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Lessons for South-South Cooperation from PetroCaribe
By admin March 10, 2016

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PetroCaribe began in 2005, after the establishment of The Bolivarian Alliance for the Peoples of Our America (ALBA), largely as an economic agreement between Venezuela and Cuba. The premise was simple: Venezuela, being an oil-rich nation, would provide up to 125,000 barrels of oil a day at a low cost to energy-dependent Caribbean countries at an interest rate of between 1 and 2 percent with repayment over the course of many years or decades. In addition, it would provide loans for social projects from the Venezuelan National Fund in order to promote the development of the region. It has developed into a system of “complementarity economics” loosely based on bartering. Venezuela provides oil at low rates and, in return, other nations provide Venezuela with goods it needs, such as doctors from Cuba or rice from Guyana. The greatest advantages Venezuela has gained, though, have been politically, even as it has suffered economically as the cost of oil has dropped significantly in recent years. Venezuela has gained allies in international organizations and has recruited a slew of new members to various regional organizations it supports, such as ALBA, UNASUR, and CELAC. Perhaps most significantly, Venezuela recently earned a seat on the UN Security Council for the 2015-2016 term.

As regional integration strengthened, PetroCaribe’s membership grew and thus enabled it to become a larger force both politically and economically. PetroCaribe has had a significant impact on the economies of many of the Caribbean countries, notably Jamaica, the Dominican Republic, Guyana, and many of the smaller Eastern Caribbean nations. For example, it recently accounted for over 90% of Haiti’s foreign assistance, having a significant impact on Haiti’s GDP.

However, since the death of then Venezuelan President Hugo Chavez in March 2013 and the appointment of his successor, Nicolas Maduro, the Venezuelan left has slowly been losing its grip on power. This was most evident with the parliamentary elections in December 2015, in which the Socialist Party lost the majority control over the Venezuelan parliament. The loss coincided with steadily declining oil prices over the past couple years, which have largely depleted Venezuela’s coffers for foreign and domestic social programs. PetroCaribe countries now struggle with the debt accrued from borrowing from Venezuela and the inability of Venezuela to fulfill its promises of assistance. They must now seek other sources of assistance, such as private buyouts of debt and help from intergovernmental organizations.

Intended to be an alternative to the Washington Consensus institutions (e.g. Bretton Woods institutions such as the World Bank and the International Monetary Fund) that primarily focus on neoliberal economic models and are often tied to US hegemony, PetroCaribe was supposed to be a model for South-South cooperation for development and regional integration. However, the business model has proven to be unsustainable. Now, the countries of PetroCaribe must decide what lessons they can learn from this venture that may be attributable to future, more sustainable efforts in South-South development cooperation as they seek other methods of meeting their shortfalls in assistance in the meantime.

 

For more information:

http://www.petrocaribe.org/

http://www.huffingtonpost.com/otaviano-canuto/oil-prices-and-the-future_b_8209010.html

http://venezuelanalysis.com/tag/petrocaribe

 

 

 

 


Thanks for sharing !


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