In 2020 I urged caution before investing in Venezuela. The investment dream then and now hinges on the assumption that once governance resembles something normal, Venezuela will be rich again like it used to be. If you get in early, you can ride the wave to wealth and whiskey at the beach.
Maduro out of power and in jail is great news, and it’s fun to point and laugh at Venezuela’s impotent military., But there effectively has been no change in government yet, which is why Venezuelans aren’t celebrating in the streets of Caracas. What comes next is what matters.
The only way I would put even $100 into anything Venezuelan is with a right-wing dictator firmly in control. Democracy is the best form of government, but pluralism is messy and takes time. Venezuela has too many bad actors with guns to effect peaceful progress. Maduro’s regime leaders face long prison sentences in the States. They’ll fight to the death before relinquishing power. That means blood.
The police and military are institutionally politicized. The Venezuelan government doesn’t control all of its territory. There are colectivos (politicized paramilitaries and gangs) in the slums and mining mafias, drug traffickers and Marxist guerrillas in the countryside … all with real interests in maintaining their positions of power.
Pluralism wouldn’t stand a chance. Venezuela is so rotten that a democracy would take decades to yield a substantial return on investment. You’ll be dead before it happens.
A right-wing, Pinochet-style dictator trampling human rights to root out those bad actors is the only way to build a remarkable economy quickly. There is a 21st-century model in El Salvador’s Bukele. He could implement an environment-and-workers-be-damned breed of capitalism while lobbying the world for aid and investment.
But even with a Venezuelan Bukele, the gaudy consumerist culture Venezuela was known for before chavismo won’t be back in my lifetime. GDP has fallen 80% (!) since its 2011 peak, while the exodus that followed hollowed out the population of ambitious and enterprising Venezuelans.
Returning oil production to its 90s-era peak requires massive investment and years of work, which market conditions don’t afford. Oil is an important resource, but the average price per barrel post-shale doesn’t justify investing billions of dollars in a country with a dodgy risk profile.
The industry moves at a glacial pace by design. Our timeline is like doggie years to them, so the Venezulan nationalizations in Venezuela occurred just a few years ago. Who will spend billions to develop a country with a dodgy risk profile, especially as other sources make up an increasing share of the energy mix? There are oil fields in North America lying fallow.
I think private, nongovernmental investment comes in at a dribble, if at all.
And how realistic is it to prop up a Venezuelan Bukele? The government has been politicized from top to bottom for a generation. Anti-capitalism, anti-America. I don’t think you can change with just one strongman or two at the top. You’re not going to find your Bukele from outside government.
That’s probably why Trump threw shade at opposition leader and Nobel Peace Prize-winner Maria Corina Machado. He’s wants work with the people already in place. He wants Delcy the Gremlin to turn the ship around. But will she do it? Can she do it? Slowly … glacially … maybe. Maybe not!
A lot depends on Trump and how far he wants to go into nation-building. Are we going full Iraq and Afghanistan, or something less than? I’ll share some thoughts on Donroe Doctrine next … stay tuned!
Regardless, if you just want to scoop up a nice property at a good price and wait for Venezuela to normalize, it might be a cool place to rent to digital nomads. But I wouldn’t bet on any 10x gains. You’ll be buying yourself a job, and a high-risk one at that.
This was Part II of the Golpemaduro series.
See Part I: Virility in Venezuela Redux. TLDR: While Venezuela’s cuckold neighbors sat on the couch stroking themselves, and Venezuela’s military couldn’t rise to the occasion, Uncle Sam mounted and penetrated Venezuela’s dictatorship, finishing in a glorious climax felt by all around.
See Part III: The Don Job Corollary (stay tuned!)
Expat Chronicles 