Thank you to the Government of Peru for convening this gathering to discuss the future of Venezuela.
Today’s discussions are an important step, toward its rebirth and recovery. Less than a decade ago, Venezuela had the highest per capita income in Latin America. But the Maduro Government’s corruption and incompetence has shrunk the Venezuelan economy more than 60 percent in five years. Of course, many of the numbers I will mention today are estimates, because the Government of Venezuela has not even reported comprehensive financial statistics since 2011. Meanwhile, they have buried the country under one hundred ninety billion dollars of debt and torn apart the very fabric of the economy.
Nothing works properly -
not electricity -
not water -
not sewage -
not the bus system -
not healthcare -
not distribution of food or medicine -
not much liquidity.
Most people cannot afford a basic 2,200 calorie a day diet, and the average Venezuelan was found to have involuntarily lost 24 pounds in a single year. And the situation is only getting worse. Over four million people have fled the country. Neither the Maduro government, nor its closest allies, Cuba, Russia, and China, are solving these problems. Quite the opposite.
They literally are diverting billions of dollars a year of oil revenues away from food for starving Venezuelans and into Cuban, Chinese, and Russian pockets. They are complicit in the notorious criminality of public officials from top to bottom, and the rise of gangs and narcotraffickers now running rampant throughout the country. Some allies! Their looting of Venezuela must end.
Venezuela will continue to deteriorate until the internationally recognized government of Interim President Juan Guaidó is able to implement needed economic, political, and social reforms. Private sector investment must be underpinned by confidence in economic growth based upon economic reforms, rule of law, transparency, global cooperation, and regional integration. The same natural resources that once helped make Venezuela great are still there – they just need to be rehabilitated after years of mismanagement. But growth also will require initial aid to jump start the engine. We at Commerce have supported an interagency effort to mobilize resources and expertise in support of Venezuela’s recovery – once Maduro and his cronies depart.
Everything we are working on are suggestions. The Guaidó Government will decide what is best for the people of Venezuela and how the international community can best help them improve the situation. Coordination with and support for them has, and will continue to be, the keystone of our entire effort. We work with partner countries, international organizations like the Inter-American Development Bank, and executives with recent private sector experience in Venezuela.
Our efforts to help the people of Venezuela return to prosperity after the end of Maduro’s reign have four main categories: energy, macroeconomic and financial stabilization, agricultural normalization, and private sector rehabilitation. There are detailed short, medium, and long-term components for each. The short term includes immediate humanitarian relief in the first one to two months post-Maduro, the medium term is work to reverse the impact of socialism in months three through twelve, and the long term effort is to restore sustainable economic growth.
In energy - - -
Initially: Institute pro-market reforms and promote participation of private firms through the new hydrocarbons law under consideration in the National Assembly.
Medium term: The government will implement proper terms of governance for energy firms, facilitating private investment, oil bid rounds, and repairing of the power generation system.
Even such simple things as ordering spare parts were neglected – so undoing the effects of socialism is no small task. The one-year goal is to reverse the decline in energy production by facilitating the infusion of capital and skills in oil, natural gas, and electricity. Further growth will be an ongoing effort.
In macroeconomic and financial stabilization - - -
Initially upon the end of the Maduro dictatorship and return to democracy: The U.S. will ease sanctions, promote domestic and international trade credit, deploy technical advisors, and engage international financial institutions to build confidence in Venezuela’s new economic policies.
Medium term: Overhaul Venezuela’s central bank, tax system, fiscal institutions, debt, and banking sector in the context of a long-term IMF deal and the need for economic stability and free elections.
Long term: Continuing reforms, with capital and talent infusions, including the return of expats, to trigger sustainable economic growth.
In agricultural normalization - - -
Initially: Support the provision of immediate food aid, jumpstart imports of seed, fertilizer, farm equipment, and technical advice.
Medium term: Foster U.S.-Venezuela agricultural cooperation and stimulate local and regional supply chains, helping domestic producers to meet more of the country’s needs.
Long term: Strengthen technical expertise, improve capacity and standards, develop a national market information system, reform land ownership, and increase access to credit.
And, in the private sector restoration - - -
Initially: The U.S. will remove commercial restrictions for U.S. firms, mobilize business contacts with Venezuela, and foster pro-market, pro-business reforms. For instance, the Department will promptly create a virtual and then in-country clearing house with real-time intel on trade and investment opportunities for U.S. and international businesses.
Medium term: Attract foreign investment by instituting pro-market reforms, improving Venezuela’s business climate, removing state controls, implementing a privatization strategy, reforming commercial laws, and stamping out corruption.
That process after year one will build upon these earlier efforts. Infrastructure investment in all sectors will also be integral to all this work. Working with us, the Guaidó government and other partners have identified critically important energy, infrastructure, and environmental projects. They focus on rehabilitation and modernization in areas like electricity, gas, sewage, water, and public transportation. The projects range from relatively small and quick to very large, multi-year ones. A relatively quick fix should be Lake Maracaibo, which had produced 400,000 barrels of oil per day, but is now down to a small fraction of that because of neglect and a shortage of parts for repairs.
At the extreme opposite is the Paraguana Refinery complex, which is more than two thirds of Venezuela’s installed capacity and the largest refinery in the Western Hemisphere. Virtually every part needs repairs. Rehabilitation and, in some cases, completion of physical infrastructure like 25,000 kilometers of roads, ports, and bridges is vital to ensure connectivity of large cities with the country’s interior and for the mining and the oil and gas sector.
Ultimately, the international business community will help drive these projects and will be crucial to the long-term prosperity of Venezuela. We believe wholeheartedly that its current fate need not be a permanent life sentence. The Venezuelan crisis is a global issue — and a global opportunity to support democratic rights and basic human dignity.
We look forward to working with all of you as this opportunity for rebirth develops further.