Bogotá — After seven years of intermittent border closures and more than two years of severed air links, relations between Colombia and Venezuela are entering a new stage under the government of Colombian President Gustavo Petro, but the reestablishment of relations and ties brings a number of challenges, from guaranteeing security and generating confidence in the business community to defining a plan that allows for the reactivation of trade flows.
Colombia’s Trade, Industry and Tourism Minister Germán Umaña told Bloomberg Línea that the plan for the reopening of the border with Venezuela is already underway and that it is expected that on September 26 the green light will be given to land transport between Norte de Santander and Táchira, and which will have “very important effects on the growth and the possibility of binational trade”, he said.
After overcoming the logistical challenges that caused delays in the announced reopening, Umaña said that by September 26 “there will also be the authorization for the first flight to Venezuela” from Colombia, which will mean a relief for the close to 1.8 million Venezuelan citizens currently living in Colombia who were forced in many cases to travel along unsafe trails to cross the border.
“That has very important consequences, not only on trade, but fundamentally in the improvement of social indices between [Colombian department] Norte de Santander and [Venezuelan province] Táchira, which for seven years have had intermittent closures of their common border,” the minister said.
Regarding this point, the legal representative of the Chamber of Commerce of Cúcuta, Blanca Kelin Contreras, told Bloomberg Línea that “despite the fact that it has been seven years since the border was closed, it is evident that in recent months there has been a recovery in trade with Venezuela, particularly in Colombian exports”.
Between January and June of this year, binational trade amounted to $318 million, a figure similar to that reported for the whole of 2021.
“We have identified that sectors such as footwear and apparel are generating strong relationships with entrepreneurs from Táchira, a dynamic that positively impacts other sectors such as services and tourism,” Contreras said.
“The figures are encouraging and the progress toward the normalization of trade exchange between the two countries will allow more sectors such as agriculture, agro-industrial products, parts and components, electrical products and pharmaceutical products, among others, to begin to see better results”, she added.
And regarding the preparation of the region for September 26, she pointed out that the representatives of the various economic sectors “have participated in the preparation negotiations for the border opening, taking into consideration what might be needed to receive in a safe and organized way the flow of economic relations expected with the total opening of the border”.
A long-term relationship
Colombia’s plan aims for the reopening of the border to trigger “a process of industrial, productive and service complementation between the citizens of both counteues”, which would result, according to Umaña, in an improvement in the fight against historical scourges in the area such as poverty and employment informality.
He pointed out in this sense the strategy is “deeply institutional” and also aims to “make permanent a relationship” that projects into the long term, he said during the interview and after his trip to Caracas, where he held a meeting with Venezuelan President Nicolás Maduro, as well as with other authorities of the economy and tourism sectors.
Maduro tweeted about the meeting with Germán Umaña, saying “the way is opened toward reunion and cooperation, which will strengthen the economies of the two brotherly peoples. This is the route! Colombia and Venezuela united!”.
“We are already on the way to open the main consulates to protect our citizens in Venezuela and Venezuelan citizens in Colombia”, added the Colombian minister, also highlighting that conversations are ongoing between the authorities of both countries on security issues.
The debts of Venezuelan businesses
Regarding the challenges posed by the reopening and the financial commitments that have not yet been settled, Umaña said that some Venezuelan businesses are in debt totheir Colombian counterparts due to the fact that there was a foreign exchange control in Venezuela, but that those issues have mostly been settled.
“Part of the pending [debt] was with Avianca, but that debt has been resolved, and the airline is now flying to Venezuela again,” he said.
According to Umaña, the outstanding debt with Colombian businesses “is no more than $150 million, and that has to be defined and will have to be resolved between the companies, and we will accompany the businesses in that dialogue”.
“Of course, there were many companies that went out of business in Venezuela, and that is a concern, but they will have the accompaniment of the government to be able to resolve [debts],” Umaña said, adding that there are also commitments that must be reviewed between companies that made acquisitions but for which exports were never carried out.
“Logically, the relevant investigations are being carried out in both countries, but with the issue of the debt, it is really important for us to accompany the businesses in this matter,” he added.
The efforts of the Colombian government are focused on being able to reopen trade relations between both markets on the agreed date. Umaña says that without the reopening of the border, binational trade would total around $700 million by the end of the year, a far cry from the $7.8 billion exchanged in 2008 during the government of Colombian former president Álvaro Uribe (2002-2010).
On the other hand, with the reopening, expectations are positive, with the trade ministry estimating binational trade figure of up to $1.2 billion by the end of the year.
In fact, and in line with the forecasts of the Venezuelan government, Umaña says it is possible that at the rate of recovery of that economy, trade between both countries could reach $2 billion in 2023, and up to $4.5 billion by the end of President Petro’s four-year term, but which will depend on many factors.