U.S. GDP have two handles, right? Whereas not that long ago, they're in the ones. I think the recession risks have moderated in the U.S. And we've taken our probabilities down. And the upside risk to growth, to more productivity from from AI, maybe to higher inflation and permanently higher rates has gone up. And that's actually not a great environment for risk assets necessarily.

22:46Right. So we've been threading this needle. We call it the the muddle through scenario where you kind of run at two percent. You have inflation stuck, you know, between two and three. The Fed eases a couple of times. That's a great environment for growth and for inflation and for financial assets.