Venezuela country brief

Overview

Australia and the Bolivarian Republic of Venezuela have cordial relations with modest commercial cooperation. Australia’s first Ambassador to Venezuela, F.T. Homer presented credentials in July 1973. The two countries celebrated 40 years of diplomatic relations in 2013.

The Australian Embassy in Santiago, Chile, is responsible for Venezuela. Venezuela opened its Embassy in Canberra in July 1978.

Venezuela is a country on the north coast of South America, sharing land borders with Colombia to the west, Brazil to the south and Guyana to the east. Venezuela is slightly smaller than South Australia and lies entirely within the tropics. The Andes run eastwards across Venezuela’s north, hosting most of the population. The central region is dominated by plains and the Orinoco river. The southern and eastern parts of the country are dominated by the rugged Guiana highlands, where the world's tallest waterfall, Angel Falls, is found..

Venezuela's population is approximately 31.3 million (2017 est). Venezuela's population is made up of a range of ethnicities, including Indigenous peoples, Europeans and Africans, as well as more recent immigrants from Asia. Roman Catholicism is the main religion.

Political overview

The Spanish expedition led by Alonso de Ojeda in 1499, which sailed along the northern coast of South America, gave the name Venezuela (“little Venice” in Spanish) to the Gulf of Venezuela because of its similarity to the bay of Venice.

Spain colonised the north-east coast of Venezuela from 1521. Caracas was established as the capital of the province in 1577, which came under the jurisdiction of the Viceroyalty of New Granada (modern Colombia).

Independence from Spain was declared on 5 July 1811, when the area was included in the Republic of Gran Colombia with Ecuador, Panama and New Granada. Venezuela seceded from Gran Colombia in 1830.

System of government

Venezuela is a federal republic, made up of 23 states, one Capital District (Caracas) and the Federal Dependencies (Venezuela's islands in the Caribbean Sea and the Gulf of Venezuela).

The president, who is head of state and head of government, is elected for a period of six years (previously five).

Venezuela’s unicameral parliament, the National Assembly, is comprised of 165 seats, with members elected for five-year terms. In 2009, the Venezuelan constitution was amended by national referendum to remove term limits on all elected officials, including the presidency.

Recent developments

Hugo Chávez was elected President of Venezuela for a third six-year term in October 2012. He passed away on 5 March 2013. Presidential elections took place on 14 April 2013. President Chávez's preferred successor, Nicolás Maduro, ran as the candidate for the ruling Partido Socialista Unido de Venezuela (PSUV) and won by a narrow margin. President Maduro's term will expire in late 2018.

The opposition party, Roundtable of Democratic Unity (MUD), won the 6 December 2015 National Assembly election, winning 112 of 167 seats. The United Socialist Party of Venezuela (PSUV – Maduro's party) retained 55 seats.

In 2016, Venezuela suffered declining oil revenue, rampant inflation and severe shortages of food, basic goods and medicines – leading hundreds of thousands of Venezuelans to protest in the capital, Caracas.

On 27 March, the Supreme Court of Justice revoked the powers of the National Assembly, triggering large-scale protests. Maduro then issued by decree a constituent assembly, which takes legislative power away from the democratically elected National Assembly. Elections for the constituent assembly were held on 30 July 2017, amid widespread international condemnation and an opposition boycott. 

Talks in late 2017 in the Dominican Republic between the opposition and government failed to reach a consensus.

Foreign policy

The foreign policy settings under the Maduro government have shown strong continuity with the previous administration. President Chávez identified with the ‘global south' favouring a fundamental shift in international political economy and the re-emergence of a multipolar world in order to constrain the United States, which in 2015 was Venezuela's main trading partner.

President Chávez strengthened relations with many of Latin America's left-leaning administrations, including Bolivia, Ecuador, Nicaragua and Cuba, through the creation of the Bolivarian Alliance for the Peoples of Our America (ALBA). It was proposed by President Chávez as an alternative to the Free Trade Area of the Americas (FTAA), based on cooperation through social, political and economic integration of these like-minded countries. Venezuela has extended its relations with select Latin American and Caribbean countries by signing of an Energy Cooperation Agreement in 2005 called Petrocaribe.

