Why Traders Are Betting on Venezuelan Debt Again

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Summary:

Venezuelan bonds are back in focus, with a potential post-Maduro $170 billion debt restructuring hinging on U.S. sanctions.

Venezuelan bonds are back in the spotlight after the January 3 seizure of President Nicolas Maduro by U.S. special forces, with markets now actively pricing in a potential, long-overdue debt restructuring.

The country's economy has been devastated by corruption, mismanagement, and severe underinvestment. U.S. sanctions intensified the crisis by cutting off access to foreign financing and choking off oil exports, the government's primary source of income.

Investors are now betting that a post-Maduro government could normalize relations with Washington, leading to the easing of sanctions and a new flow of foreign capital into Venezuela's vital oil sector. This optimism fuels hopes for a debt deal where creditors would forgive a portion of the country's roughly $170 billion in overseas obligations in exchange for a sustainable repayment plan. Analysts estimate the government and state oil company Petróleos de Venezuela SA (PDVSA) alone owe a combined $100 billion, including unpaid interest.

The Post-Maduro Economic Bet

The outlook remains highly uncertain. While acting President Delcy Rodriguez has indicated a willingness to engage with Washington, it is unclear if Venezuela's Socialist establishment will support the deep policy reforms the U.S. Trump administration would likely require before lifting sanctions.

The sheer scale of the debt is staggering. The International Monetary Fund pegged Venezuela's debt-to-GDP ratio at 164% for 2024, a figure reminiscent of Greece just before its major 2012 restructuring. According to Citigroup Inc., this burden would need to be slashed to at least 85% to align with historical debt workouts and meet anticipated IMF conditions.

Price is also a major draw. Although Venezuelan bonds have more than doubled in value over the past year, they still trade at deeply distressed levels, attracting speculative traders. Some investors see further upside.

"These bonds are probably a better buy today at 40 than they were at 30 two business days ago," Altana Wealth founder Lee Robinson noted in early January.

U.S. Sanctions: The Ultimate Gatekeeper

Washington effectively controls access to global capital markets for Caracas. Sanctions imposed by the U.S. Treasury Department have been the single biggest barrier to restructuring Venezuela's defaulted bonds, as most transactions require a license from the Office of Foreign Assets Control (OFAC). Without this authorization, even preliminary discussions about a settlement are legally prohibited.

Any restructuring would necessitate issuing new bonds, an impossibility without sanctions relief. Furthermore, oil exports—essential for servicing any new debt—would need to flow freely, but the U.S. currently has a blockade on oil shipments from the nation.

Because the U.S. financial system is so central, these restrictions can freeze trading for nearly all investors. Major U.S. asset managers like Fidelity Investments, BlackRock Inc., and T. Rowe Price Group Inc. are among the debt holders. Much of the litigation and some of Venezuela's most valuable overseas assets also fall under U.S. jurisdiction.

Unpacking the $170 Billion Debt Puzzle

Venezuela began a gradual slide into default in 2017, about two years before the U.S. cut ties with Maduro's government and barred American investors from buying the country's debt. In response, some bondholders, including Ashmore Group Plc and Grantham, Mayo, Van Otterloo & Co., formed a creditor group to prepare for negotiations.

A sovereign debt restructuring typically involves reducing the total amount owed, extending repayment deadlines, and swapping old bonds for new, more manageable ones. In recent cases like Ecuador and Argentina, collective action clauses streamlined the process by allowing a supermajority of bondholders to approve a deal binding on all parties.

Venezuela's situation is far more complex.

The country's liabilities are massive and its creditor base is highly fragmented. It includes not only bondholders but also bilateral lenders like China and entities holding arbitration awards and court judgments. These competing claims are governed by different legal frameworks, creating a tangled web of priorities.

