Rebuilding Infrastructure in Venezuela: A Multi-Billion Dollar Opportunity
Report Provided by the
Open Source Internet Intelligence Service (OSIIS)
A large part of the reason that Hugo Chavez was elected President was his promise to enhance the quality of life for impoverished Venezuelans. It is not Chavez’s dedication to this premise that is in question; it is his capacity to expedite such relief which is proving to be a challenge. Therein lays a significant opportunity for international companies in the areas of consulting, city planning, engineering, construction and a host of other infrastructure related opportunities.
According to WORLDVIEW, a project of the Architectural League of New York, “The barrios or squatter cities are the product of migrations from the countryside and the growth of a 'city inside the city,' unattended for decades by the authorities. These settlements, built on public property or illegally on privately owned land, house 60% of Venezuela's population. Because the local government has no housing alternatives to offer, it looks the other way.” An estimated 2005 Venezuelan population of 25 Million means infrastructure, building and construction requirements are needed for roughly 15 Million people. Additionally, Venezuela’s population growth has been steadily increasing since 1961.
Another factor that makes the rebuilding of Venezuela’s infrastructure a ripe opportunity is that Venezuela is ready, willing and capable of making massive investments in urban renewal projects. In terms of readiness, as mentioned before; much of Hugo Chavez’ political viability as the leader of Venezuela is dependent on his ability to institute the promises he has made to poor Venezuelans. According to TIME, “Venezuela…still needs a further 1.6 million new units to meet the shortfall in low-income housing needs”. These needs extend into water sanitation, waste sanitation, electricity, communications, traffic congestion and more. If, as WORLDVIEW speculates, the barrio is transformed into valuable real estate in the next decade; then the value of this financial opportunity increases exponentially.
The Venezuelan government is so willing to move forward with infrastructure solutions that the Mayor of Caracas, Juan Barreto, declared he was going to seize the golf courses from the Caracas Country Club and the Valle Arriba Club and use the land to build homes for 50,000 people. Such a statement by the Caracas mayor is certainly an indicator of willingness to move forward on the infrastructure challenge. It is also an indicator that there is openness to creative solutions. Apparently, Iran has already begun capitalizing on this Venezuelan infrastructure opportunity. According to the Wall Street Journal, Iran and Venezuela have signed contracts worth over $1 Billion. These contracts stipulate that Iran will build 10,000 housing units in Venezuela and a number of manufacturing plants. According, to the World Socialist Web Site, “In Beijing’s Great Hall of the People, Chavez promised to increase oil exports to China from the current level of 155,000 barrels per day to 500,000 by 2009 and 1 million by 2012. In return, Chinese President Hu Jintao agreed to support Venezuela’s campaign for a two-year seat in the UN Security Council and to provide substantial economic aid, including a fibre-optic communication network and finance for a $1.2 billion project to build 20,000 houses.” Hugo Chavez’ willingness to invest in infrastructure is evident in the business arrangements he is rapidly establishing with nations and corporations around the world.
Venezuela’s oil revenues of $200 million a day, half of that coming from the United State of America, make it more then able to compensate for infrastructure improvements. According British Broadcasting Company Newsnight’s Greg Palast, “The DoE report shows that at today's prices Venezuela's oil reserves are bigger than those of the entire Middle East - including Saudi Arabia, the Gulf states, Iran and Iraq.” And “The DoE estimates that the Venezuelan government controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet.” This may be the reason The Financial Times says, Caracas has become “a magnet for Swiss and other international bankers.”
Investment in Venezuela’s infrastructure also provides a number of political as well as profit opportunities. As a pet project of Hugo Chavez’s, improving the infrastructure would be viewed by him as a great contribution to his political legacy. From observation, Mr. Chavez’ personality appears to be one of extremes based on personal perceptions of “kindness for kindness and evil for evil” rather than being purely anti-western. This is evidenced by his willingness to take consultation from London Mayor, Ken Livingstone in exchange for discounted diesel fuel that is needed to run London buses. After meeting with Hugo Chavez and hearing his offer to provide free fuel for needy people in Great Britain (similar to his previous offer to needy Americans) during the winter, Mayor Livingstone described Hugo Chavez as “the best news out of Latin America in many years.” At the same time, Hugo Chavez has referred to Tony Blair as an ally of Hitler in relation to his friendship with George Bush. This confirms that Hugo Chavez interprets his relationships on a personal basis. Other indicators also confirm this.
