Venezuela has blocked all imports except food from neighboring Colombia amid rising diplomatic and military tension between the two countries, Finance Minister Rafael Isea. Venezuela is hoping to sign agreements with countries including Argentina, Brazil and Nicaragua to replace any future stoppage of Colombian food imports, Isea told the press late on Thursday. The Venezuelan finance ministry is also putting together a report on Colombian companies with operations in Venezuela that may be nationalized, Isea said Friday in comments broadcast by state television. President Hugo Chavez ordered troops to the Colombian border this week and expelled the country's ambassador in Caracas after Colombia's military bombed a camp of Colombian guerrillas hiding in Ecuador. “There's no price we'd have to pay that is so high as the price for the defense and dignity of the country,” Isea said.
Severing trade ties will likely have a bigger economic impact on Colombia, which has a trade surplus with Venezuela, Isea said. Venezuela is Colombia's second-biggest trading partner after the United States. However, Venezuela broke all diplomatic relations with Bogota after Colombia raided a rebel camp in Ecuador to kill the leader of Colombia's largest guerrilla group. "Colombia has to rebuild its export markets, otherwise it will suffer a recession in production apparatus," Isea warned. More than 80 percent of Venezuela’s imports from Colombia last year were finished goods that didn't create any growth or employment in Venezuela, Isea said. The Venezuelan government estimates that its boycott of Colombian imports will lower Venezuela’s growth rate by less than a half a percentage point.
Journal of Commerce
