Venezuela strays from its policy of nationalization

by Craig Janis

Venezuela has been particularly hard hit by the global recession over the last few years. Last year alone, the country experienced 27% inflation and a 2.9 percent decline in economic output. Times are tough enough, in fact, that famed “anti-capitalist and Marxist” Hugo Chávez has declared that, “Investment and experience from foreign oil firms is necessary in Venezuela. We need it.”

Venezuela has long been criticized by the US and others for its policy of nationalization, which it has pursued with vigor in industries like telecommunications and oil. Chávez actually nationalized the entire oil industry in 2007, but recently, that trend has begun to change; Chevron inked a deal worth multi-billions of dollars to drill in Venezuela after it submitted the winning bid for some oil blocks in the first oil auction since Chávez took office 11 years ago. A second group of companies, previously highlighted on this blog, won a different set of oil blocks.

According to the NY Times, this deal signals a significant shift in strategy for Venezuela and Chávez.

After clashing with foreign oil companies in recent years, President Hugo Chávez of Venezuela has shifted strategy and awarded contracts to Western oil companies, hoping to increase his nation’s flagging oil production and pull the country out of a sharp economic downturn.

Chevron, the American oil giant, led a group of companies that won one of the concessions on Wednesday night…

Furthermore, this shift in oil policy may indicate that Venezuela will be seeking warmer relations in general with the United States and other countries that Chávez has been prone to demonizing.

In an unusual display of warmth given his friction with Washington, Mr. Chávez happily greeted a senior Chevron executive in attendance, Ali Moshiri, the company’s president of African and Latin American operations. Mr. Chávez conceded that differences remained with the Obama administration, but he also extended an invitation for President Obama to visit Venezuela’s southern oil region, telling Mr. Moshiri, “You bring him here.”

This latest development in Venezuela may be part of a general shift in Latin America from the left to the center. Other indications of this current centralist trend include the election of a right-wing billionaire in Chile’s presidential election, the strong success of Brazilian President Lula who governed from the center-left, and an overall decline in combative left-right discourse throughout South and Central America.