In an impassioned op-ed, Venezuelan economist Victor Álvarez argues that his country should follow the example of Norway and enact legislation to create a Sovereign Wealth Fund – to protect the country’s oil and mineral revenues both from the boom and bust myopia of its own governments and the ambition of the US to use Venezuela to subsidise its own industries.

This article was translated for LAB by Mike Gatehouse

Every time a war breaks out in the Middle East, Venezuela incurs the dubious privilege of enjoying increased revenue from oil without having to lift a finger. Fearing oil shortages and price hikes, the major powers rush to buy vast quantities of crude oil to swell their reserves. This reaction makes prices shoot up, which in turn increases income in petrodollars and whets the appetites of its rentier society.

This history has been repeated time after time without Venezuela learning to manage this cycle of boom and bust without being harmed. When prices rise we embark on a festival of plenty, believing that revenue from oil is for ever, and we make no preparation to confront times of shortage. Yet when prices tumble and production drops off, our oil earnings are not enough to pay for the imports of products we should be producing locally and all the problems of shortages and inflation reappear, exacerbated by power cuts, water rationing, shortages of gas, and the collapse of our health and education systems. Hung-over from our nights of rentier excess, we convince ourselves that the age of oil is over. Our fight for survival makes us view the future with pessimism and we take no steps to manage the next boom.

Trust Funds

The year 2026 appears to be the most critical moment for rentier Venezuela. Because of the Iran war, oil prices are soaring, but the OFAC ¹⁾The US Office of Foreign Assets Control licensing system stops the higher earnings from oil export from reaching the Venezuelan government. So the divvying up of this increased revenue cannot be used by the government of the day as a means of maintaining its control of the country and instead becomes an instrument of foreign control.

Under the terms of Trump’s Executive Order 14373, income from the sale of Venezuelan oil must be deposited directly in accounts of the US Treasury, allegedly to protect them from action by creditors demanding vast sums of compensation for the historic expropriation of their assets. As everyone knows, bonds of the Venezuelan government and PDVSA ²⁾Petróleos de Venezuela, S.A., the state-owned oil and gas company are under threat from the claims of numerous creditors who hold bonds in default or court judgements in their favour and seek to recover their loans and compensation payments from the country’s new oil income.

In essence, Executive Order 14373 is the basic financial structure by which the US seeks to control the production and sale of Venezuelan oil. The US recognizes that oil revenue belongs to Venezuela but, on the pretext of protecting the money from any legal embargo imposed by courts and instead targeting it to revive the Venezuelan economy and halting illegal immigration to the US, the Trump Administration appoints itself legal guardian and orders that revenue from the sale of oil be deposited with the US Treasury in Foreign Government Deposit Funds.

That explains why the title of the EO is ‘Protecting Venezuelan oil revenue for the benefit of the US and Venezuelan peoples’. Trump’s decree delegates to the US Treasury Secretary the power to decide how these funds will be spent. Trump himself has said that a substantial portion will be used to purchase food, medicines, spart parts, machinery and equipment from US suppliers. Thus, with its control of earnings from oil, the Trump Administration can fund US exporters to regain the business and investments they lost in Venezuela.

For its part, Venezuela can and should demand independent and impartial management of its oil revenues. For that to happen, the Trust Funds must be converted to Sovereign Funds as a way of preparing the country for the next boom. That makes it vital that we study and learn from other countries who have known how to apply intelligence and wisdom to manage their oil riches. One such case is Norway.

What did Norway do about oil, that Venezuela could still do?

Norway is a country with fewer than 6 million inhabitants, where the fertility rate is barely 1.95. This demography means that the number of children born to each marriage is scarcely enough to replace the parents and the country’s population-size is stagnating and growing older. Since payment of future pensions cannot be covered by present social security contributions, the vital need to guarantee to pensioners a decent old age without imposing on future generations the weight of sustaining these pensions has become one of the main concerns of Norwegian society.

In 1990 they established the Norwegian Oil Fund specifically to build up reserves for the national pension scheme. In 1995 they made the first deposit of US$285 millions. To ensure that this initial contribution would grow, the funds were invested in shares, bonds, securities, viable projects, etc. Thanks to successive further deposits and the yield on these investments, the Norwegian Global Pension Fund has become the largest in the world today. Based on its reports for March 2026, the main data on the size and functioning of the fund include the following:

Volume of shares: Equivalent to US$ 2,2 trillion. The investments show dividend income growing to US$247 m (15.1% return) driven by the rise of tech industries and the banking sector.

