Instability in Venezuela and the Long-Term Legal and Economic Impacts on International Trade Flows

Over the past decade, the Venezuelan crisis has become entrenched as a structural phenomenon of political, economic, and institutional instability. Although public debate often narrows its effects to the energy sector, the long-term consequences of this instability extend well beyond oil and reach core dimensions of international economic law, foreign trade, and global governance.

Venezuela has become a paradigmatic case of how persistent internal crises can reconfigure international trade flows, affect value chains, alter patterns of foreign investment, and redefine economic relations among major blocs such as the United States, the European Union, Latin America, China, and the Middle East.

This article examines these impacts from a legal–economic perspective, highlighting the mechanisms through which Venezuelan instability influences global trade in the medium and long term.

1. Institutional instability as a legal variable in international trade

From the standpoint of international economic law, institutional predictability is one of the cornerstones of transnational trade. Prolonged political instability undermines:

• legal certainty in international contracts;

• the effective protection of property rights and foreign investments;

• the performance and enforcement of commercial and financial obligations.

In the Venezuelan case, the combination of institutional fragility, frequent shifts in economic policy, state controls, and international sanctions has created an environment of elevated legal risk. Even in the absence of formal prohibitions, trade is adversely affected by higher transaction costs, credit contraction, and uncertainty regarding the applicability and enforcement of law.

Economic literature demonstrates that this type of instability operates as a non-tariff barrier, persistently reducing trade flows.

2. Economic sanctions and their indirect legal effects on trade

The sanctions imposed on Venezuela—particularly by the United States, with extraterritorial effects—play a central role in the reorganization of trade flows.

From a legal–economic perspective, sanctions generate effects that go beyond direct trade restrictions:

• increased compliance costs for foreign companies;

• constraints on international financing and access to the global financial system;

• uncertainty regarding the validity and enforceability of long-term contracts.

These factors encourage companies and states to substitute trading partners, gradually reducing Venezuela’s integration into global trade networks. Even potential future relaxations do not immediately eliminate the accumulated reputational damage and institutional distrust.

3. Global value chains and indirect legal responsibility

Although Venezuela is not a major exporter of manufactured goods, its instability affects global value chains through indirect channels with growing legal relevance.

a) Logistics and international contracts

The deterioration of ports, transportation systems, and infrastructure compromises contractual performance, increases default risks, and reduces the predictability of delivery timelines—key elements in international trade contracts.

b) Insurance, financing, and country risk

Higher sovereign risk raises the cost of maritime insurance, contractual guarantees, and export financing, affecting operators with direct or indirect exposure to the Venezuelan economy.

c) Legal externalities

Companies operating in supply chains connected to Venezuela increasingly incorporate force majeure, hardship, and enhanced compliance clauses, thereby altering global contractual dynamics.

4. Regional impacts from a legal–economic perspective

4.1 Latin America: erosion of regional integration

Historically, Venezuela played a relevant role in South American regional trade. The prolonged crisis has weakened agreements, disrupted regional value chains, and reduced intraregional trade.

From a legal standpoint, this has resulted in:

• a loss of normative density in regional agreements;

• reduced effectiveness of economic integration mechanisms;

• substitution of Venezuela by extra-regional partners.

This process weakens integration projects and reduces regional trade autonomy.

4.2 United States: sanctions as an instrument of economic policy

The Venezuelan case illustrates the use of sanctions as a tool of foreign and economic policy. Legally, this reinforces the trend toward the politicization of international trade, whereby geopolitical decisions shape trade flows and investment patterns.

In the long term, this practice contributes to:

• greater fragmentation of global trade;

• increased transnational legal uncertainty;

• incentives to diversify partners away from areas of elevated political risk.

4.3 China and the Middle East: legal pragmatism under economic constraints

China and several Middle Eastern countries have maintained economic relations with Venezuela; however, institutional instability limits the expansion of these ties beyond strategic sectors.

Venezuela’s inability to ensure contractual predictability and macroeconomic stability constrains long-term investments, even in contexts of political alignment.

4.4 European Union: indirect and normative impacts

Although the European Union has limited direct trade exposure to Venezuela, it experiences significant indirect effects:

• reconfiguration of global supply chains;

• migratory impacts with economic and regulatory consequences;

• strengthening of due diligence, compliance, and political risk assessment policies.

These factors systematically influence European trade and regulatory policymaking.

5. Migration, human capital, and related legal–economic effects

The Venezuelan crisis has generated significant migratory flows, redistributing human capital and creating new patterns of consumption, remittances, and service provision.

From a legal–economic perspective, this affects:

• labor markets;

• cross-border services;

• regulatory regimes governing migration and economic integration.

International trade, in this context, must be understood in a broader sense, encompassing people, services, and financial flows.

6. Conclusion

Venezuelan instability illustrates how prolonged political crises produce structural and lasting effects on international trade, far beyond short-term shocks in strategic commodities.

From a legal–economic standpoint, the case demonstrates that:

• legal certainty is a central element of global trade;

• political risk has become a structural variable in commercial decision-making;

• national crises can accelerate processes of international economic fragmentation.

The Venezuelan experience underscores the need to incorporate legal and institutional analysis into trade and investment strategies in a global environment increasingly marked by geopolitical uncertainty.

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• World Bank. Migration from Venezuela: Impacts and Policy Responses, 2023.

• World Trade Organization (WTO). World Trade Report – Geopolitical Tensions and Trade, 2023.