Thursday, February 22, 2018

Cloud over PetroCaribe

In June of 2013 the eighth summit of PetroCaribe was held in Nicaragua. It aimed to address the future of this alliance and look at possible changes to the respective component agreements. However, Venezuelan leader Nicolas Maduro used it as a platform to continue the old geopolitical rhetoric on regional integration and on the problem of poverty and hunger in the region.

The many doubts and uncertainties surrounding the future of this preferential oil arrangement were not quelled as many leaders of the Caribbean region had hoped. Instead, the issue of geopolitics was on the front burner with Maduro mouthing the rhetoric his recently deceased predecessor Hugo Chavez had patented.

According to many experts, PetroCaribe is a deficient investment and, given the manner in which Venezuela’s state-run oil company PDVSA is run, there must be doubts about the future of PetroCaribe.

That Nicaragua summit should have been a wake-up call for regional leaders to get their house in order; how long will they continue to get cheap oil from a country that is in the throes of economic, social and political turmoil? But they continue to live in denial. They should have begun to make adjustments to their budgets long before the death of Chavez, because the writing had been on the wall regarding PetroCaribe when the price of oil began dropping, affected as it was by the external shocks related to the 2008 global economic crisis.

One of the regional economies that was hit hard was Jamaica’s. For over three decades Jamaica’s economy has been operating at a significant loss despite all efforts to revive it. They have had to return to the IMF to help manage and fund their large public debt, of which what is owed through PetroCaribe is a part. Adjustments have been demanded by the International Monetary Fund (IMF) regarding this massive debt.

Though many countries of the region have benefited from PetroCaribe, the St Lucian government led by Kenny Anthony faced many criticisms over the terms under which St Lucia became a full member of both PetroCaribe and ALBA (Bolivarian Alliance for the Peoples of our Americas) last year. There were concerns as to whether there would be a change in the terms of the agreement, whether the interest rate would jump from one per cent to four per cent and from a 40-year to a 20-year repayment plan as reported by the St Lucian media.

Other Caricom countries receiving PetroCaribe oil also have had their own concerns as to whether they will continue to get cheap oil under the terms and conditions that were offered under Chavez’s administration.

How is this going to affect Trinidad and Tobago which is already plagued by so many issues of its own, including a terrible crime problem and given the fact that T&T for decades has been a transshipment point for drugs and small arms and ammunition for the Caribbean region and beyond? The recently concluded CELAC meeting held in Cuba was attended by several leaders from Latin America and Caricom including T&T’s Kamla Persad-Bissessar who spoke about the trade in drugs and small arms and ammunition and the need for more cooperation among all states in the region.

Given the close proximity of Venezuela to T&T, it is no surprise to find that many Venezuelans have already begun arriving in Trinidad and Tobago in search of a quality of life they can no longer enjoy in their own country. T&T’s borders are not the most efficiently managed and therefore we will be seeing an influx of illegal Venezuelans on our streets, in our malls and communities.

The selling of its oil cheaply through PetroCaribe has come at a price for Venezuela. PetroCaribe was meant to integrate the Caribbean and foster co-operation amongst countries of the region and to loosen their dependency on the US and other countries. Underwriting both ALBA and PetroCaribe has been burdensome for the Venezuelan economy and its people. Venezuela’s own low oil production also contributed to this crisis. Additionally PetroCaribe’s internal budgetary financing has come into question over the past few years. These factors have left a gaping hole in the country’s economy and the Venezuelan people are suffering as a result.

Increasing economic problems and rising inflation in Venezuela did not occur overnight.

• Julie Guyadeen has a BSc

degree in Government and

postgraduate training in international relations