Writing on trade between Venezuela and Canada may seem like an exercise of fiction. As such, we invite you to think in terms of scenarios, strategies and systems.
Venezuela is now considered, for the most part, a failed state, with all the internationally recognized economic indexes pointing down. There’s hyperinflation. Domestic currency depreciated 8,034 per cent in 2019 and 526 per cent in the first eight months of 2020. And there’s corruption. Transparency International’s 2019 Corruption Perception Index ranks Venezuela 173rd of 180 countries. Economic Freedom ranked it 179th of 180 countries on its index. And economic rankings are not the only precarious indicators. In addition, the rule of law, a critical foundation for trade, is also absolutely absent now.
Given this difficult situation, the question is: “What can be done regarding trade between Canada and Venezuela?” Even in recent years, trade was more active. In 2017, it totalled $215.3 million, with Canada sending $197.3 million worth of goods and Venezuela sending $17.9 million to Canada. In 2018, volumes predictably fell. Canada exported just $83 million and Venezuela sent just $21.6 million to Canada, for a total of $104.6 million in two-way trade. Canada sends mineral products, vegetable products, machinery, transportation equipment and pulp while Venezuela sends chemicals, base metals, prepared foods, live animals and wood.
Getting trade back on track will involve work by all interested stakeholders. They include the Canadian government, provincial governments, the private sector — from financial institutions to corporations and entrepreneurs — along with the Venezuelan interim government, the Venezuelan diaspora and Venezuela’s surviving associations, corporations and entrepreneurs.
Trade is essential for reconstruction, which will come with huge growth in every respect. Trade will be impacted by the dynamics of reconstruction and, at the same time, reconstruction capacities will be impacted by trade and investment. All the reconstruction scenarios will be influenced by institutions, infrastructure, logistics for commerce and Venezuela’s ability to deal with urgent, critical and important needs in almost every aspect of life. Needless to say, needs in health, food, energy, infrastructure, security and safety, fuel and services are at the top of any list.
Inter-American Development Bank analysts offer a picture on Venezuela’s recovery: “The economy is thus expected to grow by 11 per cent coming out of the emergency to recover some 35 per cent the next year and then grow by around 12 per cent in the following five years to gradually even out at a 6 per cent growth rate in the long run.” In short, it’s a road with challenges, as well as opportunities.
Any political change will come with phases of emergency recovery, institutionalization, stabilization, sustainable growth and with meaningful multilateral, public and private investment.
Our first approach would be to open the discussion and be open to change. Thinking ahead is key for corporations, provinces and individuals.
Second, we would suggest thoughtful discussions, rigorous analyses and strategy development and planning exercises. Agility on these tasks is crucial as they will determine who will identify, engage and develop opportunities with Venezuela. Revisiting the past — successes and failures — and learning from it is imperative. Key strategies on finance, corporate compliance, organization, alliances, security and deployment will require thoughtful decision-making.
Canadian provinces should consider the role they can play. Billions invested in Venezuela in the ’90s and early 2000s came from different provinces. Each of them has different competitive advantages. Solutions to key Venezuelan issues could come from some of them. Just to mention a few, Alberta, Manitoba, Nova Scotia and Quebec could trade with Venezuela on services and products that include food, health, energy, knowledge and equipment. Provinces should assign talent to think about opportunities.
By working together, partners can help to design strategies and better envision how to tackle the complexity of the work ahead in Venezuela. It is particularly important when many sectors and areas are, themselves, in the midst of change and reconstruction. Local knowledge and the diaspora will be key to adding intelligence and a sense of reality to planning, preparation and execution.
As mentioned, the diaspora could play an important role as “antennas, bridges, and springboards,” as suggested by World Bank economist Yevgeny Kuznetsov. The diaspora itself can systematize its contribution and joint efforts by aligning strengths, capacities and knowledge.
Canada has played an important role in standing up for human rights and democracy in Venezuela and we hope it will have an unforgettable role in its reconstruction.
Orlando José Viera Blanco is the
ambassador of Venezuela to Canada. He represents the Juan Guaidó presidency. Reach him at ovierablanco@ca.embajadavenezuela.org or by phone at (786) 384-1070.
