Venezuela Was Once a Close U.S. Ally. What Went Wrong?

For much of the twentieth century, Venezuela stood as one of the United States’ most reliable partners in Latin America. It was a stable democracy in a region often marked by coups and strongmen. It was a major energy supplier to the U.S. economy. And it broadly aligned itself with Washington on hemispheric security and trade.

That relationship did not unravel overnight. It deteriorated gradually, through a series of political, economic, and institutional failures—many of them domestic, some exacerbated by U.S. policy choices. The result is today’s Venezuela: isolated, authoritarian, economically crippled, and aligned more closely with U.S. adversaries than with its former partner.

Understanding what went wrong requires separating rhetoric from record and ideology from sequence.

Venezuela’s early partnership with the United States was built on oil and stability. After the fall of military rule in 1958, the country adopted a democratic system dominated by two major parties that alternated power peacefully. The United States, seeking dependable allies during the Cold War, viewed Venezuela as a model—democratic, anti-communist, and resource-rich. U.S. energy companies invested heavily, and Venezuela became one of America’s top oil suppliers.

But the system that produced stability also bred complacency. Oil wealth insulated political leaders from accountability. As long as revenues flowed, corruption could be managed and inefficiency tolerated. Over time, institutions weakened. Economic diversification stalled. When oil prices fell in the 1980s, the vulnerabilities were exposed.

Public trust eroded sharply. Ordinary Venezuelans watched elites prosper while basic services deteriorated. By the early 1990s, the political system had lost legitimacy. That loss opened the door to populism.

Hugo Chávez emerged from that vacuum. A former army officer who led a failed coup in 1992, Chávez presented himself as an outsider determined to dismantle a corrupt order. He was elected president in 1998 through democratic means, promising reform and inclusion. Initially, the United States treated his election cautiously but not confrontationally.

The rupture came as Chávez consolidated power. He rewrote the constitution, weakened independent institutions, and placed loyalists throughout the military and courts. Oil revenues were redirected toward expansive social programs that boosted short-term popularity but discouraged private investment. As oil prices rose in the 2000s, the government doubled down on state control rather than reform.

Chávez also reframed Venezuela’s relationship with the United States. Casting Washington as a convenient external antagonist, he aligned himself with Cuba, Iran, and later Russia. Anti-American rhetoric became a domestic political tool. Diplomatic ties deteriorated, even as Venezuela continued selling oil to the U.S.—a reminder that the break was political, not immediate or total.

U.S. policy during this period was uneven. The Bush administration’s early support for opposition figures, and its ambiguous response to the failed 2002 coup against Chávez, deepened mistrust. While Washington did not orchestrate the coup, its reaction reinforced Chávez’s narrative of U.S. hostility and interference.

After Chávez’s death in 2013, his successor Nicolás Maduro inherited a system dependent on high oil prices and centralized control. When global prices collapsed, the economic model failed. Mismanagement, corruption, and price controls led to shortages, inflation, and mass emigration. Maduro responded not with reform, but with repression—curtailing elections, sidelining the legislature, and relying on security forces to maintain power.

U.S. sanctions followed, aimed at pressuring the regime to restore democratic norms. Supporters argue they limited the government’s ability to profit from corruption and repression. Critics counter that sanctions worsened economic suffering without dislodging those in power. Both views contain truth. Sanctions did not cause Venezuela’s collapse, but they have complicated recovery.

Today, Venezuela is no longer a U.S. ally in any meaningful sense. Its institutions are hollowed out. Millions have fled. The country relies increasingly on Russia, China, and Iran for economic and political support. The distance between Caracas and Washington reflects more than diplomatic disagreement; it reflects the breakdown of a shared commitment to democratic governance.

What went wrong was not a single decision or foreign betrayal. It was the steady erosion of institutions, enabled by oil wealth, exploited by populism, and hardened by authoritarian rule. U.S. policy mattered at the margins, sometimes for better, sometimes for worse. But the decisive failures were domestic.

The lesson is not that alliances are permanent or that foreign policy alone determines outcomes. It is that stable partnerships rest on functioning institutions, accountable leadership, and economic realism. When those foundations weaken, even long-standing alliances can unravel—slowly at first, and then all at once.