In “For Venezuela, as Distaste for U.S. Grows, So Does Trade,” Simon Romero describes Hugo Chávez’s increasing animosity toward the U.S. in the context of increasing trade with it:
Venezuela’s oil exports, of course, account for the bulk of that trade, as the country remains the fourth largest oil supplier to the United States. Pulled largely by those rising oil revenues, trade climbed 36 percent in 2005, to $40.4 billion, the fastest growth in cargo value among America’s top 20 trading partners, according to WorldCity, a Miami company that closely tracks American trade.
But American companies are also benefiting, as Venezuela’s thirst for American products like cars, construction machinery and computers has steadily grown, rising to $6.4 billion last year, from $4.8 billion a year earlier.
The new growth comes even as Mr. Chávez has done his best to try to redirect his nation’s trade toward what he considers more likeminded nations. He has formed a new socialist trade agreement with Cuba and Bolivia. A few Chinese cars can now be glimpsed in showrooms here. Iranian tractors are rolling off a new assembly line. And a Russian company plans to open a Kalashnikov rifle factory soon.
The U.S. trading partners Romero mentions are blue-chip: Financial companies like Morgan Stanley advise Caracas on bond issuance; Ford and GM sell increasing numbers of cars; AES Corp., Halliburton, Conoco-Phillips and ExxonMobil handle energy-related tasks; Microsoft software dominates; Cargill recently invested in a flour-milling business; and MasterCard amplifies Venezuelan consumers’ spending power.
Venezuela’s businesses and affluent consumers don’t have a lot of love for the leftist Chávez in the first place; but it’s still an excellent sign for U.S. soft power that they recognize American expertise in so many fields. Halliburton, whatever you think of its former officials, has a reputation for excellent oil-field services; Morgan Stanley provides bond issuers with nearly unparalleled access to buyers; and Microsoft’s software will remain easier to understand and use than Linux or other competitors for the foreseeable future.
But these companies would like to keep a low profile in case things go south in U.S.-Venezuela relations. The Times article is illustrated with a photo of a Venezuelan McDonald’s drive-through, and McDonald's would rather not have the next article feature a Venezuelan farmer ordering fries from the cab of his Iranian tractor.
(I'd like to see McDonald's USA replace its grating "I'm Lovin' It" campaign with the more graceful Spanish "Me Encanta" I found on the company's Venezuela site.)
This is in part why MasterCard declined to comment on profits from a Venezuelan crackdown on capital flight in 2003:
Some government policies have unexpectedly benefited American companies. For instance, after Venezuela restricted access to foreign currency for trips abroad to prevent capital flight during a sharp downturn in the economy in 2003, MasterCard profited because travelers were still allowed to spend up to $2,500 on their credit cards outside Venezuela.
Though MasterCard has recently stopped breaking out figures for Venezuela, it credited the exchange controls with helping to raise its gross dollar volume in the country by 82 percent, to $460 million, in the third quarter of 2005.
“We’re going to have to pass on this one,” Janet Rivera, a MasterCard spokeswoman, replied when asked about operations in Venezuela.
MasterCard can’t be blamed for tweaking its accounting to protect its image, even if its success is only a side effect of Venezuela’s macroeconomic policies. I’m sure if repression in Venezuela increased, or if relations with the U.S. deteriorated further, that U.S. companies would hurry to anonymize their Venezuela earnings under a larger “South America” in earnings reports if they haven’t done so already.
Full disclosure: I frequently consult for a company that works for Visa, Inc., a MasterCard competitor.