CARACAS // Venezuela is seeking help from Arabian Gulf countries as it struggles to manage a financial crisis brought on by falling oil prices.
Eulogio Del Pino, the country’s oil minister, made his second trip to the region in a few weeks to talk to Opec oil producers from Saudi Arabia and Qatar, as well as non-Opec Russia, resulting in the decision yesterday to freeze crude production at January levels.
But Mr Del Pino, one of the most powerful men in Venezuela’s volatile political scene, is also believed to have discussed more specific investment in his country’s creaking economic infrastructure. At a meeting in the Venezuelan capital, Caracas, last week, increased economic and financial ties between Venezuela and GCC countries, notably Saudi Arabia, were discussed. “There was a lot of interest from Gulf investors in Venezuela,” said one person who attended the meeting, who did not want to be identified because it was a private gathering.
It is not known whether Venezuelan oil officials visited the UAE during their most recent round of coordinated talks in the region on oil supply but Ahmed bin Sulayem, the chairman of the Dubai Multi Commodities Centre, spoke to officials from the oil and minerals ministry and the Venezuelan central bank last week about the possibility of increasing ties between the South American country and the UAE.
“They listened to what I had to say abut Dubai and the UAE and I think they were impressed,” Mr bin Sulayem said after the Caracas meetings.
Many economists believe that heavily indebted Venezuela will not be able to manage its financial problems without outside assistance.
It has, so far, resisted involvement by the IMF but is open to sovereign links with countries it feels are friendly towards it, as well as some global banks.
Venezuela faces imminent repayment of US$6.2 billion of bonds to Chinese investors and has recently talked to Deutsche Bank about a plan to convert some of its gold reserves into much-needed foreign exchange.
It is in the process of seeking readmission to the Kimberley Process, the international agreement that regulates the diamond trade, which would enable it to trade the precious stones for the first time since it left the organisation in 2008. Diamonds have been added to the country’s foreign reserve assets.
At the Caracas meetings, the Venezuelans revealed they were planning a radical restructuring of its economy, opening opportunities for private and foreign investors in sectors closed to them under its socialist policies.
The main areas are in mineral exploration and mining in the resource-rich south of the country and these assets could be of interest to Gulf investors.
The new economic approach is set to be unveiled by Mr Del Pino and the president, Nicolas Maduro, at a gathering of global investors in Caracas on February 24. It is the first serious step in diversification away from oil dependency, which has cost the country dear as crude prices slumped dramatically over the past year.
Consumers face dramatically rising inflation – forecast to reach 700 per cent this year – as well as shortages of food and essentials. There have been instances of food riots and looting in the volatile country recently.
Any serious investor would have to be comfortable with the close participation of the Venezuelan military in the new economic structures.
fkane@thenational.ae
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