Chavez Extends An Oil-Rich Hand To Neighbors

Chavez Extends an Oil-Rich Hand to Neighbors
Most of the Caribbean accepts the Venezuelan leader's trade offer, which he indicates is a show of solidarity against U.S. influence.

http://www.latimes.com/news/nationwo...=la-home-world

By Carol J. Williams, Times Staff Writer
9/13/2005

KINGSTON, Jamaica — With oil prices near record highs and a U.S.-backed free-trade pact for the Western Hemisphere on hold, Venezuelan President Hugo Chavez is offering cash-strapped Caribbean countries affordable fuel, debt relief and anti-poverty funding.

Thirteen countries have signed on to Chavez's PetroCaribe initiative, which some leaders say is an attempt by the Venezuelan populist to boost his influence in a region where his nemesis, the United States, has long been the main trading partner.

Of the 14 active member states of the Caribbean Community, or Caricom, only Barbados and Trinidad and Tobago have declined to participate. Other leaders from throughout the region, who gathered in the Jamaican resort of Montego Bay last week to inaugurate the new energy trading project, said their participation was based purely on economic self-interest.

"One way or another, we're going to be part of it because it affords benefits that cannot be found anywhere else," said Phillip Paulwell, Jamaica's minister of commerce, science and technology and the newly appointed vice president of PetroCaribe's administrative council. "This is a good deal for the economy and for the country."

At the Montego Bay summit, with Cuban President Fidel Castro at his side, Chavez told Caribbean leaders last Tuesday that his intervention to ease their energy plight was a show of solidarity in a long-exploited region.

"We have an opportunity to break from the imposed path of domination and servility," said Chavez, alluding to U.S. investment and influence in the Caribbean.

Jamaican Prime Minister P.J. Patterson has insisted there are "no strings attached" to Venezuela's provision of 21,000 barrels of oil a day to Jamaica, which can be partially financed on cheap credit and paid for in goods and services. Jamaica also will get a $200-million expansion of its Petrojam refinery in Kingston, the capital, and low-interest loans to retire debt, whose servicing consumes 67% of the national budget. Oil costs have tripled in Jamaica over the last four years, to $1.2 billion this year, or about what the country will gross in tourism.

Several business and government leaders responsible for steering trade in countries like Jamaica, where U.S. companies are heavily invested in resorts and alumina processing, said they saw a political agenda on Chavez's part. Venezuela, they said, seeks to thwart the stalled Free Trade Area of the Americas, a zone meant to stretch from Alaska to the tip of South America, in favor of a trade pact embracing subsidies and state control that Chavez calls the Bolivarian Alternative for the Americas.

"While we understand the political alliance this signals, the main thing is that this is a source of cheap oil," said Lincoln Price, a local businessman and Jamaica's representative on a Caricom panel coordinating trade strategy. "There shouldn't be more read into it than that. Our foreign policy hasn't changed regarding FTAA. We're still committed to that process."

Other movers in regional economic development dismiss the notion that joining PetroCaribe will indebt Caribbean states to Venezuela.

"I think the concern about an emerging socialist alliance in the region is overblown," said Andre Gordon, president of the Jamaica Exporters Assn. "There is no chance of Jamaica going down the road to becoming a socialist country like Cuba or Russia or China."

PetroCaribe offers each Caricom country, as well as Cuba, the opportunity to finance 40% of negotiated oil quantities at 1% interest over 25 years, with a two-year deferral of payments. Chavez has also pledged $50 million a year to a social development fund along the lines of his own "missions," which subsidize groceries and offer adult education and Cuban-staffed medical clinics in Venezuela's sprawling slums.

The U.S. government has cast Chavez as a regional troublemaker, accusing him of fomenting leftist unrest and anti-U.S. sentiment in Latin America. A State Department official, who said no one was authorized to discuss PetroCaribe on the record, would say only that the Venezuelan initiative had "a strong dose of politics" and that free-trade advocates in the Western Hemisphere were concerned about the influence of what amounts to a state subsidy on the international market.

Some in the region argue that Caribbean states should stick to their traditional trade arrangements with the United States. In a commentary in the Guardian newspaper in Trinidad, former Grenada Atty. Gen. Lloyd Noel cast Chavez's initiative as an "obvious ploy to use the Caricom states in his fight with the USA."

What Chavez stands to gain from PetroCaribe, Caribbean analysts say, is goodwill among his neighbors and partial payback in rice, bananas and sugar. Venezuela, though flush with oil revenue as the world's fifthlargest exporter of petroleum, imports more than 80% of its food.

Of the two nations that declined to take part, Trinidad has its own oil resources and already supplies its Caricom allies with about 60,000 barrels a day in exchange for other resources. Trinidadian Prime Minister Patrick Manning said he needed more time to study PetroCaribe's implications.

In Barbados, Prime Minister Owen Arthur said his country's existing energy arrangement with Trinidad was effective. Leftist opponents criticized that decision as missing an opportunity to reduce oil import costs.

"The only conclusion we can come to is that the Barbadian government has buckled to the pressure no doubt coming from the American government," leftist leader David Comissiong said. "The kind of revolutionary thinking that Chavez is bringing back to the Caribbean is an alternative to the neoliberal, globalizing free-trade policies of the United States. We think Chavez is the man of the hour."

Paulwell, the Jamaican commerce minister, said his nation was in part motivated to join forces with Venezuela because of the delays in starting up the free-trade zone. Without better access to U.S. markets, the Caribbean islands are at a competitive disadvantage with North American Free Trade Agreement members Mexico and Canada, he said. Five Central American states, the Dominican Republic and the Andean region also have worked out improved access with the U.S.

"We note what is not happening with FTAA," Paulwell said when asked if PetroCaribe was a competing alliance to the one pushed by the United States. But he added that Jamaican authorities continued to pursue an independent development strategy and that Chavez's opposition to FTAA wouldn't affect Kingston's plans to become part of the 34-nation bloc.

Jaslin Salmon, head of the government's Poverty Eradication Program, said Jamaica was unlikely to spurn the FTAA, but that in a changing world it was important to "learn from wherever we can how to raise our conditions."

About 16% of Jamaicans live below the poverty level, a small fraction compared with Venezuela. Salmon said Chavez's missions might be applicable to the Caribbean's social problems.

Leftist and labor leaders in the Caribbean, meanwhile, have celebrated the deal as a break from what they see as U.S. imperialism.

PetroCaribe terms for the Kingston refinery upgrade call for the government to scrap attempts to privatize the complex — a requirement cheered by National Workers Union Vice President Danny Roberts.

"Our union is of the belief that certain sectors of the economy shouldn't be subjected to the whims of foreign investors," said Roberts, whose organization covers workers in tourism, communications, transport and civil service. He welcomed the Venezuelan initiative, denouncing the FTAA as "inimical to the sovereignty, welfare and democracy of the region."

Though leaders including Jamaica's Patterson insist their development policies are not for sale, Chavez made it clear at the Montego Bay summit that he was seeking support for his Bolivarian alternative.

"This is not a gift," Chavez said of the oil deals, but the start of new south-south cooperation.