Post-Chavez Caribbean

Mar 08, 2013 Editorial

With the passing of Hugo Chavez, the relations between Venezuela and the Caribbean might be up in the air. Since Chavez had battled cancer for the past two years, his demise could not have been a total surprise to the leaders in the region, especially in the last six months as his condition declined precipitously.
While Chavez’s legacy will be debated for years, on one aspect there has to be total unanimity: he was the first Latin American leader who moved beyond rhetoric to include the non-Hispanic Caribbean in his vision of ‘regional unity’. The question (even though it might be unuttered) on the lips of every Caribbean leader has to be the future of the eighteen-member Petrocaribe oil facility, through which Chavez subsidised the supply of oil to twelve Caricom countries, including Guyana and Jamaica. Cuba was the biggest beneficiary of the scheme.
Unable to reduce oil prices because of the rules of OPEC, Venezuela under Chavez supplied oil under a deferred payment scheme that included the supply of commodities such as rice. Only 5-50% had to be paid up front with the balance repayable over 17-25 years. With Jamaica receiving two-thirds and Guyana one-half of their total petroleum requirements via Petrocaribe, they were able to deal much more positively with their current account balances. If the facility is closed, Jamaica will certainly have to go back to the drawing board with the IMF on the Structural Adjustment Programme (SAP) presently being negotiated.
While there were firm assurances by Chavez that the facility will continue indefinitely, it is hoped that the Caricom leaders will be meeting urgently to craft common contingency plans. With elections constitutionally due within thirty days of Chavez’s death, even though it is expected that Chavez’s hand-picked successor Nicolas Maduro will be victorious, our leaders cannot be complacent. The conservative forces backing the Opposition, including those from abroad, will definitely be throwing all their weight behind Maduro’s opponent (most likely Capriles Radonski). If the latter wins, the Petrocaribe facility is almost certain to be scrapped.
With soaring inflation, a recent devaluation, high import bills, over-dependence on oil and shortages of everything from meat to toilet paper, the Venezuelan economy is in a downward spiral and the next President, even Maduro, may be forced to concentrate more on domestic issues and rein in the Petrocaribe subsidies.
Our options are severely limited and much will depend on T&T, our only significant Caricom petroleum-exporting member. In the wake of the formation of Petrocaribe in 2005, the then PNM administration had initiated a Caricom Petroleum Fund (CPF). But the successor People’s Partnership regime, claiming new challenging realities, has already initiated moves to reduce its contributions to the CPF. These arrangements will have to be clarified. The Petrocaribe facility, not so incidentally at its last Summit in 2011, had made a commitment to study the possible incorporation of food security into its programs. This is just one more reason for Caricom to reconsider its strategic options.
The Petrocaribe Facility is associated with Chavez’s larger Bolivarian Alternative for the Americas (ALBA). This is a larger integration project based on the idea of the social, political and economic integration of the countries of Latin America and the Caribbean. Antigua, Dominica and St Vincent are members of this bloc, while Suriname and St Lucia became observers last year.
It is believed by most observers that while the leftist allies of Chavez might continue to give lip service to ALBA, the future of the more practical Petrocaribe component will take centre stage in the coming months. Because of the close ideological ties with Cuba it is doubtful that its oil supplies will be cut precipitously, but for the rest of the Caribbean, they may have to make alternative arrangements.
For Guyana, Chavez’s greatest contribution was his placing of Venezuela’s claim to Essequibo on Venezuela’s back burner. We can expect that the Venezuelan Opposition will make this an issue in the upcoming elections. All Guyanese should pray that Maduro stays Chavez’s course.