Assessing Geopolitical Risks and Opportunities in Latin American Defense and Security Sectors Amid U.S.-Venezuela Tensions

The escalating U.S.-Venezuela tensions in the Caribbean have created a volatile yet lucrative landscape for defense and infrastructure investments. As the Trump administration intensifies its military presence to counter drug trafficking and assert strategic dominance, defense contractors and regional infrastructure firms are poised to benefit from heightened operations. However, investors must weigh these opportunities against geopolitical risks, including potential conflicts, shifting trafficking routes, and diplomatic backlash.

Defense Contractors: A Surge in Demand for Advanced Capabilities

The U.S. military’s deployment of ten F-35 stealth fighter jets to Puerto Rico and three warships near Venezuela’s coast underscores a strategic pivot toward high-tech deterrence [1]. Lockheed Martin, the manufacturer of the F-35, has seen increased demand for its fifth-generation aircraft, which are central to U.S. anti-narcotics operations. Similarly, Boeing’s AV-8B Harrier II jets, deployed aboard the USS Iwo Jima, highlight the continued reliance on legacy platforms for amphibious operations [2].

Defense firms specializing in maritime surveillance and cyber capabilities are also gaining traction. The Atlantic Council’s Energy & Defense Program emphasizes the need for resilient infrastructure and secure energy systems in contested environments, suggesting opportunities for companies like Raytheon (missile defense systems) and Northrop Grumman (surveillance technology) [3]. Additionally, the U.S. military’s focus on next-generation technologies—such as AI-driven logistics and satellite-based monitoring—aligns with broader industry trends, as noted in PwC’s 2024 aerospace and defense report, which highlights a 9% global defense budget increase driven by cyber and space priorities [4].

Infrastructure Players: Energy, Logistics, and Security

The Caribbean’s strategic role in U.S. operations has spurred demand for infrastructure upgrades. Energy security is a critical concern, with the Atlantic Council stressing the importance of resilient power systems for military bases [3]. Companies like Alliant Energy and NextEra, which have expanded renewable energy projects in the region, could benefit from U.S. investments in solar and wind power for forward bases.

Logistics firms are also seeing growth. The U.S. military’s reliance on Puerto Rico as a staging ground for Caribbean operations has boosted demand for port modernization and cargo handling. Meanwhile, infrastructure companies in Mexico and Ecuador—such as those involved in naval drone procurement and airport upgrades—are aligning with U.S. security partnerships. For example, a $20 million U.S. aid package to Ecuador includes funding for maritime surveillance drones, signaling a shift toward technology-driven border security [5].

Investment Trends and Regional Spending

The U.S. defense budget for fiscal year 2025, while not explicitly allocating funds for Caribbean operations, reflects broader priorities through programs like international narcotics control and nonproliferation efforts [6]. Regional spending in Latin America and the Caribbean reached $59.5 billion in 2024, excluding Venezuela, Suriname, and Cuba, as nations bolster their militaries amid U.S. engagement [7].

Nearshoring trends are further driving infrastructure investment. U.S. companies relocating manufacturing to the Caribbean to avoid Chinese competition are spurring demand for industrial facilities and transportation networks. Jamaica’s offshore wind projects and Guatemala’s solar PV initiatives also align with U.S. climate goals, attracting private capital through public-private partnerships [8].

Geopolitical Risks and Ethical Considerations

While opportunities abound, investors must navigate significant risks. The U.S. military’s aggressive posturing—such as the Trump administration’s warning to shoot down Venezuelan jets—has heightened tensions, risking unintended escalation. Legal experts have criticized the legality of U.S. strikes on suspected drug vessels, citing concerns over civilian casualties [9]. Additionally, Venezuela’s mobilization of 4.5 million militiamen and its alliances with Russia and China could destabilize the region, complicating long-term investments.

Drug trafficking routes are also shifting. As U.S. pressure mounts in the Caribbean, cartels are pivoting to the Pacific, with Ecuador and Mexico becoming focal points. This realignment could strain infrastructure projects in these countries and divert U.S. security aid.

Conclusion: Balancing Strategy and Caution

The U.S.-Venezuela standoff presents a dual-edged sword for investors. Defense contractors with expertise in advanced aircraft, cyber, and maritime systems are well-positioned to capitalize on short-term demand. Infrastructure firms specializing in energy resilience and logistics will benefit from U.S. military and economic priorities. However, the region’s geopolitical volatility and ethical dilemmas require careful risk management. Investors should prioritize diversification, hedging against conflicts and regulatory shifts while leveraging long-term trends like nearshoring and renewable energy adoption.

Source:
[1] Trump orders shoot-down of Venezuelan jets as F-35s deployed to Caribbean [https://m.economictimes.com/news/international/us/another-war-in-the-making-trump-orders-shoot-down-of-venezuelan-jets-as-f-35s-deployed-to-caribbean/articleshow/123730587.cms]
[2] US deploys F-35 stealth fighters to Puerto Rico amid Venezuela tensions [https://www.flightglobal.com/fixed-wing/us-sending-f-35-fighters-to-puerto-rico-amid-venezuela-tensions/164411.article]
[3] Energy & defense [https://www.atlanticcouncil.org/programs/global-energy-center/energy-defense/]
[4] Aerospace and defense industry performance and outlook [https://www.pwc.com/us/en/industries/industrial-products/library/aerospace-defense-review-and-forecast.html]
[5] Rubio's visit to Mexico and Ecuador shows the need for US security cooperation runs deeper than warships in the Caribbean [https://www.atlanticcouncil.org/blogs/new-atlanticist/rubios-visit-to-mexico-and-ecuador-shows-the-need-for-us-security-cooperation-runs-deeper-than-warships-in-the-caribbean/]
[6] H. Rept. 118-554 - STATE, FOREIGN OPERATIONS, AND ... [https://www.congress.gov/committee-report/118th-congress/house-report/5]
[7] Full article: Chapter Seven: Latin America and the Caribbean [https://www.tandfonline.com/doi/full/10.1080/04597222.2025.2445479]
[8] Unlocking Business Opportunities in Emerging Markets: Latin America and the Caribbean [https://delphos.co/news/blog/unlocking-business-opportunities-in-emerging-markets-latin-america-and-the-caribbean/]
[9] Trump plays down possible regime change in Venezuela [https://www.stabroeknews.com/2025/09/06/news/regional/trump-plays-down-possible-regime-change-in-venezuela-us-deploys-stealth-fighter-jets-2/]