As US pressure on Venezuela intensifies and the Maduro regime appears increasingly imperiled, attention is shifting to the risks and opportunities of a potential political transition after close to three decades of Chavismo. In this article, Felix Cook, Director of Americas Delivery, and Rich Fogarty, Head of Disputes & Investigations for the Americas, explore the impacts of a potential Venezuelan reopening for investors, creditors, and claimants, as well as the persistent risks that will define Venezuela’s next era.
Since August of this year, the Trump administration has pursued a ratcheting pressure campaign against Venezuelan President Nicolás Maduro and his regime, including a large regional military buildup, lethal strikes against targets the administration characterizes as Maduro’s narcotrafficker allies, and, most recently, measures amounting to an effective blockade of Venezuela’s sanctioned oil tankers carrying hundreds of millions of dollars worth of crude oil. While the Trump administration has formally denied an intention to pursue regime change in Venezuela, the likelihood of some form of kinetic escalation continues to rise as public positions harden and the Venezuelan opposition intensifies its efforts to secure international and domestic backing. With the Maduro regime appearing increasingly imperiled, any prospective reopening of Venezuela would present both significant opportunities and complex legal and commercial risks for claimants, bondholders, and prospective investors, not to mention multinational and local regional companies with established operations in and around Venezuela.
Investment opportunities
Any scenario in which the Maduro regime is removed or cedes power would dramatically alter Venezuela’s investment climate. The country retains deep technical experience and a developed economic base, although a significant portion of its educated professionals have fled, and much of the industrial and logistical infrastructure is in disrepair. The gutting of technical know-how within PDVSA, the state oil company that drives the Venezuelan economy, and its experts (“La Gente de PDVSA”), combined with various corruption scandals over the years and US sanctions, have led to historically low production of the world’s largest oil reserves.
Assuming its human capital can be drawn back – approximately eight million Venezuelans have fled the country – Venezuela’s principal challenges, including limited liquidity, prolonged underinvestment, monetary distortions, and regulatory dysfunction, may be more comparable to post-communist Eastern Europe than post-war reconstruction efforts in countries like Libya and Iraq. The Venezuelan opposition have already unveiled a 15-year, USD 1.7 trillion growth strategy, centered on market liberalization, foreign investment, and privatization of state-owned enterprises, which they claim will triple the country’s GDP if implemented. Aiding this, a political transition will likely initiate the phased, license-driven unwinding of international sanctions – although the example of Syria suggests that this may be a slow process, and in the US, will be at least partially dependent on Congress’s disposition towards the regime change. Beyond Venezuela’s vast natural resources, there are credible ‘shovel ready’ investment opportunities across a wide range of sectors – including infrastructure, telecommunications, energy, and consumer retail – often awaiting relatively modest inputs, such as spare parts, technological modernization, or reconnection to global supply chains. This could potentially make Venezuela a highly rewarding environment for investors willing and able to navigate the turbulence of transition.
Arbitration and debt
One of the areas of keenest interest for foreign stakeholders, and the most immediate challenge for any incoming Venezuelan administration, will be the country’s enormous financial liabilities. Decades of expropriations, contract disputes, and payment arrears have left Venezuela owing an estimated USD 150-170 billion in defaulted bonds, state obligations, arbitration awards, and bilateral loans. Any new government will confront one of the most complex sovereign debt crises in recent history, and do so with very little room to maneuver. Venezuela’s available reserves are widely estimated at only USD 10-15 billion, even assuming rapid access to multilateral financing. Illustrating the scale of the problem, the arbitration award Venezuela owes to US oil company ConocoPhillips alone now exceeds USD 11 billion with interest. While a successor government is likely to signal its good-faith engagement with creditors, potentially through the long-delayed sales of state assets such as PDVSA’s majority stake in CITGO, radical restructuring and negotiation will be unavoidable. It remains uncertain whether the US and other external actors will support a coordinated refinancing or mediation process, or whether creditors will instead face a competitive and fragmented enforcement environment. In that context, expert intelligence, asset tracing, and arbitration support will be critical to prioritizing claims and acting on them effectively.
Ongoing risks
Even in the sunniest of transition scenarios, a post-Maduro Venezuela will present significant ongoing risks. After three decades of institutional erosion, corruption is deeply entrenched and bureaucratic friction and governance gaps will continue to characterize the operating environment. Political volatility is also likely; the opposition coalition is broad and ideologically diverse, and may struggle to maintain cohesion as it balances domestic expectations, power-sharing dynamics, and pressure from creditors and external partners. Although support for Chavismo has declined, it continues to represent a substantial political constituency, and a Chavista resurgence or extraconstitutional intervention by the military may be possible if economic and social conditions fail to improve. How any new government navigates the embedding of elements of the Venezuelan military in illegal and corrupt activities, including narco-trafficking, illegal mining, and collaboration with organized crime; transnational criminal organizations, some of which are now US designated as foreign terrorist organizations; and non-state armed groups such as the ELN and FARC, will be a key factor.
Security risks will further complicate the outlook, as those same non-state armed groups and transnational criminal organizations already embedded in Venezuela are likely to exploit any transition period to deepen their influence. Recent US designation and enforcement actions targeting these groups will add an additional layer of compliance and operational risk for investors, underscoring the importance of continuous risk assessment, due diligence, and ongoing monitoring.
Conclusion
If and when – and when has increasingly become a real possibility – it occurs, Venezuela’s reopening will present rare opportunity alongside daunting complexity. For investors, creditors, and counsel, navigating this environment will require not only sound legal and commercial strategy, but also timely intelligence, expert analysis, and actionable insight and understanding of local conditions and ongoing risks on the ground.
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