VenEconomy: The Goose No Longer Lays “Oil Eggs” in Venezuela From the Editors of VenEconomy Latin American Herald Tribune August 10, 2015
Oil could have been a blessing to Venezuela, but it has not. Especially in the past 14 years, a long period of time when crude oil prices were climbing steadily and the late Hugo Chávez was at the helm of the country.
Those huge resources coming from oil revenues were one of the reasons that allowed Chávez to remain in power.
At the same time, the allocation of oil to countries of the region through generous credit facilities made everyone, including the countries of the region that benefited from the measure and the international community, turn their attention from the process of dismantlement of democracy in Venezuela. Oil allocations made without control, in an abusive way, without any audit process and also with the blessing of the public authorities bowed to the wishes of the Bolivarian process.
Apart from the countless barrels of oil given away to Cuba making it up for the political patronage from Fidel Castro to Chávez, one of the most emblematic allocations in this era of Bolivarian revolution was materialized through Petrocaribe. An alliance in the energy industry, particularly in the oil sector, created by an initiative of Chávez in 2005, through which Caribbean countries were able to buy Venezuelan oil payable in 25 years and at an interest rate between 1-2%, and that also facilitated the construction of refineries, tank farms, oil pipelines and hydroelectric plants in countries such as Cuba, Nicaragua, Dominican Republic, Haiti, Honduras, Antigua and Barbuda, Bahamas, Belize, Dominica, Grenada, Guyana, Jamaica, Suriname, Saint Lucia, Saint Kitts and Nevis, Saint Vincent y the Grenadines.
The aim of this "policy" was to "buy allegiances" and influence across the region and help Venezuela being elected as a rotating member of the United Nations Security Council. And perhaps it was good for something else back then, too, but is good for nothing in today’s reality, especially when Venezuelans find themselves suffering the nasty effects of the shortages of foreign currency due to, among other reasons, a sustained decline in oil prices in a country without international reserves and with an oil industry that doesn’t have the capacity of producing efficiently.
Now, international consulting firm TPCG Group claims that the mechanism of Petrocaribe "seems worn out," as reported by local daily El Nacional on Monday. It says that despite the fact that the debt burden has been reduced, there is "nothing much to rescue in terms of cash." It reckons that about $2.3 billion in exports were to be paid via credit, an amount that will not exceed $1.5 billion in 2015.
One aspect of this change of scenario is that Venezuela is starting to evidence that its influence across the region is waning the same way its cash crisis becomes worse and the international reserves dry out.
One example of this is that in light of a new dispute with neighboring Guyana over the Essequibo region, CARICOM member countries have turned their backs on Venezuela to give their support to Guyana – in a very diplomatic manner. This action leaves Venezuela at risk of suffering a diplomatic setback, unless Fidel Castro decides to return the favor that Chávez once did of adopting a common position toward the Essequibo for years.
In short, so much oil given away and pushing the country into debt for a temporary membership in the United Nations Security Council... and many fewer miles of territory in the east side of the country.
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