Government Expropriations on the Rise in Venezuela

An in-depth analysis by the Venezuelan Confederation of Industries (Conindustria) reveals that since 2002, the Chávez government has taken over 988 foreign and domestic companies. Other findings from the study include the following data:

• This year alone, 401 companies have been seized – that is 41% more than last year
• In 2010, 284 companies were expropriated by the Chavez government
• Between 2009 and 2010, there were 422 seizures, almost the same amount than in the first eight months of 2011

The Chávez government’s policy of expropriations “only creates legal uncertainty; drives investments away; and reduces the possibility of increasing production,” said Conindustria.

In fact, data from the Central Bank of Venezuela show that in the second quarter of 2011, investment fell to 3.6%, its lowest level in five years. Foreign investment totaled $1.18 billion (US) in the first six months of the year. These are not, by any means, encouraging figures.

Billions of dollars are up for grabs with these nationalizations, which are not consequence-free for the Venezuelan government. As of today, Venezuela faces 18 arbitration proceedings before the International Centre for Settlement of Investment Disputes (ICSID). Companies that have filed claims against Venezuela include American oil giant ExxonMobil and ConocoPhillips. Experts agree that it is highly unlikely that these companies will receive fair or timely compensation for their seized assets.

Just another day in Hugo Chávez’s Venezuela.