Relations between Colombia and Venezuela one year into Petro’s administration

Relations between Colombia and Venezuela are similar to that of two neighbors who were once friends, but for various reasons have drifted apart and become enemies.

During Colombia’s last governments, this relationship and economic stability were compromised. The presence of the Farc and the ELN, Colombia’s signing of the FTA with the United States and Colombia’s accusations that the Venezuelan government tolerated drug trafficking were some of the reasons why relations between Colombia and Venezuela were affected.

You may read: Colombia’s worrying budget execution in 2023

Colombia’s alignment with the United States and Venezuela’s distancing from this power brought with it serious damage to binational trade, which became very important for both nations and accounted for 10% of Colombia’s international trade, according to DANE figures.

The market with the neighboring country is mainly concentrated in the secondary sector, since 92% of the trade of goods between Colombia and Venezuela during the last three decades was of manufactured products. Only 4.3% of bilateral trade was in agricultural products and mining products accounted for only 3.7% (DANE).

The 1990s: Intra-industrial Trade

According to DANE figures, in the 1990s, Colombia and Venezuela exchanged an average of 2.9 million tons of goods worth US$1,814 million per year. In that same period, the balance was negative for Colombia, and the trade balance was in deficit by an average of US$200 million per year.

However, Colombia had a more diverse exportable supply. Seventy-five percent of sales to Venezuela during this period were of goods produced by 18 economic activities, mostly manufacturing.

Between 1991 and 1999, manufacturing exports to Venezuela accounted for an average of 90% of the total. Of these, 17% were chemical substances, 14% food products, 12% clothing, 9% vehicle manufacturing, and 8% textiles, among other products.

In contrast, purchases from Venezuela were concentrated in products from 11 activities, including the production of basic metallurgic products, chemical substances, petroleum derivatives, the automotive industry and basic iron and steel industries.

On average, between 1991 and 1999, 95% of imports from Venezuela were manufactured products. Twenty percent were metallurgical products, 19% corresponded to the vehicle manufacturing category, 18% were chemical products and 14% were petroleum refining products, to name the most important.

You may also read: To pay pensions from birth: what very few knew about the Colombian pension system

A profitable trade relationship for Colombia

The trade deficit became a surplus since 1999. Between that year and 2022, Colombia earned on average USD$1,151 million annually in exchanges with Venezuela, according to DANE figures.

Between 2006 and 2014, the best time for trade exchanges was presented, and Colombia’s trade balance during this period averaged USD$2,388 million per year. The best year for trade relations was in 2008, when exchanges reached USD $7,268 million.

Since 2015, the trade balance decreased at an average rate of 4.9%, until 2021.

Breakdown of relations between Colombia and Venezuela

Trade relations were affected by political decisions that led to the breakdown of diplomatic relations between the two countries, and reached their most tense point when Colombian President Iván Duque recognized Juan Guaidó as president of the neighboring country and led what he called the diplomatic encirclement, in coordination with Washington’s policy.

Subsequently, President Gustavo Petro assured during the campaign that he would establish relations between Colombia and Venezuela. One year into his administration, Ana Rodríguez, correspondent in Caracas for El Tiempo, assures that resuming relations after four years of rupture is not an easy task, but recognizes that “there are those who consider that the implementation has been quite slow”.

At the beginning of Petro’s government, ambassadors were appointed: Armando Benedetti in Caracas and Félix Plasencia in Bogotá. Both were replaced months later.

In the case of Armando Benedetti this happened due to the scandal that broke out when some audios were revealed in which he threatened to reveal information about possible illegal sources of financing for the campaign of President Gustavo Petro.

Insufficient efforts to reactivate relations between Colombia and Venezuela

Initially, there was the reactivation of the border, which allowed again the commercial exchange between both countries. Between January and June 2022, exports to Venezuela totaled USD $284 million, and for the same period of 2023 they increased 8%, to USD $306 million, according to DANE.

On the other hand, between January and June 2022, purchases from Venezuela totaled USD $39 million, and for the same months of 2023 they amounted to USD $81 million.

The slow reactivation of trade is compounded by the persistence of smuggling. In this regard, the Confederation of Associations of Agricultural Producers of Venezuela (Fedeagro) assures that smuggling has taken over different products, which negatively affects the Venezuelan industry.

On the Colombian side, irregular trade flows along the border have become a breeding ground for violent actors, trafficking of illicit drugs and smuggling of oil and minerals.

There are also difficulties in making payments to Colombian exporters and Venezuelans’ purchasing capacity has fallen with the production crisis in that country, making it difficult for Colombian companies to significantly increase sales in that market.

One year after the reactivation of the bilateral relationship began, consulates have not reopened to provide services to the nearly 4 million Colombians in Venezuela.

Undoubtedly, much remains to be done to fully reestablish relations between the two countries.

Keep reading: Icetex bill will finally be easy to understand: entity announces invoice changes