Every year, thousands of Venezuelans arrive in the United States, leaving behind a country they no longer can call home. This isn’t by choice, but by necessity. Thanks to dictators Hugo Chavez and Nicolas Maduro, Venezuela’s economy has all but collapsed. Venezuela’s future will depend on foreign investment to rebuild its economy and create jobs and opportunity once again.
According to the U.S. Trade Representative, Venezuela’s GDP declined by 35 percent in 2019 to $70.1 billion. That same year, American foreign direct investment in Venezuela amounted to $2.2 billion, representing a large chunk of the nation’s total economic activity. American businesses have already made critical investments in Venezuela, supporting economic development and job creation in a country struggling through a devastating economic crisis. We have the opportunity to do more.
Venezuela is in an economic crisis. It needs infrastructure, jobs, and healthcare to bring the country out of the throes of poverty.
President Biden and his team have made commitments to support the Venezuelan people. By supporting the rule of law, Biden can begin to undo the damage caused by the late Chavez and Maduro.
Unfortunately, it is incredibly difficult for Western companies to invest in Venezuela and its people. For the past two decades, Chavez and Maduro violated the rule of law by nationalizing the assets of foreign businesses in the country, deterring others from investing in Venezuela and its economy.
The Biden administration can start to repair this damage by addressing cases where the rule of law was overlooked, like in the case of Crystallex. In the early 2000s, Crystallex was awarded a contract to operate a gold mine in the Las Cristinas region and invested more than $500 million into the project. Crystallex’s investment was set to create thousands of jobs and support social projects benefiting the local community, including a health clinic, water treatment plant, sewer lines and scores of homes.
This all changed in 2011 when then President Chavez nationalized the mine. Not only did this cancel thousands of jobs, it has also deterred U.S. and other Western investors from committing capital to similar projects.
Despite clear rulings from the courts, both the Trump and Biden administrations have refused to allow Crystallex to be repaid. Biden can right this wrong by supporting court rulings in the United States so that Venezuela is forced to comply. This process would generate trust with foreign investors and would serve to help Venezuelans. The litigation should be handled by the courts of each sovereign country and not by deals made between governments.
Secretary of State Antony Blinken recently told the House Foreign Affairs Committee that private-sector investment, particularly in infrastructure, will give the United States leverage in Latin America. He acknowledged that Western expertise will be critical to rebuilding. If that is the case, the United States cannot just talk about rule of law. If our country does not lead by its actions, it will disincentivize Western investment in Venezuela, and advance China and Russia’s desire to have enduring presences in the region.
In addition to this humanitarian support, the Venezuelan community in South Florida is critically important. This should be a priority for the Biden administration. Many of the more than 400,000 Venezuelans who fled their country and now live in the United States are eager to return and rebuild what has been lost.
But they, like any other investor, must trust that they will be protected by the rule of law.
Hernando Torrealba Schneider is an independent consultant focused on the oil and shipping industries in Venezuela. He has not professional relationship with Crystallex.