Rifts in U.S.-Venezuelan Relations Could Affect Business in Latin America

In recent developments of the ongoing deterioration of relations between the United States and Venezuela, the U.S. government sanctioned multiple Venezuela government officials for alleged human rights violations, demanded the release of political prisoners, and warned against blaming American policies for the country's continued economic and political problems. While this exchange or harsh rhetoric and sanctions is nothing new for the U.S. and countries that differ greatly from its foreign policy goals, what makes this episode especially noteworthy is that it could entail significant consequences for American prospects for doing business within the Latin American region, and especially within Cuba.

As marked by recent news headlines and globalEDGE blog posts, President Obama has been leading a strong effort to normalize political and economic relations with Cuba. Raúl Castro, the current president of Cuba and younger brother of Cuba's cultural figurehead Fidel Castro, has been working cooperatively with the Obama Administration on reconciliation efforts and remained relatively silent about the renewed sanctions on Venezuela. Meanwhile, Fidel congratulated Venezuelan President Maduro on his stance against "the brutal plans of by the United States government." Fidel has been viewed as the political mentor for both Maduro and the late Venezuelan President Hugo Chavez, and through those close relations formed political, economic, and cultural ties that have equated to Venezuela being Cuba's largest import partner and shared regional foreign policy agendas.

Therefore, both Havana and Washington have found themselves in a sensitive situation regarding how to handle Venezuela's problems. From an economic standpoint, the growing markets of the United States provide far more opportunities than the heavily sanctioned and unstable Venezuelan markets, thereby encouraging continued talks that would be beneficial for both Cuban and American business interests. However, the storied political and ideological closeness that Venezuela shares with Cuba and other Latin American and Mercosur nations not only directly threatens the U.S.' ability to foster new relations with Cuba, but also American hemispheric economic and political goals. In summary, eager investors waiting to break into Cuban markets should carefully be watching the direction in which U.S.-Venezuelan relations head, for the enduring influence of Fidel Castro's affiliation with Venezuela could potentially slam the door shut to Cuban markets once again.