Wednesday, April 17, 2024

BEHIND THE HEADLINES: Whither PetroCaribe oil deal


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When masked protesters hit the streets of Caracas recently throwing petrol bombs, the fresh anti-government violence didn’t go unnoticed across the Caribbean. The reason? PetroCaribe.
Unlike Barbados and Trinidad and Tobago, most Caribbean countries are Venezuela’s partners in PetroCaribe, the development and diplomatic programme devised by the late President Hugo Chavez and continued by his successor Nicolas Maduro. Today, it has the proverbial sword of Damocles dangling over its head.
“Without PetroCaribe’s generous concessions several Caribbean countries, which are beneficiaries of it, would be in real financial trouble,” said a senior Caribbean economic analyst at a financial institution in Washington.
Crippled by a 56 per cent inflation rate; a quarter of the population living in poverty; unable to reduce a homicide rate of 53.7 murders per 100 000 people in 2012, the world’s second highest after Honduras; and with many grocery store shelves half empty in some cities, youthful protestors are eager to use the slightest reason to vent their anger in the streets. They did that around the Easter weekend using Christ’s suffering on the cross and his resurrection to draw attention to their plight. And that’s where PetroCaribe comes in. It’s seen as a programme the country can’t afford.
Alejandro Grisanti, an oil analyst at Barclay’s Capital in New York, agrees.
“The guy with an unstabilised economy (Venezuela) is subsidising the guy with better roads, better inflation and better fiscal figures,” Grisanti said of the way Venezuela is spending its oil revenue in the Caribbean. “This does not make any sense. The economic and political cost for Venezuela is huge.”
Grisanti and others estimate PetroCaribe’s annual cost to Venezuela at about US$7.5 billion. The linchpin of the special initiative is its credit scheme that offers long term loans to its member countries at the rate of one per cent. Added to that is the option to trade oil for goods and services, such as Cuban doctors treating Venezuelan patients.
“Some observers now believe PetroCaribe has also created a precarious dependency among the recipients,” Tom Blackwell, a commentator wrote in the National Post, a major Canadian business publication.
General John Kelly, head of the United States (US) military southern command that monitors security issues in the Caribbean, went a step further. He was quoted as speculating recently that countries like Cuba would suffer economic collapse if Venezuela terminated Petro-Caribe.
But not everything in Venezuela is chaotic. For instance: Thanks to subsidies, food, electronic goods and other essentials are affordable when they are available. Half a million more Venezuelans are getting free tertiary education than before. Neighbourhoods that didn’t have health care before now have Cuban-trained physicians looking after them.
The official exchange rate is relatively low, about 6.3 bolivars to the US dollar, and it keeps medicines and imported food less expensive. Thousands of university students, opponents of the government, vigorously disagree. They contend: Like Honduras, Belize, Jamaica and St Kitts and Nevis, Venezuela has one of the world’s highest murder rates. Basic items needed for daily living are scarce. Toilet paper, car batteries and food staples are in short supply.
Instead of channelling their country’s abundant oil reserves into “productive investment” in human and physical development, the government was giving them away on Petro-Caribe. Rampant allegations of corruption and smuggling of cheap oil and gas.
“These events symbolise the suffering we Venezuelans are enduring,” asserted Nicole Gonzalez, an 18-year-old law student in Caracas who spent the Easter weekend participating in street demonstrations.
Blackwell adds fuel to the fire.
“Domestic subsidies make filling a car with gasoline cheaper than a bus ticket,” he said.
“This deprives the state-owned oil firm of billions, while Venezuela is indirectly underwriting the cost of oil it sells to Cuba, Jamaica and a host of other Caribbean countries to the tune of billions more dollars.”
Still, Maduro is far from being on the political ropes. For one thing, enthusiasm for street demonstrations seems to be waning. Instead of hundreds of thousands, the Easter barefoot protests in Chacao district of Caracas attracted a few hundred.
“We may be fewer, but we are staying on the street,” said Gonzalez.
For another, the student activists and the moderate opposition leadership have parted company over negotiations brokered by the Vatican and South American foreign ministers. The talks haven’t yielded any results, except for an agreement to set up a Truth Commission to delve into the causes of the crisis.
Thirdly, the president was able to celebrate his first anniversary in office without the “Venezuelan Spring” his opponents had hoped would have driven him from office by now.
Next is the support Maduro is getting from the military. That backing has reduced the strength of the opposition. Forty people have died in the protests, 650 injured and an estimated 100 in prison since the protests began in February and show little sign of letting up.
“We have achieved nothing yet. We have to keep fighting,” said a mother of two children as she carried a cross marked “justice”. She added: “I’m here (on the street) to support these kids, to let them know they’re not alone.”
• Tony Best is a veteran journalist and NATION New York correspondent.


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