By G Michael Reid

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“The amount of the debt owed to Venezuela by many Caribbean countries is shrouded in secrecy because the process of dealing with Petro Caribe has not been transparent. ….The beneficiary Caribbean governments have much for which to thank Hugo Chávez and Nicolás Maduro, but they would be imprudent if they did not now begin to make adjustments to their budgets for a transition from dependence on Petro Caribe to buying oil on the international market.”

“They would be sensible to approach the Caribbean Development Bank for technical advice on how to alter their financial circumstances to make the transition and to propose ways in which such a transition could be accomplished with the least amount of inevitable pain — pain which would be more desirable than calamity.”

The above is the opening and closing paragraphs of an article written by Sir Ronald Sanders that was published in the Jamaica Observer in February of this year. Sir Sanders is a consultant, senior research fellow at London University and a former Caribbean diplomat. Under the title “Petro Caribe: Are Caribbean countries prepared for the worst?” the article delves into the intricate and mostly ignored facts about this novel and noble initiative from the late Venezuelan president Hugo Chavez.

In an impromptu interview conducted with Prime Minister Barrow last Friday, Jules Vasquez finally broke the silence and broached the topic of Petro Caribe. The silence has been long and deafening as it relates to this vital stitch in our country’s delicate economic tapestry. With declining oil revenues, a citrus industry threatened by “greening” and a sugar industry facing imminent and potentially devastating uncertainty, Belize’s economy is more than ever, dependent on Venezuela’s boon. Sir Ronald issues a sober and apposite warning.

Belize is one of twenty countries currently benefitting from the Petro Caribe initiative; “all of them representatives of the so-called Third World, that part of the planet where, according to the World Bank’s figures, 70% of the consumption basket of one poor inhabitant is spent on food and energy.” The Petro Caribe initiative allows participating countries to purchase Venezuelan fuel at half the world prices and get up to 25 years to pay off the rest of the bill. It is, in effect a loan, albeit at a rather attractive interest rate of 2%. There have been rumors swirling that this rate will eventually be doubled, or worse, which will spell major trouble for a country like Belize, so already deeply in the hole.

While Prime Minister Barrow has described Petro Caribe as “another arrow in our quiver”, Sir Ronald thinks that it could just as well serve as “another nail in our coffin.” The death of Hugo Chavez in March of last year has left a huge veil of uncertainty hanging over the Petro Caribe initiative. Chavez’s successor Nicolas Maduro has had anything but a smooth reign and while he has pledged to continue Chavez’s social agenda, the challenge to do so becomes increasingly difficult with every passing day.

Sir Ronald warns that “Two events are playing out in Venezuela to which vigilant officials in ministries of finance in Caribbean countries should be alert. The first is the problematic state of the Venezuelan Government’s finances, and the other is the increasing confrontation between dissenting groups and the Government that has spurred violence in the streets”. According to Sir Ronald, Madura might eventually be forced to choose between hanging onto Chavez’s ideals and preserving his own political fortunes. So far, he has been maintaining balance but it is a slender and unstable tightrope upon which he traipses.

Here in Belize, our government has been benefitting handsomely. Where has the money been going though, and are the terms of the initiative being fulfilled? How much of a debt have we racked up and should GOD forbid, this initiative collapses, what will be our chances of transitioning? The government of Jamaica has proclaimed its debt to Petro Caribe at US$2.5 billion. We know that Belize’s debt is well into the hundreds of millions and this brings us to the question asked of the Prime Minister last Friday. The Finance and Audit Act of 2005 requires that “Any loans or borrowings by Government of or above ten million dollars “shall” only be validly entered into pursuant to a resolution of the House of Representatives and the Senate authorizing the Government to do so”. Why then, with us being well into the hundreds of millions of dollars, of this which is indubitably a loan, has this matter not gone before the House? Are we missing something here?

The Prime Minister does not “think it much matters except perhaps just to ensure that we are in strict and faithful compliance with our regulatory requirements”. Well sir, that’s a big enough matter wouldn’t you say? You, who for ten years railed against many less significant and minor “unfaithful compliance,” cannot suggest that “it does not matter”! With all due respect, sir, you are “just wrong”!

The Prime Minster continuously harps and pontificates about his infrastructure projects and points to them as his crowning achievements. In fact, it is his only achievement; unless we count the mishandled misappropriation of our utility companies which still hangs in uncertainty before the courts and which at the very least, will have to compensated for. But who is really funding this “massive infrastructure”?

Venezuela does not give us cash money; it gives us fuel at low cost. The government then resells that fuel at astronomically high prices to the citizens of this country. Government officials and high ranking UDP cronies do not buy gas; they get it free on vouchers which taxpayers eventually have to pay for. The poor people of Belize; the taxi drivers, bus operators and regular Joe and Jane are the ones actually funding these projects.

Sources within Venezuela have been complaining that, “not only has provision not been made to repay the debt, but the loan component of the oil price has not been used for the social programs for which Chávez intended it.” In Belize, Petro Caribe is used to purchase political mileage; miles and miles of concrete political mileage. Hugo Chavez must be turning in his grave.

Developing conditions in Venezuela will inevitably bring an end to the Petro Caribe “free ticket” which is anything but free. Their inflation index stands at 56 per cent and rating agencies like Moody’s and Standard & Poor’s have downgraded Venezuelan bonds to junk status. The “strong bolivar”, (so renamed by Chávez) has weakened steeply against the US dollar and on the black market Venezuela’s money has dropped in value from 8 to 1 a year ago to 87 to 1 at last check.

Prime Minister Dean Barrow would do well to heed Sir Sander’s warning and “be prudent by beginning to adjust (his) budgets to take account of the loss of benefits now derived from the oil arrangement.” Knowing this Prime Minister however, his hubris will not allow and his pride must goeth before our destruction and his haughty spirit before our fall. Heaven help us all!