Venezuela's Petro-Diplomacy: Hugo Chávez's Foreign Policy

7. Responses to Venezuelan Petro-Politics in the Greater Caribbean

7 Responses to Venezuelan Petro-Politics in the Greater Caribbean Anthony P. Maingot “Bolivarian bravado” is the term used by Benedict Mander of the Financial Times to describe the rhetoric coming from the regime in Venezuela in the second half of 2008.1 In an analysis supported by other serious journalistic accounts ,2 Mander pointed to several underlying realities of the situation at the end of 2008. First, he noted that while Venezuela was second only to Saudi Arabia in terms of oil reserves, these are, of course, in the ground, offshore, or in the difficult terrain of the Orinoco Belt, and will require foreign, that is, U.S., technology to fully develop. President Hugo Chávez’s overwrought anti-American rhetoric appears to ignore this problem, Mander pointed out, as well as the fact that the United States is one of the few countries that pays for oil in cash up front. Were it not for this, Venezuela could hardly afford its enormous domestic and international outlays. The country’s budget was planned on expectations of $60 per barrel of oil, and the November 2008 price was closer to $45. In addition, while Venezuela claimed to be producing 3.24 million barrels a day, according to OPEC the real figure was closer to 2.33 million—a not unusual discrepancy, since calculating the amount of oil any country produces is, in the words of the Financial Times, a “dark art.”3 Be that as it may, by mid-December Standard and Poor’s had downgraded Venezuela’s foreign debt three rankings below investment grade.4 This is the context in which Venezuela’s assistance to seventeen countries in the Greater Caribbean should be analyzed. The major and most expensive part of this assistance is Petrocaribe, an influential instrument of Venezuelan foreign policy in the region. Petrocaribe was initiated under more favor- Responses to Venezuelan Petro-Politics in the Greater Caribbean 103 able financial circumstances, but things have changed over the three distinct phases of its existence. The first phase began in July 2004 with the first meeting of energy ministers of the Caribbean in Caracas; the second phase in August 2004 with the second Petrocaribe meeting of energy ministers in Montego Bay, Jamaica; and the third in June 2005 at the energy meeting for the creation of Petrocaribe in Puerto La Cruz, Venezuela. PetroCaribe is more than an energy-based agreement. It is intended to help integrate the Greater Caribbean region under a comprehensive program geared toward the “transformation” of these societies. The agreement recognizes the need for “special and differentiated” treatment of less-developed countries. It guarantees absolute respect for the principles of sovereignty, non-interference, and equality of states, with all terms and conditions determined through bilateral negotiations. It all seemed too attractive for any country in the Greater Caribbean to turn down, especially considering the structural conditions of virtually all of these small states. All of the nations in the region, with the exception of Venezuela and Trinidad and Tobago, are energy dependent. As the foreign ministers who met at the Organization of American States (OAS) General Assembly meeting in Panama in 2007 acknowledged, “Energy is an essential resource for the sustainable development of peoples. . . . Access to energy is of paramount importance.” Already in 1980 Mexico and Venezuela had inaugurated the San José Accord, based on an oil facility geared toward reducing the financial burden of energy costs for eleven Central American and Caribbean countries when the price of oil exceeded $15 per barrel. That accord is today in frank decline for two reasons: first, Mexico’s declining production; and second, Chávez’s promotion of his own energy aid program, Petrocaribe, which is far more generous. Although the Caribbean received trade preferences under the Caribbean Basin Recovery Act (CBERA), it was really the Caribbean Basin Trade Partnership (CBPTA) which provided opportunities for products not covered by CBERA. CBPTA is due to expire in September 2010. Even if well-intentioned members of the U.S. Congress, such as Charles Rangel of the powerful Ways and Means Committee, seek ways to promote trade with the Caribbean, some private-sector interests think otherwise, and have even more influence in Washington. An example is the recent World Trade Organization (WTO) ruling that the European Union preference program for Eastern Caribbean bananas was not in compliance with international trade rules and 104 Anthony P. Maingot had “harmed American...