Bilateral relations

In 2001, the Australian Government established the Council on Australia-Latin America Relations (COALAR), which aims to enhance commercial, political and cultural relations between Australia and Latin America. Since its inception, COALAR has been active in promoting business, education, tourism and cultural links between Australia and Latin America. For updates on COALAR activities and information on the annual grants program, follow COALAR on Facebook.

People to people links

Though small numbers of Venezuela-born people have migrated to Australia since the 1960s, they are relatively new migrants to Australia. The Census in 2011 recorded 3,404 Venezuela-born people in Australia, an increase of 122 per cent from the 2006 Census. More information on the Venezuela-born community in Australia can be found at the Department of Social Services Community Information Summary page.

From 2011 to 2015, three Venezuelan scholars were sponsored under Australia's Endeavour program – in 2015 through one Postgraduate Scholarship, and in 2011 through one Research Fellowship and one Vocational Education and Training Scholarship.

There were 2,121 Venezuelan student enrolments in Australia as at December 2017 (year to date).

In 1993, a Treaty on Extradition between Australia and the Republic of Venezuela entered into force.

Development assistance

From 2010 to 2014, Australia provided $100 million in official development assistance to Latin America, including 250 Australia Awards scholarships. Venezuela received six Australia Awards Scholarships.

Economic overview

For the latest economic data, refer to the Venezuela fact sheet [PDF 29 KB].

Economic outlook

Venezuela's main source of income continues to be Petróleos de Venezuela (PDVSA), the state-owned oil company, despite oil production falling to a 28-year low. GDP contracted 18 per cent in 2016 and a further 7.4 per cent in 2017. High inflation, falling public expenditure due to low oil prices, a weak investment outlook, deteriorating infrastructure and a major breakdown in security are contributing factors to this slowdown.

The United States is PDVSA's main full cash export market. The company has also revived plans to expand natural gas production for export to Argentina.

In 2017, annual inflation soared to around 720 per cent (year on year), as a result of deteriorating domestic productive capacity, tight currency restrictions, high fiscal spending and several currency devaluations. Inflation is forecast to rise further in 2018.

The quality of Venezuela’s infrastructure has deteriorated in recent decades because of underinvestment—in spite of a prolonged oil bonanza—stemming largely from a lack of effective administrative capacity. This has been most evident in the electricity sector, where a failure to invest in extra capacity and in improved distribution networks has left the country facing regular electricity rationing, but it is also evident in the deteriorating quality of roads and ports.

Bilateral economic and trade relationship

In 2016, Australia trade with Venezuela totalled a modest $77 million, primarily education-related travel services.

Trade and Investment

Despite abundant mineral wealth and some of the world's largest reserves of iron ore, aluminium, nickel and gold, Venezuela's mining industry is underdeveloped and accounts for less than one per cent of GDP. The government has identified the mining industry as a key sector in the diversification of the economy away from petroleum, particularly as a source of export revenue and inputs for domestic industry.

The government's strategy to nationalise strategic industries (including banks and food producers) that do not comply with government regulations have raised sovereign risk concerns. Government policy is favouring ties with state-owned firms linked to governments that are either close allies of the administration or countries the administration wants as allies. The imposition of foreign-exchange controls requires all persons in Venezuela to obtain government approval to send funds overseas. The difficulty in receiving payment in foreign currencies such as the US Dollar or the Euro has discouraged many small to medium sized Australian companies from exporting to Venezuela.

High level visits

In January 2012, then Parliamentary Secretary for Foreign Affairs, the Hon Richard Marles, visited Venezuela.

 

Note: Currency is in Australian dollars unless otherwise stated.

 

Last updated: December 2017



Last Updated: 26 June 2017