Venezuela’s Political Risk Assessment
Venezuela’s current political and economic situation represents a threat to any foreign entity interested in establishing a business relationship with the country. The country’s economic decay began in 2015, after oil prices plummeted from $100 to less than $30 a barrel. Ultimately, the country’s earnings decreased from $80 billion in 2013 to $25 billion in 2016. (Plummer, 2013). Due to the lack of economic diversification, the government’s mismanagement of oil revenues, and excessive spending in poorly managed government plans, nowadays Venezuela is facing “drastic shortages of food, medicine, electricity and other necessities are causing small riots.” (McCarthy, 2016). The International Monetary
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One of them restricts the trading Venezuelan Bonds “sold by government in the American financial markets to raise money.” (Krauss, 2017). Another, prohibits the “imports of Venezuelan crude oil to American refineries.” (Krauss, 2017). Since Venezuela is an oil-depending economy, the sanctions deny the Maduro administration any source of financing; basically, isolating the country from any business opportunity. Most of these sanctions occurred due to questionable government practices, their lack of respect for human rights, and their obvious corruption in the political practices.
The sanctions, coupled with the government complex currency system and deteriorating economy “has led to exorbitant schemes by importers, who wildly inflate the value of goods brought into the country to grab American dollars at rock-bottom exchange rates.” (Neuman & Torres, 2015). This represents a high risk for any company interested in doing business in Venezuela, since considerable losses of money might occur due to the fluctuating currency, high corruption, and political instability. Corruption is considerably present in economic transactions to the point that importers might fake shipments altogether to get money. There are virtually no imports regulation, which has led to countries, like the United States, to prohibit the export of defense articles and services to Venezuela (Export.gov, 2017).
What might even complicate business transactions between U.S.
When Christopher Columbus discovered the coast of Venezuela, he thought he had encountered an earthly paradise, today that grace land is ravaged by famine, inflation, scarcity, violence, social and political conflicts; “social implosion [being] driven by economic collapse, caused by shockingly self-destructive policy making” (Toro, 1). Venezuela’s antidemocratic government and its lack of foresight has created a severe economic crisis crumbling health care system and a lack of basic necessities and is jailing innocent people who object.
For five decades the United States and Cuba have been at each other’s throats, this is reason that fifty plus years ago the U.S. created and embargo act against Cuba making all business between the two country’s illegal. But after such a long time of this going on President Barrack Obama ends the act and thus opens the doors for business between the two countries (Alonso, 2016). What had initiated the ending of this embargo act was the trade of prisoners between the countries. This has people wandering what to do now, where do we start, and is there certain factors we need to be aware of to establish business with and or
During the Cuban missile crisis there was a blockade that prevented the United States further trade with Cuba. “In 1992, congress passed the Cuban Democracy Act, which prohibits foreign-based subsidiaries of U.S. Companies from trading with Cuba but creates loopholes for travel to Cuba by a select group of U.S. Citizens” (History). The only thing the law allows regarding Cuba is that private groups can deliver food and medicine. This private group is the Trade Sanctions Reform Act (TSRA), passed by President Clinton in October of 2000. In the sixties, Americans were allowed to live in Cuba to help with the different industries they had but when the
There are many countries that the United States frequently traded with who are now under a set of economic sanctions today. The sanctions were designed to restrict a country to the resources of their country and their allies until they comply with specific request. The US-Cuban sanctions were suppose was supposed to be in place until democracy and human rights were restored in Cuba. One effect of the sanction resulted in Cuban citizens only being able to purchase vehicles made before 1958. Although this is a minor effect of sanction, can you imagine if you were only able to possess a microwave that was made before 1958?
Venezuela, located in the Latin American region, is a country that has been characterized by its abundance of oil reserve. A natural resource that has shaped the history and development of the country, affecting its economic, social and most important is political spheres. For many years Venezuela was controlled by authoritarian regimes. The country, being very important in the sense of geo-politics due to its abundance of oil, has been a key player in the international arena and most important, to those that for many years kept the country under their regime. It was not until 1958 that Venezuela experienced the change to democracy and a stable democracy was kept between the two main political parties of the time, Accion Democratica (AD)
The country of venezuela is hot, humid,and located in nothern south america.The capitol of venezuela is caracus. The name venezuela came from the explorer , alonso de ojedo ,because he admired how much it reminded him of venice. Earleist records of venezuela date back to march 30th 1845 when christopther made his third voyage in search of gold.Settlers would go to venezuela to trade for their resources because venezuela was known as the riches country.Venezuela would trade natural resiurces like : petroleum natural gas,iron ore gold minerals and diamonds.They first gained independence in 1811 on july 5th ; by the help of jose prudencio.
