Is Venezuela “better”?
New restaurants, stores, bars, and cars have popped up across cities in Venezuela. Baseball games are full, and patrons are ordering sushi and popcorn instead of a cerveza and mango biche. The Ferrari store has reopened in Caracas and bar, club, and home renovation costs in the hundreds of thousands of dollars are getting underway. People are out in the streets — day and night.
The question, “Venezuela se arregló?” started as a joke. The question has now turned into something more serious, perhaps a positive foreshadowing of the future. While Venezuela is far from “fixed,” the question we receive, “is Venezuela better?” is legitimate, and a heated debate topic. It occupies business minds from executive boardrooms in Houston and Miami to the arepera on the streets of Montevideo.
The executives want to know if the country is safe. Where will employees live? Can the local property managers guarantee power and water supply? Is there a robust labor market again, or do they need to bring staff? What will government relations look like in a heavily sanctioned country with two presidents? Most are waiting for some sort of green light, such as the loosening or fracturing of international sanctions, to make their investigation more official. We’ve spoken to many who are quietly lobbying, hiring slowly, and making plans.
Everyone wants a “yes” or a “no” — to go or not to go. Over the next several months, however, the answer is case dependent and weighs heavily on risk appetite.
On the one hand, living and working in the country today comes with new risks — money laundering is occurring at an unprecedented scale (an estimated 21% of GDP). An extremely savvy corporate governance and PR team is critical considering the country’s current parallel government structure: one which is de facto governing from abroad and the other which is governing from the country (and faces an open UN investigation on crimes against humanity). Moreover, sanctions from both the US and EU create a difficult and dynamic regulatory environment, which is at times labyrinthine to navigate
On the other hand, there are signs of improvement. An April 2022 survey by Caracas Chronicles-owned Cinco8 reflects conversations we have had with sources throughout the country. The survey found that 59% of respondents living in Venezuela believed Venezuela was not “better” — still that’s 41% who believe it is. Respondents were divided on political stability, sanitation, purchasing power, and gasoline access. The survey found the majority of respondents believe lines for basic products are not as long; there are more products in general; there are fewer protests; security has improved; and, blackouts have become less frequent.
We would argue that today, Venezuela is on a path of economic recovery, as opposed to a path of further decline. Investment opportunity persists for those who are adept and up for the challenge. For those waiting to reopen offices they refused to let go of, we would argue that now is the time to begin considering a return-to-office plan.
Venezuela today is not better or worse, but it is night and day from the Venezuela you left.
Southern Pulse is a strategic advisory firm specializing in Latin America, with an extensive source network in Venezuela. With over two decades of experience in the region, we are poised to answer your toughest questions and dig deepest on your most complicated investigations. Want to learn more? Let’s chat.
Stay tuned for a follow-up piece discussing sanctions risk.