As economic turmoil in Venezuela grows, the Guyana government’s reticence on the future of the PetroCaribe agreement is passing strange, observers say.
Such official comments that come from the government have been strictly limited to what emanated from the Guyana Rice Development Board (GRDB), which is tasked with mobilizing rice and paddy from local farmers for shipment to Venezuela in order to keep Guyana’s part of the oil-for-rice agreement.
Recent indications from the GRDB indicate that all is well with the PetroCaribe agreement, describe increasing indications of a worsening economic and political situation in Venezuela.
Most recently, Agriculture Minister Dr Leslie Ramsammy, in one of his rare public comments on PetroCaribe, said Guyana’s increasingly aggressive international rice marketing drive means the industry may be moving towards decreasing its dependency on the Venezuelan market. However, farmers with whom this newspaper spoke dismissed the minister’s pronouncement, pointing out that the Venezuelan market accounts for more than a third of Guyana’s annual rice crop. Farmers said replacing Venezuela was likely to be difficult, given the competition particularly from the major rice producers in Asia.
Late last year the International Monetary Fund (IMF) had expressed concern regarding whether Venezuela, given its current economic state, would be likely to provide the beneficiaries of PetroCaribe with oil at concessionary prices for much longer. Since then, there has been no respite, either for diving oil prices or for the Venezuelan economy.
There is no evidence that PetroCaribe has become a political hot potato in Venezuela, however the likelihood of that becoming the case cannot be ruled out. The issue is not the economic impact of the relatively small volume of oil being disbursed through PetroCaribe, but the likelihood that as the political heat rises in Caracas President Nicolas Maduro’s opponents may accuse him of giving away the country’s oil at a time when locals are feeling an economic squeeze.
Late last year, Caracas failed in a bid to persuade the members of the Organization of Petroleum Exporting Countries (OPEC) to reduce oil production in a bid to force prices up.
In Venezuela, pressures on the government of President Maduro have intensified. As recent as early this week international media reports alluded to “swelling lines” of shoppers showing up at supermarkets from early in the mornings in search of basic food items. Even allowing for the healthy doses of propaganda that find their way into reporting on Venezuela in sections of the western press, there is evidence of serious production shortages in Venezuela. To make matters worse consumers appear entirely unafraid to blame the country’s economic situation on the policies of President Maduro while the hapless President says the situation is due to an economic war driven by his political opponents.
It was less than 5 years ago that the late president Hugo Chavez had signed off on an agreement to increase oil shipments to Guyana from 5,000 to 10,000 barrels a day under PetroCaribe. The agreement allows some Caribbean nations, including Guyana, to secure reasonably cheap oil in large quantities from Venezuela and offset the cost through a 25-year financing agreement on 1% interest and supplying goods to Venezuela.
During his visit here in August 2013, President Maduro sent signals that he was seeking to embrace his predecessor’s foreign policy posture of reaching out to the rest of the Caribbean. PetroCaribe Agreement has been at the heart of that policy. Though as both Caracas and Georgetown are finding out, the agreement will only hold good as long as political and economic pressures in Venezuela do not push the political administration there in the direction of amending or worse, scrapping the agreement.
