Venezuela’s Withdrawal From ICSID: What it Does and Does Not Achieve Timelines: K-Erdgas-Erdöl, N-Venezuela, N-Venezuela-takeover, US-Imperialismus

In January 2012, the Bolivarian Republic of Venezuela denounced the ICSID Convention, becoming the third country – after Bolivia and Ecuador – to do so. The exit from the global forum for the settlement of investment disputes signals these countries’ apparent loss of faith in the system and raises questions about the Convention’s fitness for purpose. This article looks at the possible reasons which prompted Venezuela to take this step, the impact it is likely to have and some broader issues arising from it.

The Foreign Ministry’s 2012 press-release points out that the country acceded to the Convention in 1993 by “a decision of a provisional and weak government, devoid of popular legitimacy, and under the pressure of transnational economic sectors involved in the dismantling of Venezuela’s national sovereignty.” The current government thus sees itself as correcting the mistakes of the earlier one. Far-reaching economic reforms by President Hugo Chávez’s government also indicate that – in the view of those currently in power – joining ICSID was one of many things where the previous regime had gone wrong.

Chávez’s economic programme seeks to re-establish the role of the state in the economy, especially in strategic sectors, farmed out to foreign corporations in the 1990s. Over the past few years, Chávez’s government has carried out a wave of nationalizations of domestic-and foreign-owned assets in petroleum, steel, agribusiness, construction, tourism, telecommunications, banking and some other industries. Most foreign investors’ grievances against the government are the fallout of these claw-back policies; the main issue in dispute is usually whether the amount of compensation offered by the government is sufficient.