Wall Street banks estimate Venezuela owes around $100 billion in unpaid foreign-currency bonds and interest. Citigroup puts the total external debt, including bilateral loans and other obligations, at approximately $169 billion. The complexity, combined with U.S. sanctions and ongoing creditor lawsuits to seize assets, makes a swift resolution unlikely. Pictet Asset Management anticipates a "very protracted" process that could take as long as three years, potentially mirroring Greece's drawn-out, multi-stage settlement in 2012.

A Potential Path Forward: Oil-Linked Warrants

Venezuela's ability to pay its debts will ultimately depend on how quickly its oil production can recover after a political transition and how much foreign investment returns. This uncertainty has led to proposals for creative financial solutions.

One such solution involves oil-linked warrants. These instruments would give creditors a share in the upside if Venezuela's oil output rebounds strongly, while providing the government with breathing room if the recovery is slower than expected. Similar to GDP-linked securities used in other restructurings, oil warrants could help bridge the gap between creditor demands and the government's need for flexibility.

Navigating the Political Minefield

For now, investors are closely watching who will lead Venezuela through a transition. Rodríguez, Maduro's former second-in-command, has been sworn in as acting president and has been in contact with U.S. Secretary of State Marco Rubio.

Under the constitution, Rodríguez can hold executive power for up to 90 days, with a possible extension. Her ability to balance U.S. demands against pressure from hard-liners within the regime will be a critical test. Money managers are also watching for any signs that Washington might ease sanctions and encourage U.S. energy companies to help rebuild the country's oil industry. Ultimately, the recovery value of the debt hinges on economic stabilization and oil output.

A High-Risk, High-Reward Trade

Despite the renewed optimism, investing in Venezuelan debt remains a highly speculative bet. The political and economic outlook is fluid, with little clarity on the timing or structure of a potential restructuring.

Recovery value estimates vary widely, from 35 to 60 cents on the dollar, and could be lower if a market-friendly outcome doesn't materialize. A key risk is how different types of debt will be ranked. If bonds issued by the state oil company PDVSA are not treated equally with sovereign debt, losses could differ sharply across various instruments.

Any restructuring would be one of the largest and most complex in modern history, likely taking years to complete. Litigation and competing legal claims could easily derail the process.

Beyond the debt talks, other risks loom:

• A rapid recovery in Venezuelan oil output could depress global crude prices, limiting revenue gains.

• Political uncertainty remains high, with questions about the durability of the Rodríguez presidency.

• After years of underinvestment, oil production may recover much more slowly than optimists hope.

In short, this trade is a bet not just on a successful debt deal, but on sustained political stability, deep policy reform, and a durable economic rebound. If any of those pillars crumble, Venezuela's revival—and the value of its debt—could unravel.

To stay updated on all economic events of today, please check out our Economic calendar

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You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Edward Lawson

Energy

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Commodity

Four key OPEC+ nations have committed to deeper oil production cuts through the first half of 2026, a strategic move to address compliance issues and stabilize an oversupplied global market. The United Arab Emirates, Iraq, Kazakhstan, and Oman will collectively reduce output by 829,000 barrels per day (bpd) by June, a figure three times larger than their previous pledge.

This move follows an earlier OPEC+ decision to extend its voluntary cuts of 2.9 million bpd, keeping that volume off the market through the first half of the year. The renewed caution reflects growing concerns over market imbalances as robust production from non-OPEC countries continues to pressure prices.

Key Members Increase Output Reductions

The distribution of the new 829,000 bpd cut highlights a significant commitment from Kazakhstan, which will shoulder the majority of the reduction. The specific pledges through June are:

• Kazakhstan: Will cut 669,000 bpd, a substantial increase from its prior commitment of 131,000 bpd.

• Iraq: Will maintain its cut of 100,000 bpd.

• UAE: Will raise its reduction to 55,000 bpd from just 10,000 bpd.

• Oman: Will implement a cut of approximately 5,700 bpd.

Non-OPEC+ Supply Surge Pressures Prices

The global oil market is expected to remain oversupplied in 2026, primarily driven by strong production growth from countries outside the OPEC+ alliance. The United States, Brazil, Canada, Guyana, and Argentina are poised to lead this supply increase as new projects launch and operational efficiencies improve.