The United States and Venezuela have not had been the best relations with one another. Now that the former President Hugo Chávez has passed away, there are still high hopes for the US that all of that will change. Currently, Venezuela is in a tight struggle right now and if it were not for the US they would be still standing. Venezuela is powerful when it comes to their oil, and have very strong polices: however these policies are not working like before so there are some considerations that might be an eye opener for you. Presenting that Venezuela should be giving with their assets the way the Americans are giving with theirs.
As a reaction to the crisis in 1963, the Cuban embargo was extended not only restricting economic transactions; it also included restrictions on capital flows and travel to the island. The new restrictions also call for the freezing of Cuban assets in the United States. Additionally, the motives for the restrictions now showed not only the increased aggression but also the likelihood of additional economic reprisal for the nationalization of U.S. properties in the island. Lastly, other countries were asked to become involved and to participate in the embargo. In 1964, members of Organization of American States (OAS) with the exception Mexico, agreed to take part in the restrictions towards Cuba and became the multilateral embargo.
This embargo was met with approval from both sides of the government and has survived
Supporters of the legislation believe that prohibiting foreign investment will quicken Castro’s downfall. (Close Up Foundation) Many debate on the issue of why the U.S. should or shouldn’t keep the ebargo against Cuba. These debates deal with the effects of the Embargo on Cuba’s economy, humanitarian rights and health of the people of Cuba. The embargo today places a ban on subsidiary trade, Licensing, shipping and humanitarian aid. (Close Up Foundation) In 1992, the Cuban Democracy act imposed a ban on subsidiary trade with Cuba. This ban restricted Cuba’s ability to import medicines and medical supplies from third country sources. There have also been corporate buy-outs and mergers between U.S. and European pharmaceutical companies thus adding to the number of companies permitted to do business with Cuba. Under the Cuban Democracy Act, The U.S. Treasury and Commerce Departments are allowed to license individual sales of medicines and medical supplies, supposedly for humanitarian reasons to make up for the embargo’s impact on health care delivery. According to the U.S. corporate executives, the licensing provisions are so tough as to have had the opposite effect. With this statement, it is assumed that there are fewer licenses given out for humanitarian reason therefore favoring the embargo and aiding in the downfall of health in Cuba. Since 1992, the embargo has prohibited ships from loading or unloading cargo in U.S. ports for 180 days after
Venezuela is located on the north coast of South America. It is a very interesting country, since it possesses many unique attributes and resources that other countries in the region do not. There are several different systems that represent these resources and attributes. Major Kris A. Arnold (2006) states “PMESII is (sic) military acronym listed in several joint and service publications, which evolved from a systems perspective, and equates to the political, military, economic, social, infrastructure, and information systems of states. The acronym provides a starting point for identifying key interrelated systems of an adversary and facilitates analysis and kinetic and non-kinetic targeting”. Venezuela is an especially interesting case due to the political system in place, in addition to the unique economic power that the nation has.
With an economy dominated by the production of oil, Venezuela has enjoyed the highest standard of living in Latin America. In spite of its success in the oil industry, agriculture and manufacturing also play important roles in Venezuela’s economy. With this in mind, it would seem as though Venezuela’s economic state has flourished. Rather, it has suffered from the effects of political influence, corruption, and poor economic management. The distribution of wealth across Venezuela has caused the elite to benefit at the cost of the working people. This is mainly due to the economic and political structure of the country. Even with the plentiful resources Venezuela possesses, it is constantly being threatened by political instability,
Venezuela currently has a population of 31 million people. Venezuela is still growing in numbers, and it’s getting harder for the government to provide health care for their people. Venezuela’s population is 1.9 times larger than South America. The country is mainly urban, and the wealth rate is declining. The resources per person needs to be the same, and as of now that’s not the case. Overall fertility rates are failing in Latin America. In 2015 the population was six times the size that it was in 1950, and the United Nations projects that it will be nine time larger by 2050, and still growing at that point, despite the long-term decline in fertility. (Latin America) Although there are many economic crisis in Venezuela, this isn’t preventing them from having children in higher numbers. This could be the shortage of health care.
Sanctions intended to change the behavior or government of a target country are very difficult to design. They have to be imposed as quickly and easily as possible.(Library of Economics) By moving too slowly, it gives the target country time to adjust by finding alternative markets, finding new allies, and by gaining domestic support of its own policies.
The main purpose of the following report is to provide information about the profile of The Bolivarian Republican of Venezuela; in order to study the current situation of the country for further investigations in the future that may help to understand the opportunities and risk involve in importing and opening new markets in Venezuela.