For four years, Venezuela was an international pariah. That is changing. In the medium term, Venezuela could also become interesting for German companies.
by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung
Last week, the U.S. announced a special permit for national companies to operate in Venezuela: Effective immediately, U.S. oil company Chevron, as well as North American oil industry service companies (Halliburton, Schlumberger, Baker Hughes and Weatherford), will be allowed to restore oil facilities and produce oil in Venezuela. Chevron must export the oil it produces to the United States. This is to pay off Venezuela’s accumulated debt to the California company. The Venezuelan state may not levy any taxes or royalties on the production.
This is an u-turn in U.S. policy toward Venezuela. In 2018, U.S. President Donald Trump had imposed tough sanctions on the West’s richest oil country after rigged elections. All trade with Venezuela in dollars is banned to this day.
But now the West is looking for new sources of oil after the loss of Russian oil on the world market. And Maduro is up to his neck in water. For a long time, he was able to circumvent the sanctions with the help of Russian banks. But this channel has been closed since the start of the Russian war in Ukraine.
Thus, since the start of the war in Ukraine, there has been a steady rapprochement between the U.S. and Venezuela: In principle, Washington is concerned with obtaining commitments from Maduro to democratic elections. In return, the U.S. offers a gradual lifting of sanctions.
It is still completely open whether Venezuela will experience a renaissance as a major oil producer for the West. The decisive factor is whether Maduro is willing to hold fair and clean elections. In eight years, five negotiating groups have tried to reach an agreement. However, Maduro has never been willing to make concessions.
The thaw in relations with the USA could also open up opportunities in Venezuela again for other companies – including German ones. That’s because Venezuela is experiencing growth again this year for the first time after a severe decade-long recession that saw the economy shrink by 80 percent. The Economic Commission for Latin America and the Caribbean expects growth of 12 percent this year (2023: 5 percent). By allowing the dollar as a second currency, Maduro has been able to curb inflation since 2019. The local consumer market has also reawakened since then. Consumer goods have been entering the country, especially from the U.S., since the government lifted import tariffs.
It is true that foreign companies are only allowed to supply pharmaceutical and food products to Venezuela – all other imports are banned due to US sanctions. But those who produce in the country are not affected by the sanctions. Investments in the energy, telecommunications, agro-industry and tourism sectors are considered promising.
It seems that the German business community should look at Venezuela again.