U.S. crude output is projected to stay near record levels after reaching an all-time high of 13.87 million bpd in October. This strength is supported by consistent shale output and offshore growth in the Gulf of Mexico, which helps offset softer production in Texas.

Subdued Demand Outlook Complicates Market Balance

On the demand side, growth in 2026 is forecasted to be modest and below historical averages. This slowdown is attributed to a tougher macroeconomic environment, advancements in vehicle efficiency, and the increasing adoption of electric vehicles in major economies.

These combined supply and demand dynamics have already led to periods of inventory accumulation in global markets, with visible stock increases reported across parts of Asia. The latest cuts from OPEC+ are a direct response to these challenging conditions as the group attempts to manage supply and support prices.

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Manuel

Economic

U.S. job openings dropped to a 14-month low in November while hiring resumed its sluggish tone, pointing to ebbing demand for labor amid policy uncertainty related to import tariffs and the integration of artificial intelligence in some work roles.

Despite the larger-than-expected decline in job postings reported by the Labor Department on Wednesday, employers remained hesitant to carry out mass layoffs, keeping the labor market in what economists and policymakers call a "no hire, no fire" state. That bolstered economists' expectations the Federal Reserve would keep interest rates unchanged later this month.

"The November ‌JOLTS estimates show a notable decline in job openings and little sign of deterioration in labor market conditions," said Marc Giannoni, chief economist at Barclays.

Job openings, a measure of labor demand, dropped 303,000 to 7.146 million by the last day of November, the Labor Department's Bureau of ‌Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report. That was the lowest level since September 2024. October's openings were revised down to 7.449 million.

Economists polled by Reuters had forecast 7.60 million unfilled jobs in November following the previously reported 7.670 million in October. There were 0.91 job openings for every unemployed person in November, the lowest level seen since March 2021. Businesses with headcounts of between 50 and 999 accounted for the bulk of the decline in job postings.

Small businesses reported an increase in job openings.

The decrease in overall job openings in November was led by the accommodation and food services industry, which saw vacancies plunging 148,000. Unfilled jobs in the healthcare and social assistance sector ⁠decreased by 66,000. These two sectors were among the main drivers of job growth ‌in 2025.

There were 108,000 open positions in the transportation, warehousing and utilities sector, while unfilled jobs in the wholesale trade industry fell 63,000. Government job openings decreased by 89,000, mostly at the state and local government level. Federal government vacancies increased 8,000.

But job postings increased 90,000 in the construction sector and jumped 121,000 in the retail industry likely as ‍stores geared up for the holiday season. The overall job openings rate fell to 4.3% from 4.5% in October.

Hiring dropped by 253,000 positions to 5.115 million in November, consistent with lackluster job gains even as economic growth was robust in the third quarter.

The decline in hiring was nearly across all business sizes, and most pronounced in the healthcare and social assistance sector, where hiring fell by 76,000. The overall hires rate dropped to 3.2% from 3.4% in October.

Economists say policy uncertainty mostly related to import tariffs had left businesses reluctant to increase their headcounts, resulting in a jobless economic expansion. The U.S. Supreme Court is expected on Friday to rule on the legality of President Donald Trump's sweeping global tariffs.

Some employers also are ‌integrating artificial intelligence in certain roles, diminishing the need for labor.

Economists argue that the labor market is experiencing structural challenges rather than cyclical weakness.

LAYOFFS REMAIN HISTORICALLY LOW

Layoffs dropped by 163,000 to 1.687 million. Resignations increased by 188,000 to 3.161 million, lifting the quits rate to a still-low 2.0% from 1.9% in October.

"Although layoff activity remains modest, we note that the low rate of voluntary exits raises the risk that employers who are looking to dial back headcount may need to increasingly resort to layoffs in lieu of attrition," said Sarah House, a senior economist at Wells Fargo.

Stocks on Wall Street were mixed. The dollar was steady against a basket of currencies. U.S. Treasury yields fell.