​Investment structure: To ensure that the fund grows and will be sufficient to pay future pensions, the investments are diversified as follows:

• ​Variable income: 71% in a diversife portfolio of shares in 9,000 companies across the world, including Apple, Microsoft y Nvidia.
• ​Fixed income: 26% in bonds issued by governments and companies.
• ​Property: 2% in buildings, offices and commercial property in large cities.
• ​Renewable energy infrastructure: 1% (on wind and solar farms).

​The rule of expenditure and re-investment: Norway’s success is not only in the amount of money it holds, but in how the money is used. The rules are very strict:

• International Investment Rule: To avoid the economy overheating from the injection of oil income, the fund’s rules require that it only invests outside Norway. Thus it protects the internal economy from volatility in the price of oil on international markets.
• ​Three Per Cent Rule: To balance the National Budget the government can only withdraw 3% of the Fund’s value per year. The remainder is constantly reinvested. Thus the higher the value of the Fund, the more money can be devoted to health, education and the pension system.

​In Norway, this National agreement is pegged to very strict rules which prevent arbitrary expenditure of oil income. On the basis of coordinated development objectives, the government and Parliament jointly plan transfers from the Sovereign Wealth Fund to the national exchequer. The key is that in this way oil income is not spent, nor shared to preferred clients, but invested and reinvested to ensure sustained growth in the size of the Fund. Governments can only use a percentage of the Fund’s yields as complementary resources for the national budget, which must still be financed by taxpayers’ contributions.

​​A New National Oil Agreement

Venezuela still has substantial oil reserves and can do what Norway has done with its oil revenues. With the reforms made to the Hydrocarbons and Mining Laws, they have announced the creation of two trust funds to administer oil and mining revenue.

• ​Social Protection Account: Intended exclusively for recovering the real value of wages for workers in health, education and housing.
• ​Infrastructure and Services Account: Focusing on the restoration of the National Electricity System (SEN), roads and housing infrastructure.

​On the heels of reforms to the oil and Mining laws, came the licences granted by OFAC. In order for Venezuela to recover its oil and mining production it must give priority to supplying the US market. But a country which produces without having the freedom to sell where it wishes, is obliged to sell without billing directly and is operating under external supervision, should be demanding its independence, autonomy and sovereignty to administer its own revenues. In order to procure the irrevocable transformation of Trust Funds into Sovereign Funds, Venezuela’s National Assembly should approve a new legal and institutional framework to administer oil and mining revenues and the reinvestment and use of the income they generate.A Law to Establish a Venezuela Sovereign Wealth Fund should be the legal embodiment of a new National Oil Agreement which will permanently prevent raids on oil revenues and invest the income from the oil and mining industries in accordance with the following principles:

• Oil and Mining Revenues: These will be used to invest in shares, bonds, securities and sound and profitable projects which will generate income and increase the size of the Sovereign Fund.
• Dividends: Dividends from the fund will be used to repair the infrastructure of the electricity, water, gas, telecommunications and transport industries, restoring the production capacity of public-private companies in oil and mining, with the aim of generating more income to permanently feed the Fund.
• Taxes and tariffs: To improve the collection of ISLR ³⁾Impuesto Sobre La Renta, a tax on the income of companies and individuals, IVA ((Impuesto al Valor Agregado, Value Added Tax) and other taxes, required to finance current expenditure, the government will be authorized to use a certain percentage of the yield of the Fund to finance expenditure planned in the National Budget

As the Fund grows in value, the same percentage of the dividends which is used to finance public expenditure will contribute a steadily growing amount to the National Budget. What must be established clearly in this new National Oil Agreement is that whatever the government of Venezuela, it will only be allowed to use for the National Budget a percentage of the income from the investments of the Fund. And a steadily growing Fund will generate a steadily growing sum of secure income to the National budget.

Once it transforms its Trust Funds into Sovereign Funds, Venezuela will cease to depend on external approval and will achieve the sovereign allocation of its own resources. The country will also be protected from the erratic swings in international oil prices, because it will cease spending all the revenue from oil in good times, and will begin to save so that it can survive lean periods. And in this way, too, the ‘clientalist’ distribution of oil revenue will cease to be a mechanism for domination, used by governments to reward their most committed supporters, buy the loyalty of others and punish their opponents. It will mark the end of a ‘rentier’ society in which it has been possible to impose authoritarian control over the economy and society by deploying arbitrary discretion in the use of oil revenues.

Victor Álvarez (@victoralvarezr )is an economist, researcher and consultant. He has won Venezuela’s National Science Prize and hosts the website and podcast Pedagogía Económica y Política.

Main image: from thegoan.net