The World Briefly

May 16, 2022

The Big Shrug

Venezuela

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Venezuela is planning to attract private investors to pump money into its essential but crippled state-run firms, a move analysts consider a major reversal after the country’s socialist government seized them years ago, the Associated Press reported.

The government will begin offering five to 10 percent stakes in companies ranging from telecoms and internet services providers to petrochemical producers this week. President Nicolas Maduro said Venezuela needs the capital for the development of public companies.

His comments underscored a major U-turn from the efforts of his predecessor, the late President Hugo Chavez, who nationalized numerous companies in an effort to transform Venezuela into a socialist country.

The move could mark the first step toward returning the firms to private hands. But Maduro’s announcement did not clarify specific details about the sale, including share prices.

Analysts also questioned exactly who would purchase a minority stake in Venezuelan companies that have suffered from years of neglect and mismanagement. Some suggested that investors tied to the government could opt for such a move: They described this as a scenario similar to post-Soviet reforms in which a large number of state-owned companies were privatized.

Venezuela is currently facing a social, economic and humanitarian crisis exacerbated by plummeting oil prices and sanctions.

Government supporters and critics have continuously complained about poor government services. Analysts said the proposed changes are “largely forced by the circumstances but also largely fueled by political survival.”

This story originally appeared in the May 16, 2022 newsletter, Home Alone.