The U.S. central bank is expected to keep interest rates unchanged in January. Minutes of the December 9-10 meeting published last week showed deep divisions at that meeting. The BLS is likely to report on Friday that nonfarm payrolls increased by 60,000 jobs in ⁠December after advancing by 64,000 in November, a Reuters survey of economists predicted.

Though the ADP's national employment report showed private employment rebounded by 41,000 jobs last month after decreasing 29,000 in November, economists cautioned against reading too much into the increase.

The monthly ADP estimate has historically diverged from the government's private payrolls count in the employment report.

"The visual signal from today's headline is that jobs were gained in December, but at a relatively slow pace," said Carl Weinberg, chief economist at High Frequency Economics.

Attention is likely to center on the unemployment rate for fresh clues on the health of the labor market and near-term monetary policy outlook. The ‍jobless rate is projected to have eased to 4.5% in ⁠December after accelerating to more than a four-year high of 4.6% in November.

The November unemployment rate was partially distorted by the 43-day federal government shutdown, which also prevented the collection of household data for October. The unemployment rate for October was not published for the first time since the government started tracking the series in 1948.

A third report from the Institute for Supply Management showed its nonmanufacturing purchasing managers' index ⁠increased to 54.4 in December from 52.6 in November, with a measure of services employment rebounding to 52.0 after contracting for six straight months. At face value that suggested strong momentum in the economy heading into the new year.

The economy this year is expected to get ‌a tailwind from tax cuts and fading trade policy uncertainty.

"Stable and consistent economic growth in 2026 should keep services in a solid expansionary state over the year with upside if stimulus impacts ‌are substantial," said Ben Ayers, senior economist at Nationwide.

Source: Reuters

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Edward Lawson

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White House Confirms Military Option on the Table

The White House has confirmed that President Donald Trump reserves the right to use military force to secure American oil interests in Venezuela. Press Secretary Karoline Leavitt stated Wednesday that while diplomacy remains the preferred approach, military action is a possibility if necessary.

When asked if the president would deploy troops to protect U.S. oil workers, Leavitt affirmed that Trump would act in the best interests of the American people and its energy industry. She clarified that the U.S. does not currently have troops on the ground in Venezuela.

This statement follows the Trump administration's recent military buildup in the Caribbean, which included the deployment of the USS Gerald R. Ford carrier strike group. Despite the increased presence, President Trump told NBC News on Monday that the United States is not at war with Venezuela.

Oil Giants Summoned for Venezuela Strategy Talks

The administration is actively engaging with top energy firms to rebuild Venezuela's oil sector. President Trump has called for U.S. oil majors to invest billions and is scheduled to meet with industry executives at the White House on Friday.

According to sources who spoke with CNBC's Brian Sullivan, the CEOs of ExxonMobil and ConocoPhillips, along with a representative from Chevron, are expected to attend.

Separately, Energy Secretary Chris Wright is set to speak with oil executives on Wednesday at Goldman Sachs' annual energy conference in Miami. Chevron is currently the only major U.S. oil company operating in Venezuela, doing so under a special license.

US Takes Control of Venezuelan Oil Sales

The U.S. government plans to manage Venezuela's oil sales for the foreseeable future. Energy Secretary Wright announced Wednesday that the U.S. will market all crude coming out of the country, starting with 30 million to 50 million barrels of stored, sanctioned oil.

"We're going to market the crude coming out of Venezuela," Wright said at the conference. "First this backed up stored oil and then indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace."

He explained that this control is a strategic tool. "We need to have that leverage and that control of those oil sales to drive the changes that simply must happen in Venezuela," the energy secretary stated.

Ouster of Maduro Sets Stage for US Investment

These developments follow the ouster of President Nicolas Maduro in a U.S. military raid over the weekend. Maduro was subsequently taken to New York City to face federal charges related to a drug-trafficking conspiracy.

