In places like Venezuela, a multinational's office becomes a sanctuary with reliable power and communications. The commute is a dangerous journey between secured corporate compounds and gated residential communities, highlighting the stark contrast with failing public infrastructure.
Related Insights
When instability in a country like Venezuela forces skilled professionals to flee, a multinational corporation can retain that talent by relocating them to offices in other countries, turning a local crisis into a global talent redistribution.
While the Trump administration promotes investment in a post-Maduro Venezuela, major oil companies like ExxonMobil are publicly skeptical. Their stance that the country is "uninvestable" due to the absence of rule of law shows that political guarantees are insufficient without fundamental institutional reforms.
Once a destination for American economic opportunity, Venezuela's economy imploded after nationalizing its top industry and imposing widespread price controls. This recent, dramatic collapse serves as a powerful, real-world example of how such policies can lead to ruin, yet they remain popular.
When local currency collapses, companies in places like Venezuela must shift focus from core operations to creatively exporting anything possible (like salt or pallets) just to secure hard currency for essential imports like spare parts.
Modern multinationals avoid the high cost and risk of securing foreign markets themselves. Instead, they 'draft' behind the U.S. government, which uses its diplomatic and military power to create favorable conditions. This effectively socializes geopolitical risk for corporations while they privatize the profits.
A rapid rebound in Venezuelan oil production is improbable, even with massive investment. The effort is constrained by fundamental infrastructure failures, like a deeply unreliable national power grid, which is essential for running upgraders and refineries. This makes a quick recovery lasting years, not months.
The Maduro regime is not just a corrupt petrostate; it is a diversified criminal enterprise. It has expanded into drug trafficking, gold smuggling, and human trafficking, turning Venezuela into a safe haven for global criminal networks, terrorist groups, and adversaries like Russia and Iran.
Resourceful Venezuelans tapped into private energy sources like small hydro plants to mine Bitcoin. This created a portable, non-governmental store of value they could carry on a digital wallet to flee the country and start a new life.
The hosts argue that even with vast oil reserves and government encouragement, the political instability, power vacuum, and lack of rule of law in Venezuela make it a poor investment for oil companies. The cost and uncertainty of securing profits are too high.
Increasing political instability, crime, and social decay in major Western cities are causing a 'flight capital' phenomenon among the wealthy. They are relocating to places perceived as safer and better managed, such as Dubai and Hong Kong, driving up asset prices in those locations.