Besides the fact that Chavez is open to Western influence and will give away oil; infrastructure investment will give any participating country/corporation a foothold and opportunity for greater participation in the Venezuelan oil and oil services industry whose infrastructure is in need of repair and expertise. Based on the aforementioned Department of Energy report this could be a major opportunity for long-term oil security, profitability, Central/South American political influence and a big foot in the business door of emerging Latin American markets.
Considerations of non-diplomatic activities to achieve oil security in Venezuela should bear in mind the way diplomatic verse non-diplomatic methods have played out in Iraq and Iran. In Iraq; France, Germany, Russia and China had beaten the United States to the punch and made business deals which gave them large shares of Iraq’s oil assets. The United States went to war and indicated to the aforementioned countries that “you’re either with us or against us” and countries not supporting the war in Iraq would lose their business interests. Now, the United States is embroiled in a war that by all accounts it is losing and costing it billions of dollars. Getting out of Iraq has taken precedent over oil. Not to mention the United States’ “with us or against us” mentality has given several major world powers a reason to hope for, at the least, a decisive U.S. loss in Iraq.
Iran, which was subject to U.S. overthrow and labeled as part of “the axis of evil”, has been the subject of discussions regarding a bombing of their nuclear facilities. Now the U.S., hat in hand, is requesting their assistance in extricating themselves from Iraq. To avoid such humiliating examples in the future, which result in an enormous loss of face and the creation of more enemies; any country or company that seeks to take advantage of the infrastructure opportunities in Venezuela should follow the successfully established business model. The best businessmen will get the best deals.
Report Provided by the
Open Source Internet Intelligence Service (OSIIS)
A large part of the reason that Hugo Chavez was elected President was his promise to enhance the quality of life for impoverished Venezuelans. It is not Chavez’s dedication to this premise that is in question; it is his capacity to expedite such relief which is proving to be a challenge. Therein lays a significant opportunity for international companies in the areas of consulting, city planning, engineering, construction and a host of other infrastructure related opportunities.
According to WORLDVIEW, a project of the Architectural League of New York, “The barrios or squatter cities are the product of migrations from the countryside and the growth of a 'city inside the city,' unattended for decades by the authorities. These settlements, built on public property or illegally on privately owned land, house 60% of Venezuela's population. Because the local government has no housing alternatives to offer, it looks the other way.” An estimated 2005 Venezuelan population of 25 Million means infrastructure, building and construction requirements are needed for roughly 15 Million people. Additionally, Venezuela’s population growth has been steadily increasing since 1961.
Another factor that makes the rebuilding of Venezuela’s infrastructure a ripe opportunity is that Venezuela is ready, willing and capable of making massive investments in urban renewal projects. In terms of readiness, as mentioned before; much of Hugo Chavez’ political viability as the leader of Venezuela is dependent on his ability to institute the promises he has made to poor Venezuelans. According to TIME, “Venezuela…still needs a further 1.6 million new units to meet the shortfall in low-income housing needs”. These needs extend into water sanitation, waste sanitation, electricity, communications, traffic congestion and more. If, as WORLDVIEW speculates, the barrio is transformed into valuable real estate in the next decade; then the value of this financial opportunity increases exponentially.
