Swiss companies pull out of Venezuela

by
Swissinfo.ch
My articles My booksMy videos
Follow on:TwitterFacebookGoogle +

Nicolas Maduro (blue shirt) at the tomb of former Cuban leader Fidel Castro in Santiago on August 15 (Keystone)

Swiss firms have been cutting hundreds of jobs in long-established branch offices in Venezuela, as the oil-producing country experiences an economic and political crisis.

“The disaster – economic, social, political and humanitarian – which is engulfing Venezuela with the government of [president] Nicolas Maduro is forcing Swiss companies to resize their presence or to gradually leave the country,” wrote French-language newspaper Le Temps, which based its article on an investigation by Handelszeitung, a Zurich business weekly.

“[Swiss] exports to Venezuela, which has the largest oil reserves in the world, came to half a billion francs in 2012. In the second quarter of 2017, they totalled only CHF11 million ($11.5 million) – the lowest level for 30 years,” Le Temps said.

The paper cited the example of Swiss engineering firm Sulzer, which it said had invested in Venezuela in the turbines and pumping equipment sector.

“With Nicolas Maduro and the crisis triggered by the socialist government, the Winterthur-based group has had to adjust to the drop in demand. It has ended its turbine activity. Its branch was capitalised at 5,000 Venezuelan bolivars (CHF470). Because of the hyperinflation, its value now corresponds to that of four kilos of bananas or half a chicken.”

Over 120 people have died in four months of protests against Maduro’s handling of an economy beset by triple-digit inflation and acute food shortages.

Monitoring the situation

Le Temps also mentioned Basel-based pharmaceutical giant Novartis, which was seriously reducing its operations. “Having once employed up to 600 workers in various offices around the country, now there are fewer than 80,” it said.

A Novartis spokesperson added: “We’re closely monitoring the situation and receive regular updates from our local offices.”

Swiss companies such as Roche and Schindler are following the same strategy.

At the beginning of August, Swiss bank Credit Suisse banned its traders from carrying out transactions involving Venezuela’s debt and financial products coming from the capital Caracas.

The bank is also looking into whether there is a risk to its reputation, given that some members of Venezuela’s ruling class have been accused of massive corruption.

‘Interesting trade partner’

The history of economic relations between Switzerland and Venezuela shows the scale of this turnaround.

The Historical Dictionary of Switzerland states that Venezuela has always been an interesting trade partner for Switzerland because it has never been short of money thanks to revenue from oil. The tome also states that Switzerland has sought to maintain normal relations with Venezuela, even during periods when the government was authoritarian (Marcos Pérez Jiménez, 1952-1958), corrupt (Carlos Andrés Pérez, 1989-1993) or populist (Hugo Chávez, 1999-2013).

The only exception reported by Handelszeitung and Le Temps was Swiss food multinational Nestlé, which has been active in Venezuela since 1940 and which isn’t planning on leaving.

“We are committed to providing consumers in Venezuela with quality food products. We are determined to maintain our operations in Venezuela and to continue to support the local communities where we operate in the country,” spokesman Michael Jennings told swissinfo.ch, pointing out that the company’s five factories in Venezuela were still operational.

“In doing so, the safety of our more than 3,000 employees remains our main priority. Nestlé Venezuela is steadily working to locally source raw and packaging materials as much as possible,”