General Motors announced on Thursday that it was pulling out of Venezuela after authorities seized its auto plant, in a fresh sign of the turmoil gripping the South American country as antigovernment protests swell.
The plant takeover happened on the same day that huge crowds of demonstrators marched against President Nicolás Maduro’s government, calling for new elections and a return to democratic rule. The move against GM could further strain relations between Venezuela’s leftist government and Washington.
GM called the expropriation of its factory “an illegal judicial seizure of its assets” and announced that it would cease operations in the country, where it employs nearly 2,700 workers.
The company is not the first foreign firm whose assets have been confiscated by Venezuelan authorities, but those actions have typically been preceded by repeated public threats from the socialist government.
Venezuelan officials offered no explanation for the seizure of the GM facility. Some analysts saw it as part of a pattern of confrontation between the Maduro government and manufacturers as the economic situation deteriorates. But the timing of the move also led to suspicions that Maduro may be looking to escalate tensions with the United States and blame his government’s struggles on a brewing confrontation with the Trump administration. Maduro claims that his opponents are colluding with U.S. authorities to overthrow him.
“It fits a broader pattern, in the sense that the government’s response to surges in opposition activity tends to be the deepening of the revolution,” said Phil Gunson, a Venezuela-based analyst for the International Crisis Group, using the government’s term for its socialist makeover of Venezuelan society. “There are those at the top, including Maduro himself, who appear genuinely to believe that this is a revolution and the ultimate goal is the replacement of the capitalist economy with one that is entirely state-run.”
On Wednesday, a Venezuelan court in the western state of Zulia ordered the U.S. company’s assets frozen and its property seized, siding against GM in a lawsuit filed by a former GM dealer in 2000, according to Venezuelan news accounts. Why the court issued the ruling more than 16 years later, at the peak of anti-Maduro protests, was unclear.
The automaker said the judicial order was “arbitrary” and “in total disregard of [GM’s] right to due process, causing irreparable damage to the company.”
Auto manufacturing has virtually come to a halt in Venezuela amid a broader economic collapse under Maduro. The economy contracted by an estimated 18 percent last year, as the country faced one of the world’s highest inflation rates and suffered widespread shortages of food and medicine.
Once one of Latin America’s wealthiest nations, the oil-rich country has witnessed a broad, painful withering of industrial activity.
Protests against Maduro continued Thursday. Police fired tear gas at demonstrators, but the crowds appeared to be smaller than Wednesday’s marches.
In its statement denouncing the takeover of its factory, GM said it has operated in Venezuela since 1948. The Detroit automaker said vehicles and other property were “illegally taken from its facilities” as well.
Production at the GM plant in the city of Valencia had virtually halted because of government import restrictions and shortages of raw materials. Union leaders at the plant said in February that GM had not assembled any new vehicles in Venezuela since 2015 and was limiting production to replacement parts.
Foreign firms that have pulled out of Venezuela or whose properties have been expropriated rarely receive compensation and have struggled to collect on international court judgments against the cash-squeezed government.
Last year, authorities seized a plant owned by U.S.-based multinational Kimberly-Clark, renaming it after a 16th-century indigenous leader who rebelled against Spanish colonial rule. But diapers, sanitary napkins and other health products manufactured at the plant remain scarce in Venezuela because of acute shortages of raw materials.
David Smilde, a Venezuela expert at the nonprofit Washington Office on Latin America, said that despite the timing of the GM takeover, he didn’t see the move as an attempt to “tweak the U.S.”
“It is part of a broader pattern in which big manufacturers reduce their activity to a trickle because they cannot get the dollars to import the inputs they need to produce,” he said. Then the government accuses them of reducing production as part of an ‘economic war.’ The standoff ends either with the company closing shop or the government seizing its assets.”
Mariana Zuñiga in Caracas contributed to this report.