News & Politics

GM Pulls Out of Venezuela After Socialist Government Seizes Plant

GM Pulls Out of Venezuela After Socialist Government Seizes Plant
Venezuela's President Nicolas Maduro gestures as he speaks during a march, at Miraflores Presidential Palace in Caracas, Venezuela, Thursday, April 7, 2016. (AP Photo/Ariana Cubillos)

General Motors (GM) has announced it will immediately halt all operations in Venezuela after the country’s socialist government seized its plant in the country, a move GM described as an “illegal judicial seizure of its assets.”

“[GM] strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights,” the company said in a statement.

GM’s Venezuelan subsidiary, General Motors Venezolana (GMV), has operated in that country for nearly 70 years. It employs nearly 2,700 workers and has 79 dealers in the country, CNN Money reported. The company promised to make “separation payments” to its workers after pulling the plug on GMV.

This is merely the latest government seizure of a private company in the country with the world’s largest oil reserves but a self-imposed big-government recession. Under the late President Hugo Chavez, who took power in 1999, the government took over private oil, telecommunications, energy, and cement businesses.

In recent years under President Nicolás Maduro, the government has seized bakeries amidst a bread shortage, taken over toilet paper factories amid a toilet paper shortage, and repressed the political opposition.

Indeed, the opposition launched “the mother of all protests” on Wednesday, accusing Maduro of creating a dictatorship. The government has blocked their attempts to remove Maduro from power by a referendum vote, and it has also delayed local and state elections. The last election held in the country was the parliamentary election of 2015, which gave the opposition a majority in the legislature.

On March 29, the Venezuelan Supreme Court dissolved the Parliament, taking legislative power on itself. While this was reversed three days later, protests had already erupted.

The government also barred opposition leader Henrique Capriles from holding political office for the next 15 years. So far, at least four people have been killed in protests.

In a tragic irony, Maduro declared he would provide guns to as many as 400,000 of his supporters, effectively reversing a 2012 firearms ban which only allowed the military, police, and groups like security companies to purchase guns. After the gun ban, passed allegedly to decrease crime, the murder rate increased. But this week, Maduro provided guns to his supporters — in order to suppress dissent.

As CNN Money reported, it was not immediately clear why authorities in Venezuela seized the GM plant, but Maduro has in the past blamed the United States and its companies for the country’s economic and political problems.

Many global firms have pulled out of the country or been forced to halt operations in recent decades due to government interference. ExxonMobil left in 2007 after Chavez attempted to nationalize one of its projects. It later took the government to court. In May of last year, Coca-Cola was forced to halt production of Coke due to sugar shortages.

Given the seizures of private companies and their decisions to leave the country, it may come as no surprise that Venezuela is in crisis mode. The country’s economy shrank by 18 percent in 2016, its third consecutive year of recession. Unemployment is set to surpass 25 percent, and shortages of food and medicine persist. Hyperinflation has also wiped out the value of Venezuela’s currency, the bolivar.

Unfortunately, the process of crony capitalism and socialism that created the crisis in Venezuela can indeed happen in the United States. Maduro even endorsed Vermont Senator Bernie Sanders in the 2016 Democratic primary. Even after Sanders lost that primary, the party embraced him, dragging him along on a “unity tour.”

If GM was willing to pull out of Venezuela after 70 years due to government seizure of property, what makes Democrats think the candidate Maduro endorsed would lead America to prosperity? Venezuela’s fate was avoidable, and America need not trod the path to shortages and economic ruin. Perhaps Democrats should rethink their heroes.