Energy analysts note that U.S. oil companies will require assurances about security and governmental stability before committing to major investments in the country.

Venezuela holds the world's largest proven crude oil reserves, according to the U.S. Energy Information Administration. Data from energy consulting firm Kpler shows the nation was recently producing approximately 800,000 barrels per day.

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Nathaniel Wright

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Data Interpretation

Leading economists from Canada’s largest banks are sounding the alarm, arguing that Prime Minister Mark Carney’s latest budget investments fall short of what’s needed to make the country competitive. Their consensus: without fundamental tax reform, the new spending plans won't be enough to drive meaningful growth.

"I don't think it's enough," Beata Caranci, chief economist at Toronto-Dominion Bank, stated at a recent Economic Club of Canada event. "What we've seen is a good first step, but really what they've done so far is unwind previous bad policy."

A C$1 Trillion Goal Under Scrutiny

The November budget outlined an ambitious goal to attract C$1 trillion ($723 billion) in public and private investment over five years, fueled by tax incentives and targeted spending on housing, infrastructure, and defense. However, many of the corporate tax changes were simply carried over from the previous government.

Jean-François Perrault, chief economist at Bank of Nova Scotia, described the C$1 trillion target as "completely unrealistic," noting that it would require Canada to double its current investment levels. Despite this, he acknowledged that the country stands to benefit from the push, even if it is only partially successful.

How Tax Policy Holds Back Business Growth

According to the panel of economists, the core issue lies within Canada's tax structure, which they argue actively discourages growth.

Caranci highlighted how the system can stifle higher earnings. For example, small businesses lose their preferential tax rates once they surpass C$500,000 in income. This creates a "bunching" effect where a large number of firms hover just below that threshold, hesitant to expand.

Her recommendation is to, at a minimum, index that figure to inflation. "You're artificially keeping companies smaller," she explained.

Perrault echoed this sentiment, adding that many businesses are not focused on maximizing profit growth because they view the tax system and regulatory environment as significant disadvantages.

The Vicious Circle of Productivity and Investment

This reluctance to invest feeds into a larger problem flagged by the Bank of Canada: a "vicious circle" where weak productivity leads to reduced investment, which in turn perpetuates weak productivity.

While Carney's government has worked to clear some regulatory hurdles for new west coast pipelines to export more oil to Asia, no company has yet committed to building one. Even if a project moves forward, the construction—and its economic benefits—would be years away.

This timeline is not aggressive enough for Stéfane Marion, chief economist at National Bank of Canada. "We need to be a little bit more aggressive in terms of building it, and hopefully we can do it in less than 10 years," he said.

Global Oil Markets and Fading Urgency

Recent geopolitical shifts are adding to the pressure. U.S. President Donald Trump's efforts to access Venezuelan crude have reinforced calls for Canada to diversify its energy export markets. The urgency was underscored this week as prices for Canadian heavy oil grades fell after the capture of Venezuelan President Nicolas Maduro.

However, Caranci believes the more immediate threat for Canada is the existing global supply glut, arguing that unlocking Venezuelan oil will require many years and substantial investment.

Ultimately, the economists warned that Canada is at risk of losing the momentum it gained after President Trump imposed tariffs and made other threats.

"I'm worried that as much as we want to seize the moment, that we don't," Perrault concluded.

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Commodity

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The Trump administration plans to control future sales of Venezuelan oil and hold the proceeds in US accounts, Energy Secretary Chris Wright said, making the clearest statement yet on Washington’s strategy to bring the impoverished nation’s crude to market and manage its most valuable resource.

Wright, who spoke at a Goldman Sachs Group Inc. conference in Miami Wednesday, said initially the barrels would come from crude Venezuela is holding in storage, which has been filling up amid the US blockade and threatening to force some production off line.

“We’re just going to get that crude moving again and sell it,” Wright said. “We’re going to market the crude coming out of Venezuela – first this backed-up stored oil and then indefinitely going forward we will sell the production that comes out of Venezuela.”

