Venezuela’s Rapid Economic Turn

Venezuela’s Rapid Economic Turn Presents Growing Investment Opportunities Despite Enduring Risks

July 8, 2026

Summary

Since the US detained Nicolas Maduro earlier this year, Venezuela has undergone swift economic change, opening broad investment opportunities for foreign companies, particularly in natural resources. Still, uncertainty over the political transition, a regulatory environment in flux, decrepit infrastructure, and persistent security risks should temper investor expectations. The devastating earthquakes in late June will exacerbate the country’s economic and security problems. For firms evaluating entering or expanding in the Venezuelan market, a clear-eyed awareness of associated risks can help prepare for and mitigate problems.

Economic Transition is Moving Fast

Venezuela’s accelerating economic transition and vast energy and mineral reserves present substantial investment opportunities. Under US pressure, Acting President Delcy Rodriguez has reformed laws governing Venezuela’s oil, mining, and electricity sectors to attract foreign investment and generate much needed revenue.

Venezuela has the world’s largest oil reserves, estimated at more than 300 billion barrels, and nearly 200 trillion cubic feet of natural gas, the majority of South America’s total. Much of that gas is now flared at oil wells, leaving a largely untapped resource for power generation and exports to neighboring countries. Building the infrastructure to capture and use this gas would be a major economic gain for Venezuela and a blueprint for expanding US investment in the region.
The country has substantial mineral deposits, including gold, bauxite, aluminum, coltan, iron, diamonds, and rare earths. The formal mining industry remains underdeveloped, underinvested, and constrained by poor infrastructure and outdated equipment. It will require large-scale investment to become productive.
Gold, which dominates the mining sector, is concentrated in the Orinoco Mining Arc in southeastern Venezuela, where criminal gangs and armed guerrillas control much of the mining, often in collusion with corrupt military or police officials. Venezuelan military activity in the Mining Arc in early June may have been an initial effort to improve security. Sustained operations in the region will indicate whether the government is serious about asserting control.

Nonetheless, enduring regulatory and infrastructure barriers will continue to pose formidable obstacles over the next three to five years, while the earthquakes that struck near Caracas on 25 June are setting back reconstruction and the overall economic transition. The haste in passing new laws—the new Hydrocarbon Law was passed within a month of Maduro’s arrest—has left ambiguity in some of the legislation, providing government entities broad discretion over deals with foreign companies. Moreover, Venezuela’s infrastructure is severely deteriorated, and nearly any investment will require costly repairs or replacement.

US and foreign companies are reliant on US Treasury Office of Foreign Assets Control (OFAC) licenses to conduct business, because US sanctions are still in place. Operating under a license adds an element of uncertainty to operations in country because they can be easily withdrawn if US policy changes and companies must remain mindful of the broader sanctions regime.
The power sector is a major constraint on growth: electricity generation and transmission cannot meet current demand, much less support large-scale industrial expansion. In mid-June, the government signed an agreement with a foreign company to begin rebuilding the grid, but rehabilitating Venezuela's aging power infrastructure will require billions of dollars in additional investment and likely take much of the next decade.
The earthquakes severely damaged infrastructure, including roads, housing, and electricity transmission and, as of 28 June, exacted a death toll of 1,450, which is expected to climb significantly higher. Even lower estimates by the U.S. Geological Survey put economic losses from the disaster at $10 billion, which could amount to 10 percent of Venezuela’s total annual economic output.

Venezuela’s Political Transition is Stalled

While US support for Rodriguez has provided short-term stability, continuing economic pressure on the population and lack of a meaningful political transition heighten the risk of instability over the next year as opposition to her increases. Average Venezuelans have yet to see tangible benefits from the recent surge in economic activity, and Rodriguez is unpopular and considered illegitimate by most of the population. The earthquakes are creating dire living conditions for many Venezuelans, who are already criticizing the government’s response to the disaster, noting that civilians have been leading many of the rescue efforts in hard-hit areas.

High inflation and a weakening exchange rate continue to strain daily life for most Venezuelans. Inflation remains above 500% annually, though May’s monthly rate fell to 6.3% from 10.6% in April, the lowest monthly reading in 19 months.
The US administration has promised that a presidential election will usher in a political transition, representing the third and final phase of current Venezuela policy, but there has been virtually no progress towards this goal. It will take at least 9 months to prepare for an election, once efforts begin, and in that time disapproval of Rodriguez is likely to grow. The most popular opposition leader, Maria Corina Machado, has remained outside of Venezuela since last year at the request of the US Government but plans to return by year-end to advance a political transition.
Rodriguez has evaded questions on when she will hold an election and has little incentive to do so unless she is compelled to by the United States. In the meantime, she is consolidating control within the governing party and security forces and demonstrating to Washington that she is a reliable partner. She never had broad support, and she is starting to lose support among Chavistas, supporters of former president Hugo Chavez, who accuse her of selling out his political legacy.

Insecurity is a Persistent Problem

The Rodriguez government has not shown a serious willingness to address insecurity, and officials in her administration almost certainly continue to work with criminal actors. Urban crime includes robbery, kidnapping for ransom, extortion, and murder, while rural areas face narcotrafficking, illegal mining, illegal logging, robbery, extortion, and violence. Companies operating in Venezuela need security measures tailored to common criminals, organized gangs, and armed militants, depending on location (see text box).

