Revolution and Trade Part 2 – Venezuela

By Michael Jones (michael.jones@tsiglobalconsulting.com)

Since the last blog article in this series was written, the situation in Ukraine has changed even more drastically.  Protesters have seized control over Kiev, opposition leaders have been released to return to government, and now-former President Yanukovich has fled.  While these changes certainly suggest an ending to the violence, the wild card of Russia must always be taken into account, and tensions could flare up again at any moment.

Meanwhile, on the other side of the world, protests are raging on in the South American country of Venezuela.  These protests were originally small-scale and non-violent reactions to the corruption in Venezuela’s government as well as the shortages of basic goods faced by average Venezuelans, but quickly spiraled out of control due to a fierce crackdown by the government.  Now, violent clashes between protesters and government/pro-government forces are frequent occurrences.  In an attempt to stop further bloodshed, Venezuelan politician and opposition leader Leopoldo Lopez turned himself into the government to stand trial; however, Venezuelan President Nicolas Maduro has refused to give into protester’s demands.  While the violence is not quite on par with Ukraine (roughly only 12 have died so far), it is still worthy of note as there is still a great deal of potential for its escalation.

The U.S. has long had a complicated relationship with Venezuela.  Beginning in the late 1990s, Venezuela’s President Hugo Chavez rallied the population behind him by demonizing the U.S. and using it as a scapegoat for Venezuela’s problems.  However, U.S. leaders learned to judge Chavez based on his actions, as economic ties actually grew between the two countries, especially in the oil sector.  The U.S. waived its existing sanctions on Venezuela in the mid-2000s, and the countries have enjoyed strong economic, but poor political, relations ever since.  However, given the U.S.’s reaction to the protests so far,  the economic relationship between it and Venezuela could be in jeopardy.  While it has not officially issued sanctions against President Maduro’s government yet, the U.S. has threatened their use if the conflict continues.  President Maduro’s claims that the U.S. is financing the opposition are certainly not making the situation any better.  Anyone with business in Venezuela should be very wary about making any significant business decisions with this country until after the protest die down.

If you are worried that the protests in Venezuela could affect your business, give TSI Global Consulting a call at 210-757-0618 for a consultation.  We can help guide you through any U.S. regulations that may come up in the coming weeks so that you can limit your company’s liability in this unstable situation.

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