The plan comes as the Trump administration is pushing for US energy companies to rebuild Venezuela’s decaying oil infrastructure and revive its flagging production. The US is also selectively rolling back sanctions on Venezuela’s oil sector as part of the effort, the Energy Department said.

President Donald Trump said Tuesday evening that Venezuela would relinquish as much as 50 million barrels of its oil for the US to sell, valued at about $2.8 billion at current market prices.

The US has already begun marketing Venezuelan crude, White House Press Secretary Karoline Leavitt said during a briefing Wednesday.

Revenue from the sales will be held in US Treasury accounts, a move that would protect the proceeds from Venezuela’s creditors, a person familiar with the matter said. The funds will benefit the American and Venezuelan people, Leavitt said.

“All proceeds from the sale of Venezuelan crude oil and products will first settle in US-controlled accounts at globally recognized banks to guarantee the legitimacy and integrity of the ultimate distribution of proceeds,” Leavitt said. “Those funds will be dispersed for the benefit of the American people and the Venezuelan people at the discretion of the United States.”

Earlier, US forces seized two more sanctioned oil tankers, including one flying a Russian flag, as the Trump administration pushes to control all exports of Venezuelan crude. One was seized in the Atlantic Ocean south of Iceland, and the other was apprehended in the Caribbean region.

Trump is pushing for US oil companies such as Chevron Corp., ConocoPhillips and Exxon Mobil Corp. to rebuild Venezuela’s infrastructure and revive production now that the US has removed former President Nicolás Maduro. The administration has already had conversations with multiple oil companies, according to an official. The president is set to meet with energy executives on Friday, Leavitt said.

US oil companies have so far said little publicly about their willingness to take on such an endeavor.

Venezuela sits atop some of the world’s largest crude reserves, but companies will want to ensure there’s a stable government in place before making any long-term investments. They will also want some degree of confidence Washington will support their presence in Venezuela even after Trump is no longer in office.

Chevron is the only US major operating in Venezuela, working under a special license from Washington. Exxon and ConocoPhillips previously operated inside the country but left after their assets were nationalized by Maduro’s predecessor, Hugo Chávez, in the mid-2000s.

Global oil futures slipped 1.3% Wednesday, trading at around $60 a barrel.

“It’s just a meeting to discuss, obviously, the immense opportunity that is before these oil companies right now,” she said.

Secretary of State Marco Rubio also may attend the sit-down that’s being planned, according to people familiar with the matter.

Venezuela’s oil sector has suffered from years of corruption, underinvestment and neglect, and its production is less than 1 million barrels a day. Wright estimated that output could be increased by several hundred thousand barrels a day in the short to medium term.

Restoring the industry to its former glories would be a huge undertaking, costing an estimated $10 billion per year over the next decade, according to estimates from Francisco Monaldi, director of Latin American energy policy at Rice University’s Baker Institute for Public Policy.

Source: Bloomberg

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King Ten

Remarks of Officials

Political

President Donald Trump's suggestion of military action to annex Greenland is being framed by his Republican allies on Capitol Hill as a hardball negotiation tactic, echoing the deal-making style he championed in his 1987 book. This defense comes as Trump refuses to rule out force, a stance that has alarmed European leaders and many in Washington.

The GOP has largely supported Trump following a recent strike he ordered to capture Venezuelan leader Nicolas Maduro without congressional approval. Now, as attention shifts to Greenland, some Republicans argue the president's aggressive posture is merely a bluff to secure greater U.S. influence over the strategic Arctic island.

The "Art of the Deal" Defense

Supporters of the former president claim his threats are part of a calculated strategy to bring Denmark to the negotiating table.

"He's from New York, he's one of the best negotiators and how he negotiates sometimes is everything is on the table," Rep. Ryan Zinke, a Montana Republican who served as Trump's first-term Secretary of the Interior, told CNBC.

Zinke added that he believes Secretary of State Marco Rubio is correct to downplay the idea of a military invasion. "I'd be supportive of negotiating a deal with Denmark to make sure that it stays influenced in the West," he said.

