Caribbean countries join in energy accord

Fourteen Caribbean heads of state met at the end of June in the Venezuelan city of Puerto la Cruz, invited by President Hugo Chávez to ratify an energy accord during the First Energy Gathering of Caribbean Heads of State.

This was the third meeting of the group. In 2004, the initial discussions and com mit ments took place at meetings in Caracas, Venezuela, and Montego Bay, Jamaica. Called Petrocaribe, this agreement on energy cooperation will allow poor countries in the area to overcome the terrible energy crisis brought about first by International Monetary Fund and World Bank policies, and secondly by the recent hike in oil prices on the world market.

Dependent for energy supply on foreign imperialist oil companies, mostly based in the U.S., these countries, with the exception of Trinidad and Tobago, do not possess significant energy resources for their domestic needs. They have always been at the mercy of voracious companies that charge an enormous amount of money for transport and delivery of this important resource. “Apagones” (blackouts) can be a daily occurrence, making even the most routine chore a great difficulty for the masses.

Not deterred by U.S. letter

So despite a letter critical of Chávez sent by the U.S. State Department to the participants just before the meeting—basically a veiled threat by the Bush administration designed to discourage any association with Venezuela—the leaders met. With the exception of Barbados and Trinidad and Tobago, 13 signed the agreement with the Bolivarian Republic.

These were the Dominican Republic, Antigua, Bahamas, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts, St. Vincent and Suriname. Cuba, which also signed, had already endorsed previous agreements with Venezuela.

Dominican President Leonel Fernán dez, whose country is guaranteed 50,000 oil barrels per day from Venezuela, described Chávez’s energy proposal as one “full of solidarity, noble and generous which will help ease the oil problems that affect the economy of the Dominican Republic and of the other countries of the region.”

It is important to review some of the provisions of the agreement to fully grasp its nature and its impact, not only on the signing countries, their peoples and the region, but also on the U.S. oil corporations’ “sphere of influence.”

The treaty begins with 11 points of general background. It is worth reading the first point, which sums up the purpose of the agreement. It reads: “We salute the Bolivarian Republic of Venezuela’s initiative towards the creation of PETROCARIBE, whose fundamental goal is to contribute to energy security, social-economic development and the integration of the Caribbean countries, through the sovereign use of energy resources, all these, based on the principles of integration called the Bolivarian Alternative of the Americas (ALBA).”

Blaming colonialism and imperialism for the current economic system that has devastated the region, the signers conclude that only an integrated Caribbean can survive and develop with respect to their independence and sovereignty. To that effect they state that Petrocaribe’s function is to “contribute to the transformation of Latin American and Caribbean societies, making them more just, participative, with more solidarity, and that is the reason it is conceived as an integral process that promotes the elimination of social inequalities....”

For the purpose of helping the region develop socially and economically, a fund called ALBA-Caribe has been created to which Venezuela will initially grant $50 million. Every nation involved will contribute from the savings that will result from direct oil trade, and from other government instruments.

The Venezuelan oil company PDVSA will create PDV Caribe, which will be Venezuela’s company within Petrocaribe.

Oil at preferential prices

The oil will be traded at preferential prices, paid for with cash, goods or services, with a considerable percentage of the long-term financing paid by the Bolivarian Republic (RBV). For example: If the price per barrel is US$15, the RBV will pay 5 percent; at $50, RBV will pay 40 percent; and if it reaches $100, the subsidy will jump to 50 percent. As the price per barrel goes up, so does the percentage paid by the RBV. Even if oil reaches $100 per barrel, the Petrocaribe countries will have to pay only $50 per barrel to Venezuela; the rest will be financed by Venezuela on a long-term basis.

There is a grace period of two years and an extraordinarily flexible repayment plan. Short-term financing will be extended from 30 to 90 days and the long-term repayment will extend to 17 years, with the possibility of 25 years when the price of oil exceeds $40, payable with only 1 percent interest. All or part of it could be paid with goods and/or services.

In return, this trade will help Venezuela create 100,000 jobs and buy, at preferential prices, agricultural products like sugar, banana, corn and avocados, among many other regional industries that have been in great danger because of U.S. and other imperialist countries’ “free” trade agreements.

Petrocaribe also projects the building of infrastructures, including refineries, exchange of technology and training. It will touch each and every sector that falls within the energy industry. Alternative energy and conservation projects will be encouraged.

It is not surprising, then, that coverage of this important development has been almost totally absent in the U.S. or any other capitalist media, except for negative comments. An AFX News Limited release on June 30 read: “According to Goldman Sachs analysts, the agreements unveiled yesterday ‘should not be seen from the standpoint of economic rationality, but rather from the broader perspective of Venezuela’s aggressive foreign policy and attempts to increase its influence in the region.’”

Barbados and Trinidad and Tobago did not sign the agreement. An article in Business Week of July 2, entitled “Barbados seeks Venezuela oil deal details,” quotes Energy Minister Anthony Wood as saying, “We have genuine concerns with the document and they would have to be addressed before we can sign,” adding, “I need to know more about the mechanics of the fund and how the participating territories can access the fund.”

The same article states that Trinidad and Tobago’s Prime Minister Patrick Manning “said he was concerned the Petrocaribe accord would put his oil-producing nation at a competitive disadvantage.”