Venezuela’s Prospects for Sustainable Development

Caracas viewed from the summit of El Avila Mountain and the Humboldt Hotel (El Avila National Park, . . .

[+] Venezuela) Headlines over the past several years have starkly shown Venezuela as the tragic archetype of how natural resource wealth can incentivize inefficiencies in economic outcomes and kleptocratic governance. Yet despite the despair that the country has endured in the recent past, there is immense “phoenix potential” which the country holds, given a range of underlying strengths of human and physical capital. I had a rare opportunity to visit Venezuela in early January of this year and was pleasantly surprised to find a resilient group of entrepreneurs and academics who are defying the allure to move abroad and instead rebuilding their country.

In particular, there was a growing recognition that the country’s oil wealth (estimated to still contain the world’s largest proven reserve of crude oil) needed to be used towards a more sustainable transition to a greener economy. Historically, the rents of oil wealth in Venezuela were not distributed well across the population, and obscene economic inequality led to a disenchantment with capitalism in the 1990s for a majority of the voting populace. The advent of democracy in the country’s 1998 election thus delivered the Marxist populist leader Hugo Chavez, who benefited from a high oil price during much of his tenure to secure his rule .

He rallied the public around revolutionary rhetoric with atavistic speeches that claimed the anti-colonial mantle of Caracas-born Simon Bolivar, who had led the movement of independence from the Spanish empire in the early nineteenth century. Chavez’s death of contested natural causes in 2013 left a power vacuum that often follows the passing of charismatic leaders. Several factions of “Chavismos” arose during the election battle that followed with the United States favoring the opposition candidate and challenging the results of the country’s various electoral processes.

The calamitous aftermath of this tussle led to economic mismanagement and massive sanctions by the United States and the West. The result was an exodus of an estimated 3 million Venezuelans (almost 10% of the population) between 2019 and the present day. Yet, 2024 could be a positive turning point for Venezuela as the political position has agreed to a deal with government of President Nicolas Maduro and the United States has also eased some sanctions.

Chevron has been allowed to engage in limited investment again in the country and a waiver has also been issued for Trinidad and Tobago to help develop a massive natural has project in bordering waters. Flying into Caracas from Santo Domingo, Dominican Republic (there are no direct flights anymore from the United States), I was pleasantly surprised to find the plane full of the Venezuelan diaspora returning home to visit their families. There was an upbeat mood that the country was turning a positive corner.

Caracas has a superb geographic location, nestled in a coastal mountain valley along the Caribbean, with a pleasant climate all year and easy access to the beach as well as to a protected national rainforest park (Parque Nacional El Avila). The famed ecologist and polymath Alexander von Humboldt had started his scientific explorations here and there is a recently renovated luxury hotel that bears his name at the top of the El Avila Mountain that is serviced by a phenomenal cable car system. My first office visit in Venezuela was to meet the remarkable entrepreneur Juan Jose Pocaterra , who has developed a series of companies that use data analytics for smarter urban planning.

His overarching platform, called Vikua , has been recognized by the World Economic Forum where he also serves on the Global Future Council on Clean Air . His business partner (and spouse) Maria Fernandez Vera is the CEO of a transport company that uses data analytics to provide a “micro-mobility” solution through a fleet of minivans across Venezuela’s major cities called Wawa. Their work has been profiled by the Interamerican Development Bank and is being also replicated in other Latin American countries.

Next, I visited an established petrochemical servicing company called Vepica, which has been in operation for five decades but is reinventing itself as an energy services and sustainability solutions provider. They are headquartered in Venezuela’s only LEED certified green building . Vepica has offices in Houston and Beijing and is well-positioned to expand into new markets with easing of sanctions.

The CEO Juan Nutt was a professional golfer before taking on the executive role in the family business. He chose to stay in Venezuela despite the turmoil and run the firm. What impressed me further was that the executives I met were trained at Venezuelan universities rather than elite foreign locales as is often the case in other Latin American countries.

Another encouraging aspect of my visit was witnessing the existing educational infrastructure in the country. Despite the flight of many intellectuals, the country could revitalize its universities fairly quickly with a well-qualified alumni base and facilities. The Universidad Central de Venezuela, where Juan Nutt graduated from, boasts the only campus in the world that is a UNESCO World Heritage Site for being an “outstanding example of the coherent realization of the urban, architectural, and artistic ideals of the early 20th century.

” I also visited the campus of Universidad Simon Bolivar which hosts the Instituto de Estudios Avanzados (Institue for Advanced Study). This institute is specializing its efforts in biotechnology and has also provided office space for the United Nations University’s Biotechnology Program for Latin America (BIOLAC). At the heyday of Venezuela’s educational investment period several decades ago, the government provided an endowment of $10 million for this program.

To this day the returns of this endowment have sustained the program despite all the economic challenges. The Coordinator of BIOLAC is currently Cornell-educated Dr. Gustavo Fermin, who is poised to develop further research and training capacity for the program.

Young researchers were working on a range of innovative projects involving microbes and algae for improved removal of pollutants and carbon sequestration. Such organizations deserve greater attention from development donors and can be a means of fostering science diplomacy (as was argued in a CSIS report as early as 2014) , even if the political situation remains uneasy. While the challenges ahead are daunting, there is room for optimism that the country could turn a page in its tragic history and begin a transition towards sustainable development.

International development donors and investors should start to revisit the potential for growth and prosperity for Venezuela. The Biden Administration should start to focus on Venezuela as a possible diplomatic success story of its own beleaguered foreign policy. This will require thinking beyond zero sum games and allowing the country to have some space for independent relationships with US adversaries like Russia, Cuba and Iran.

Such an approach would be somewhat similar to how America has approached relations with Turkey or India. Stabilizing the country which once was the vanguard for hope in post-colonial Latin America could be a winning strategy at home and abroad. .