Rodriguez’s actions against criminals so far appear aimed more at consolidating power and satisfying Washington than at changing the government’s approach to crime. For example, her government allegedly cooperated with the United States to kill the leader of the Tren de Aragua Foreign Terrorist Organization in June and extradited a corrupt Maduro-linked official to the United States earlier this year at Washington’s request.
Venezuelan police have often cooperated with criminal groups, providing protection or resources in exchange for a share of profits. Reliable crime-rate comparisons are difficult because the government does not publish credible data.
Armed militant groups operate across much of Venezuela and have long benefited from safe haven and support from the government. They are concentrated near the Colombian border but are also present elsewhere, including gold-mining regions. Although these groups began as leftist movements fighting the Colombian government, they have evolved into criminal enterprises that dominate narcotrafficking and other illicit activities.
Venezuela also has dozens of armed motorcycle gangs, known as colectivos, that have long worked closely with the government. They help sustain government support, especially in poor neighborhoods, and serve as a semi-deniable force to attack protesters and opposition members. The colectivos see themselves as defenders of Hugo Chavez’s socialist legacy.
The military is both a security actor and an economic stakeholder, and some units have been accused of facilitating illicit activities or cooperating with criminal groups. Investors therefore may encounter overlapping authorities, inconsistent enforcement, and security arrangements shaped by local military interests.

The scale and complexity of Venezuela's security challenges underscore the need for specialized solutions for companies operating in the country's energy, mining, and infrastructure sectors.

Drawing on extensive experience supporting US Government and commercial clients in high-risk environments, Arcanum provides professional, tailored security services that combine threat and strategic intelligence, vulnerability assessments, executive protection, fixed-site security, and comprehensive force-protection planning to mitigate risks from criminal organizations, armed groups, and political instability. Arcanum's American-led teams work closely with clients to design scalable security programs that protect personnel, facilities, supply chains, and operations while enabling companies to pursue opportunities in Venezuela's challenging operating environment.

What Comes Next?

Over the next 12 months, public pressure for a political transition is likely to intensify. Investors should anticipate political disruptions and protests, some of which may be violent, as expectations for economic improvement and political change go unmet.

Many Venezuelans see investor delegations and legal reforms as benefiting only Washington, foreign companies, and corrupt domestic politicians.

Pressure for change is likely to produce one of two outcomes: the current government entrenches itself with US support, or Venezuela transitions to a new government, likely led by an opposition figure. US policy will be the decisive factor in determining which path emerges. Both scenarios create risks for companies that do not carefully manage their activity in the Venezuelan market.

Entrenchment. To resist pressure for political change, the Rodriguez government would likely rely on repression, intimidation, and violence, tactics honed under Maduro. It would need tacit US support, probably sought by warning that a transition would bring chaos and economic disruption. A crackdown could trigger economic disruption and broad social unrest. One variant of this scenario would be another regime insider pushing Rodriguez aside and taking control to ease pressure for deeper change while allowing former Maduro officials to retain control.
Transition. A free and fair election would almost certainly bring Maria Corina Machado or another opposition contender to power. The transition itself would probably be unstable, as the current regime would try to obstruct a handover. After a new government takes office, regime-linked actors could seek to disrupt economic and political activity, while criminal networks would try to protect their influence and revenue. A new government could seek to revise or unwind some economic agreements made by the Rodriguez regime. Machado has said she would honor agreements made with the Rodriguez administration, but a more left-leaning president could push to renegotiate terms with foreign companies.

Risks and Mitigations for Investors

Political Risk. Working with a government widely viewed as illegitimate could expose foreign companies to backlash if the public sees them as enabling Rodriguez or benefiting from her government, particularly if the Rodriguez administration relies on repression or intimidation to stay in power. In addition, if a new government takes office, it could seek to revise regulations or agreements it views as unfair, unpopular, or illegitimate.

Because the opposition and public have been excluded from current dealmaking, many Venezuelans may see natural-resource agreements as favoring foreign companies over national interests. Public anger at the regime and its opaque practices could therefore extend to foreign firms, increasing pressure to revisit existing deals. Following a political transition, a new government would also likely scrutinize companies' relationships with the Rodriguez administration and investigate corruption involving Venezuelan officials, particularly where agreements are perceived as having benefited politically connected elites. Politicians may view renegotiating some agreements an effective political strategy.
Cultivating relationships across the Venezuelan political spectrum where legally permissible and building trust by providing immediate, concrete quality-of-life improvements to the local population would help ensure that support for investors would endure any future political transition.

Regulatory Risk. Recent legislation opening parts of Venezuela’s economy to foreign investment improves on prior laws but still lacks many safeguards investors typically seek. The Hydrocarbon Law gives foreign companies greater operational autonomy in their work with PDVSA, but it also grants the Venezuelan government broad discretion over projects, contracts, and royalties. The mining law permits foreign investment in gold mining but does little to address the dominance of criminal groups and corrupt officials in the sector.

Corruption is widespread and deeply entrenched in Venezuela, and foreign companies will need thorough due diligence and other safeguards to protect themselves. Oil, gas, and mining deals will require international firms to work with officials accustomed to personally profiting from these sectors.
Companies can hedge against the government's broad discretionary authority by limiting irreversible capital commitments in the early stages of projects, securing political risk insurance and financing via the Development Finance Corporation, and structuring investments so that risk can be scaled up or down as regulatory conditions evolve.