The Venezuelan government is so willing to move forward with infrastructure solutions that the Mayor of Caracas, Juan Barreto, declared he was going to seize the golf courses from the Caracas Country Club and the Valle Arriba Club and use the land to build homes for 50,000 people. Such a statement by the Caracas mayor is certainly an indicator of willingness to move forward on the infrastructure challenge. It is also an indicator that there is openness to creative solutions. Apparently, Iran has already begun capitalizing on this Venezuelan infrastructure opportunity. According to the Wall Street Journal, Iran and Venezuela have signed contracts worth over $1 Billion. These contracts stipulate that Iran will build 10,000 housing units in Venezuela and a number of manufacturing plants. According, to the World Socialist Web Site, “In Beijing’s Great Hall of the People, Chavez promised to increase oil exports to China from the current level of 155,000 barrels per day to 500,000 by 2009 and 1 million by 2012. In return, Chinese President Hu Jintao agreed to support Venezuela’s campaign for a two-year seat in the UN Security Council and to provide substantial economic aid, including a fibre-optic communication network and finance for a $1.2 billion project to build 20,000 houses.” Hugo Chavez’ willingness to invest in infrastructure is evident in the business arrangements he is rapidly establishing with nations and corporations around the world.
Venezuela’s oil revenues of $200 million a day, half of that coming from the United State of America, make it more then able to compensate for infrastructure improvements. According British Broadcasting Company Newsnight’s Greg Palast, “The DoE report shows that at today's prices Venezuela's oil reserves are bigger than those of the entire Middle East - including Saudi Arabia, the Gulf states, Iran and Iraq.” And “The DoE estimates that the Venezuelan government controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet.” This may be the reason The Financial Times says, Caracas has become “a magnet for Swiss and other international bankers.”
Investment in Venezuela’s infrastructure also provides a number of political as well as profit opportunities. As a pet project of Hugo Chavez’s, improving the infrastructure would be viewed by him as a great contribution to his political legacy. From observation, Mr. Chavez’ personality appears to be one of extremes based on personal perceptions of “kindness for kindness and evil for evil” rather than being purely anti-western. This is evidenced by his willingness to take consultation from London Mayor, Ken Livingstone in exchange for discounted diesel fuel that is needed to run London buses. After meeting with Hugo Chavez and hearing his offer to provide free fuel for needy people in Great Britain (similar to his previous offer to needy Americans) during the winter, Mayor Livingstone described Hugo Chavez as “the best news out of Latin America in many years.” At the same time, Hugo Chavez has referred to Tony Blair as an ally of Hitler in relation to his friendship with George Bush. This confirms that Hugo Chavez interprets his relationships on a personal basis. Other indicators also confirm this.
Besides the fact that Chavez is open to Western influence and will give away oil; infrastructure investment will give any participating country/corporation a foothold and opportunity for greater participation in the Venezuelan oil and oil services industry whose infrastructure is in need of repair and expertise. Based on the aforementioned Department of Energy report this could be a major opportunity for long-term oil security, profitability, Central/South American political influence and a big foot in the business door of emerging Latin American markets.
Considerations of non-diplomatic activities to achieve oil security in Venezuela should bear in mind the way diplomatic verse non-diplomatic methods have played out in Iraq and Iran. In Iraq; France, Germany, Russia and China had beaten the United States to the punch and made business deals which gave them large shares of Iraq’s oil assets. The United States went to war and indicated to the aforementioned countries that “you’re either with us or against us” and countries not supporting the war in Iraq would lose their business interests. Now, the United States is embroiled in a war that by all accounts it is losing and costing it billions of dollars. Getting out of Iraq has taken precedent over oil. Not to mention the United States’ “with us or against us” mentality has given several major world powers a reason to hope for, at the least, a decisive U.S. loss in Iraq.
Iran, which was subject to U.S. overthrow and labeled as part of “the axis of evil”, has been the subject of discussions regarding a bombing of their nuclear facilities. Now the U.S., hat in hand, is requesting their assistance in extricating themselves from Iraq. To avoid such humiliating examples in the future, which result in an enormous loss of face and the creation of more enemies; any country or company that seeks to take advantage of the infrastructure opportunities in Venezuela should follow the successfully established business model. The best businessmen will get the best deals.
The Open Source Internet Intelligence Service (OSIIS) is an independent Non-Governmental Organization (NGO) providing private, insightful analysis to international clientele utilizing the Internet and a unique variety of source methodologies.
