Guyana is reportedly examining a proposal to set up a PetroCaribe Economic Zone (PEZ), made by Venezuela at the PetroCaribe summit held earlier this month in Caracas and attended by Prime Minister Samuel Hinds.
According to Venezuelan Oil and Mining Minister Rafael Ramírez, this initiative will widen the role of PetroCaribe beyond the provision of oil at favourable prices, allowing inter alia for the strengthening of fair trade mechanisms among participating countries. In this respect, Mr Hinds has explained that, “… countries could meet some or all of their finance portions of their oil purchases by selling goods to Venezuela. Guyana is already taking advantage of this as it sells rice to the neighbouring country.”
Even if this barter factor helps to explain to some extent the Prime Minister’s apparent enthusiasm for the proposition, it is not quite clear how the PEZ will develop, as Mr Hinds puts it, “the production sectors of member states, based on the linkage of production chains which would generate economic surplus… would make cooperation sustainable in the context of PetroCaribe.”
This remains a theoretical construct at best, given not only the inability of Caricom to move ahead with full implementation of the Single Market and Economy but the shakiness of the Venezuelan economy. Be that as it may, an ad hoc working group of PetroCaribe member states is to conduct a feasibility study of the PEZ, including consideration of how it would relate to other regional integration initiatives.
As far as Caricom’s PetroCaribe members – Antigua and Barbuda, The Bahamas, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, and Suriname – are concerned, there is a sense of palpable relief that Hugo Chávez’s petro generosity will be continued by his successor, Nicolás Maduro. They would do well, however, to remain concerned about its sustainability in the context of the health of the Venezuelan economy and the tense political situation in that country.
Older Guyanese still harbour painful memories of the economic hardships of the late ’70s and ’80s, which were characterised by all sorts of shortages and ‘Guylines.’ Perhaps nothing captured the economic depths to which we had plummeted more than the infamous scarcity of toilet paper. Been there, done that, we might say, but now Venezuela seems to be heading up the same creek we once did.
Just last week, the Venezuelan government announced that it was importing emergency supplies of toilet paper, which is the latest item in short supply. For most of the year, shortages of basic food items and queues have been the norm, a situation made considerably worse by the huge irony of widespread power cuts in an oil-rich, energy-producing country. But the lack of toilet paper, as we know from bitter experience, is perhaps the ultimate indignity of daily life and the most telling indicator of the state of an economy.
According to the respected Brussels-based International Crisis Group, the “power vacuum” caused by Mr Chávez’s death “is particularly grave because the country is on the brink of a recession, has a large public-sector deficit and suffers from a growing scarcity of basic goods and one of the world’s highest inflation rates.” Indeed, the Group has opined that “the tight result [in the April presidential election] and legal challenges to the validity of the vote cast a shadow over the sustainability of the new administration.”
President Maduro blames the political opposition for carrying out a strategy of economic sabotage to foment discontent and instability. He accuses the business sector of hoarding products to create artificial shortages and force the government to remove the price controls it had imposed to make goods affordable for the poor.
The private sector, on the other hand, counters that the country is simply reaping what it has sown since President Chávez began to accelerate his ‘Bolivarian Revolution’ in the early 2000s – land expropriations, nationalisation, currency controls, price regulation and general state interference in the production and distribution of goods have led to a system characterised by mismanagement, corruption and gross under-production.
The deteriorating economic situation and festering political climate in Venezuela do not inspire confidence in the long-term sustainability of PetroCaribe, much less the viability of the proposal to expand the arrangement through more petro-fuelled largesse. Beyond the diplomatic niceties, Guyana and the other Caricom beneficiary countries would be best advised to consider their options.
