Michelle Caruso-Cabrera is chief executive of MCC Global Enterprises and a CNBC contributor.
While President Donald Trump ratchets up the military pressure on Venezuelan dictator Nicolás Maduro, members of the Venezuelan opposition are meeting with investors, sending this message: There is a free-market, rule-of-law alternative waiting in the wings if Maduro is finally pushed aside.
Michelle Caruso-Cabrera is chief executive of MCC Global Enterprises and a CNBC contributor.
While President Donald Trump ratchets up the military pressure on Venezuelan dictator Nicolás Maduro, members of the Venezuelan opposition are meeting with investors, sending this message: There is a free-market, rule-of-law alternative waiting in the wings if Maduro is finally pushed aside.
Led by María Corina Machado, winner of the Nobel Peace Prize for her efforts to restore democracy to Venezuela, the team is marketing a “day one” investment and reconstruction strategy for economic recovery if they ever come to power: protection of private property, a stable currency and an investment framework that they say could attract billions of dollars in capital.
“This is going to be huge,” Machado told thousands of attendees at the America Business Forum in Miami on Nov. 5. “We will bring rule of law. We will open markets. We will have security for foreign investment and a transparent massive privatization program that is waiting for you.”
When her team began marketing the plan in New York last June, there was only limited interest. The investment community saw business in Venezuela as a theoretical exercise, rather than a real opportunity.
Things started to change in late summer, as Trump ordered thousands of U.S. troops to the region, began attacking the boats of alleged drug runners and made clear he wants Maduro gone. So far, U.S. forces have carried out at least 19 strikes in the campaign, resulting in at least 76 deaths. On Tuesday the world’s largest aircraft carrier, the USS Gerald R. Ford, arrived in the Caribbean.
Sary Levy, Machado’s senior economic adviser, helped draft the plan and told me that the team has met over the past two months with nearly a dozen potential investors in Texas, New York and Miami, some in person and others via zoom. The increase in interest, Levy said, is due to investors’ belief that Maduro could finally be on his way out. “If investors don’t think there is going to be a change, they don’t have the meeting,” she said.
Some potential investors are individuals, some are large companies — and many are among the roughly 8 million Venezuelans who have fled the country and would like to return and reinvest in their homeland. Levy, a Venezuelan economist now doing research at the Adam Smith Center for Economic Freedom at Florida International University, has been working on the plan for several years with other exiles, hoping to be ready when the moment comes. They claim Venezuela offers a $1.7 trillion investment opportunity that could triple the country’s economy in 15 years.
Investors would certainly have excellent assets to work with, starting with the world’s largest oil reserves. Venezuela used to pump more than 3 million barrels of oil per day. Today, that number has fallen to roughly 1 million barrels per day, the vast majority of which is exported to China. Machado’s plan predicts production of 4 million barrels per day in 15 years. Industry executives have told me that is easily achievable, if the investment framework is strong enough to attract the money necessary.
“We will turn Venezuela from the criminal hub of the Americas into the energy hub of the Americas,” Machado promised in Miami.
Beyond oil, Venezuela has abundant natural gas and Latin America’s largest reserves of gold, which is now selling at near-record highs. The country’s large tracts of undeveloped farmland make agriculture an attractive investment. And tourism is another potential bonanza. “Venezuela has 2,800 kilometers [1,700 miles] of pristine Caribbean coastline ready to be developed,” Machado told investors in Miami. Perhaps she’s appealing to a certain well-known hotel developer? (Trump, to whom she partly dedicated her Nobel Prize, also spoke at the America Business Forum.)
But having vast natural resources means nothing if a country doesn’t have guaranteed property rights, enforcement of private contracts and legal certainty — which Venezuela has not had for 26 years, under Maduro and his predecessor, Hugo Chávez.
“Our administration will be pro-business, pro-investment,” Machado tells investors, with a focus on shifting away from state control to “a private-sector-driven economy.”
The Miami and New York speeches, like all Machado’s public statements in more than a year, were delivered from undisclosed locations; she has been in hiding since Maduro cracked down on the opposition after declaring victory in a widely disputed presidential election. When asked about Trump’s massive deployment of the military to the Caribbean, she described the administration’s “strategy” as “absolutely correct.” She told attendees, “Nicolás Maduro is not a legitimate head of state.” Instead, she said, he is the head of a criminal structure that sustains itself from drug trafficking, gold smuggling, weapons smuggling and human trafficking. “You need to cut those cash flows,” Machado said.
“Venezuela is going to be the new global frontier for innovation and wealth creation, and we invite you to be part of it.”
Before investors accept that invitation, Maduro needs to be gone, replaced by someone who will respect what they can do to help turn the country around.
The post Seeking investors for Venezuela, Machado backs Trump’s military moves
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