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April 16, 2014 at 09:20 PM
When Harry Belafonte sang about Matilda, who took the money and ran to Venezuela, it was a different time and place. Investors these days need to be wary of running to Venezuela with their investment money, since it might be tough to get it – and even themselves – out again. Hazards lurk in everything from currency to transport to nationalization.
President Hugo Chavez died last March, and in the lead-up to the first anniversary of his death, demonstrations against the government broke out and became increasingly violent. Spurred on by shortages in everything from housing to electricity to food and appliances, Venezuelans took to the streets to display their displeasure. With a death toll that currently stands in the mid-double digits, more unrest seems inevitable.
In an attempt to crack down on the protests, Chavez’s successor, Nicolas Maduro, has tightened the screws on private enterprise and public demonstrations while throwing sops to the public. Last November, he seized electronics stores and ordered price controls in an attempt to appease a restive populace; more recently he’s gone after his political opposition, although he’s also thrown them a bone or two, such as extra holidays to celebrate Carnival.
But his actions have only brought more public outcry, as well as demands from the opposition for everything from negotiation to resignation. And that’s not all. The dangerous political situation led Air Canada to suspend flights to the country in mid-March, citing security worries. Maduro has said Air Canada – and, for that matter, any company “that leaves the country will not return while we hold power.”
According to the International Air Transport Association, several other airlines had already reduced their Venezuelan operations and are considering severing them, because the country has kept a tight rein on currency – those airlines have claimed the country owes them $3.8 billion. Ticket sales to Venezuelans are required to be billed in Venezuelan bolivars, but when the airlines have requested the OK to repatriate the money, the government has not approved those requests. Many have not been paid in over a year, some in as long as two years.
IATA Chief Executive Tony Tyler had said 11 of the airlines flying to Venezuela have within the past year reduced service to the country between 15% and 78%. As a result, travelers are finding it hard to enter or leave the country. And among those who are successful, many say that outbound flights are often nearly empty.
