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Stabroek News

In search of development: Chavez and PetroCaribe
published: Sunday | August 28, 2005

Robert Buddan, Contributor

LEADERS IN the Americas like Hugo Chavez, Fidel Castro and Lula da Silva of Brazil are expressions of a paradox of development. For 500 years, countries of the Caribbean and Latin America have laboured within the sphere of influence of the greatest powers in modern history but never benefited from the kind of development that would make them into industrial societies as well.

This paradox is described as dualism - development of the North co-existing with underdevelopment of the South. In the past 300 years, the Caribbean and Latin America have been extensions of the greatest industrial power of its time - Britain ­ and the largest economy in history - the U.S. - and yet development has failed to 'trickle down' or spread out and lift millions of the poor out of poverty. Haiti remains the poorest country in the Western Hemisphere and Latin America is a picture of great poverty, exclusion and social violence.

Latin America's first great liberator, Simon Bolivar, felt that what the region needed was independence, regional unity and its own model of development. Bolivar was born in Venezuela and formed an army to liberate Latin American countries from the Spanish. He fled to Jamaica after initial defeats, reorganised in Haiti and completed his mission in South America. Bolivia was named in his honour. Hugo Chavez, President of Venezuela, now offers the Americas the 'Bolivarian Revolution', a plan for the development that has eluded the Americas.

The plan centres on regional cooperation for sustainable development. The issue of development has really revolved around the questions, cooperation with who and development on what terms? The Bolivarian Revolution wants cooperation within the region on the region's terms. This comes out of the experience of an unfair western trading system. When the countries of the Caribbean, Africa and Asia became independent in the 1950s and 1960s, they too discovered that the western system of international trade did not support their development.

In 1964, these countries banded together in the United Nations to form the United Nations Conference on Trade and Development (UNCTAD). Its purpose was to negotiate with the developed countries for fair trade and development. Forty years after, both sets of countries have failed to come to an agreement. Today, the developing countries (the Group of 77) are still locked in negotiations at the World Trade Organisation, or through African, Caribbean and Pacific states -European Union negotiations. Forty years is a long time and estimates say developing countries are losing as much as US$40 billion a year in agricultural trade alone because of the protected and subsidised markets of the developed countries.


The closest that a group of developing countries has come to establishing a working link between trade and development is the PetroCaribe initiative of Venezuela's president, Hugo Chavez. PetroCaribe builds on the spirit of the New International Economic Order (1974), a product of UNCTAD, which Michael Manley championed. Manley proceeded to build a strong friendship with then president of Venezuela, Carlos Andres Perez and Mexico under Luis Echeverria and Lopez Portillo. From this came oil price concessions under the San Jose Accord. Mexico has subsequently defected to an American-style model of trade through NAFTA and the U.S. has enlisted Central America under a similar arrangement called the Central American Free Trade Agreement (CAFTA).

PetroCaribe is very different from American-inspired arrangements like NAFTA, CAFTA and the Caribbean Basin Initiative (CBI). It does not exclude countries like Cuba for ideological reasons. Neither does it provide military aid to regimes, require countries to open their markets to multinationals, expect that countries should be in good standing with the IMF and adopt its conditionalities, or apply or threaten sanctions against countries that do not share the vision of the Bolivarian Revolution. It is open to the pro-American interim regime in Haiti and the anti-American government in Cuba alike. It is open to all CARICOM members, including oil rich Trinidad.

The philosophy behind PetroCaribe is simple. The American way is neither the only way nor even the best way to get development. Development must aim at the poor who are left out of markets and left behind by states. PetroCaribe encourages South-South relations and regional integration on consensual terms. It respects sovereignty because it does not require a country to stop doing business with any other, including the United States. It does not support overthrow of governments or assassination of presidents. Its only condition is that savings from oil concessions are used for social and economic development. The concessions go to the poor, not the rich.


The New International Economic Order (NIEO) hoped to build a broad coalition of Third World countries, including the oil producing countries of OPEC. OPEC, however, only took advantage of international crises to raise oil prices and to invest oil wealth in the industrialised countries, disregarding the cost to developing economies. PetroCaribe offers instead to lower oil costs during times of crises and allow governments to re-invest savings in development projects.

Another hope of the NIEO was to stabilise commodity prices so that agricultural producers did not suffer in times of poor harvests. It also hoped to compensate for the growing differential between low agricultural export prices and high priced manufactured imports. PetroCaribe buffers oil-dependent countries against high oil prices, promises to cut-out multinational middlemen who transport and retail oil and oil products, and invest in oil refinery and refined oil products so that companies like Petrojam can get in on the high-end of the petroleum industry. It has never been in the commercial interest of oil rich families, whether they are Arab sheiks or American presidents, or of multinational oil distribution companies, to lower the cost of oil, its distribution, or the production of oil by-products.

The NIEO hoped to convert military spending to development spending. However, even in the post-Cold War era, countries like the U.S. and the U.K. still spend billions of dollars on war. The Bolivarian Revolution is not a revolution by arms but a revolution in development. Poor countries like Grenada, ravaged by two hurricanes in fewer than 12 months, welcome PetroCaribe. A poorer country like Haiti, hostile to Cuba and no friend of Venezuela, has jumped onto the PetroCaribe bandwagon and it is a credit to Chavez and Venezuela that they have made a place for Haiti as well. This is the same poor Haiti that was denied Western aid and investments while Aristide was in power.


Venezuela's decision to invest up to US$500 million by 2008 to upgrade Petrojam amounts to the second largest single investment after the Alcoa investment of US$690 million. In addition Jamaica will save millions of dollars in oil price concessions. No other government has ever made an investment or provided price concessions to Jamaica of this order despite the number of oil shocks experienced since 1974.

In fact, international aid has been declining and Western governments have failed to meet the agreed aid target of 0.7 per cent of GDP arrived at during the NIEO negotiations. After 30 years of appeal, they only agreed to forgo the debts of the most indebted countries this year.

For small and vulnerable countries trying to find their way in an aggressive international environment, Chavez offers a way in our search for development. He offers a source of funding for education, security, roads, environmental protection, shelter, health and any number of projects that fall within the scope of development as defined under the Caracas Energy Accord. Simon Bolivar was called the George Washington of South America. What the region needs now is a Simon Bolivar of the Americas. Chavez's Bolivarian Revolution - propaganda, smear campaign and assassination threats aside ­ comes closest to this. Can the U.S. and Europe match it?

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