This perspective is shared by other Republicans who believe Trump's rhetoric is primarily about leverage.

"To Trump, everything is a deal, everything is a negotiation, a lot of things come down to leverage," said Rep. Nick LaLota, a New York Republican. "I think his administration is comfortable with the term about not taking any options off the table, I hope we don't read too much into that."

Rep. Mike Lawler (R-NY) argues that while Greenland is strategically important, there is strong bipartisan opposition to using force.

Rep. Mike Lawler, another New York Republican, acknowledged the island's importance but drew a clear line against military action. "Obviously there is strategic national security importance to it with respect to the Arctic, with respect to NATO, with respect to combating Russia," he said. "If you can enter into negotiations with Denmark, with Greenland, great. The idea of taking it by force, no... there is strong bipartisan opposition to any use of force with respect to Greenland."

White House Keeps Military Option Open

Trump has long expressed interest in Greenland, a self-governing territory of Denmark, a NATO ally. He argues that U.S. control is a national security imperative for countering Russian and Chinese ambitions in the Arctic. His focus on the island has intensified following the raid that captured Maduro, who now faces drug charges in New York.

Former Interior Secretary Ryan Zinke, a Trump ally, suggests the President's aggressive posture on Greenland is a negotiation tactic.

The White House has not dismissed the possibility of using force.

"The President and his team are discussing a range of options to pursue this important foreign policy goal, and of course, utilizing the U.S. Military is always an option at the Commander in Chief's disposal," White House Press Secretary Karoline Leavitt said in a statement Tuesday.

Bipartisan Backlash and European Alarm

The administration's stance has rattled European leaders and angered Denmark, which, along with Greenland, has consistently rejected Trump's proposals.

"Greenland belongs to its people. It is for Denmark and Greenland, and them only, to decide on matters concerning Denmark and Greenland," Danish Prime Minister Mette Frederiksen, French President Emmanuel Macron, German Chancellor Friedrich Merz, British Prime Minister Keir Starmer, and the leaders of Italy, Spain, and Poland declared in a joint statement.

In Washington, Democrats have warned that an invasion of Greenland would shatter the NATO alliance.

• Sen. Ruben Gallego (D-AZ) announced he plans to introduce a War Powers Resolution to block Trump from ordering military action.

• Rep. Jim McGovern (D-MA) stated he is working on a similar resolution in the House, telling CNBC, "The people around him need to stage an intervention... He wants to destroy and blow up our NATO alliances."

Some Republicans have joined Democrats in condemning the rhetoric.

• Rep. Don Bacon (R-NE) called Trump's actions "appalling," adding, "It's creating a lot of long-term anger and hurt with our friends in Europe. I feel like we have a bunch of high school kids playing Risk."

• Sen. Thom Tillis (R-NC) and Sen. Jeanne Shaheen (D-NH) issued a joint statement affirming that any suggestion of coercion against a NATO ally "undermines the very principles of self-determination that our Alliance exists to defend."

The Stakes for NATO

Even Trump's allies concede that military action against Greenland would require congressional approval, unlike the Venezuela operation, which they characterized as a law enforcement function. "This would require congressional authorization," Zinke said.

Trump himself cast doubt on the alliance's value in a Truth Social post on Wednesday, writing, "RUSSIA AND CHINA HAVE ZERO FEAR OF NATO WITHOUT THE UNITED STATES, AND I DOUBT NATO WOULD BE THERE FOR US IF WE REALLY NEEDED THEM." He added, "We will always be there for NATO, even if they won't be there for us."

For now, influential House Republicans are standing by the president, maintaining that his threats are a means to an end. House Foreign Affairs Committee Chair Rep. Brian Mast, R-Fla., insisted the "post World War 2 order is not over in any way whatsoever."

"There's not a goal to break up NATO right now," Mast said. "There's looking to say, is there a good deal that can be made for what is a very strategic location, not just for the United States of America, but for others."

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