Venezuela’s prospects for sustainable development

The headlines of recent years have clearly shown Venezuela as the tragic one archetype of how natural resource wealth can incentivize inefficiencies in economic outcomes and kleptocratic rule. However, despite the despondency the country has suffered in the recent past, there is enormous “potential palm” available to the country, given a range of underlying human and natural capital capabilities. I had a rare opportunity to visit Venezuela in early January this year and was pleasantly surprised to find a resilient group of entrepreneurs and academics who are defying the temptation to move abroad and instead rebuild their country. Specifically, there was a growing recognition that the country’s oil wealth (estimated to still contain the largest proven reserve of crude oil in the world) it had to be used for a more sustainable transition to a greener economy.

Historically, the rents of oil wealth in Venezuela have been not well distributed among the population and obscene economic inequality led to a disenchantment with capitalism in the 1990s for the majority of the voting population. The advent of democracy in the country’s 1998 elections thus produced Marxist populist leader Hugo Chavez, who took advantage of the high price of oil during much of his tenure to ensure his dominance. He rallied the public around revolutionary rhetoric with atavistic speeches claiming the anti-colonial mantle of the Caracas-born Simón Bolívar, who had led the movement for independence from the Spanish Empire in the early nineteenth century. Chavez’s death of disputed natural causes in 2014 left a power vacuum that often follows the death of charismatic leaders.

Several factions of “Havismo” emerged during the ensuing election battle with the United States favoring the opposition candidate and questioning the results of the country’s various electoral processes. The disastrous consequences of this controversy led to financial mismanagement and huge penalties from the United States and the West. The result was one Exodus of about 3 million Venezuelans (almost 10% of the population) between 2019 and today. However, 2024 could be a positive turning point for Venezuela, as the political position has agreed to a deal with the government of President Nicolas Maduro and The United States has also eased some sanctions. Chevron was allowed to get involved in limited investment again in the country and exemption has also been issued for Trinidad and Tobago to help develop a massive natural project in its territorial waters.

Flying into Caracas from Santo Domingo, Dominican Republic (there are no longer direct flights 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 optimistic mood that the country was turning around positively. Caracas has a wonderful geographical location nestled in a coastal mountain valley along the Caribbean, amidst a pleasant year-round climate and easy access to the beach as well as a protected rainforest national park (El Avila National Park). The famous environmentalist and polymath Alexander von Humboldt he had started his scientific explorations here and there a newly renovated luxury hotel named after the El Avila mountain peak served by an amazing cable car system.

My first visit to Venezuela was to the offices of the distinguished businessman Juan Jose Pocatera, who has developed a number of companies that use data analytics for smarter urban planning. Its dominant platform is called Vikuahas been recognized by the World Economic Forum where he also serves on Global Clean Air Future Council. His partner (and his wife) Maria Fernandez Vera is the CEO of a transportation company that uses data analytics to provide a “micro-mobility” solution through a fleet of minivans in Venezuela’s major cities called Wawa. Their work was Interamerican Development Bank profile and is repeated in other Latin American countries.

Then I visited an established petrochemical service company called Vepica, which has been in business for five decades but is rebranding itself as a provider of energy services and sustainability solutions. They are based in Venezuela’s only green building with LEED certification. Vepica has offices in Houston and Beijing and is well positioned to expand into new markets with sanctions relief. The CEO Juan Nat he was a professional golfer before assuming an executive role in the family business. He chose to stay in Venezuela despite the turmoil and run the company. What impressed me further was that the executives I met were trained in Venezuelan universities and not elite foreign locals, 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 exodus of many intellectuals, the country could revive its universities fairly quickly with a well-qualified graduate base and facilities. The Universidad Central de Venezuela, where Juan Nutt graduated from, boasts of only university campus in the world that is a UNESCO World Heritage Site as “an outstanding example of the coherent realization of urban, architectural and artistic ideals of the early 20th century”.

I also visited the Universidad Simon Bolivar campus that hosts the Instituto de Estudios Avanzados (Institute for Advanced Study). This institute specializes its efforts in biotechnology and has also provided office space for the Biotechnology Program of the United Nations University for Latin America (BIOLAC). At the height of Venezuela’s education investment period several decades ago, the government provided a $10 million grant for this program. To date, returns from this bequest have sustained the program despite all financial challenges.

The BIOLAC coordinator is currently studying at Cornell Dr. Gustavo Fermin, who is ready to develop further research and teaching capacity for the programme. Young researchers were working on a number of innovative projects involving microbes and algae for improved pollutant removal and carbon sequestration. Such organizations deserve more attention from development donors and can be instrumental encouraging science diplomacy (as argued in a CSIS report as early as 2014)even if the political situation remains uncomfortable.

While the challenges ahead are daunting, there is room for optimism that the country could turn the page on its tragic history and begin a transition towards sustainable development. International development donors and investors should begin to rethink the possibilities of growth and prosperity for Venezuela. The Biden administration should begin focusing on Venezuela as a potential diplomatic success of its own beleaguered foreign policy. This will require thinking beyond zero-sum games and allowing the country some room for independent relations with US adversaries such as Russia, Cuba and Iran. Such an approach would be somewhat similar to the way America has approached relations with Turkey or India. Stabilizing the country that was once the vanguard of hope in post-colonial Latin America could be a winning strategy at home and abroad.