Introduction
As I write this concluding column on PetroCaribe, global crude oil prices have resumed their decline. Presently these prices are at a new six-year low, below US$45 per barrel. After a four-week hiatus, most analysts link this resumed decline to a world-wide shortage of capacity to store oil purchased by speculators on the cheap for later sale, when as is widely anticipated prices will rise. From Guyana’s perspective three basic contradictions of this initiative form the focus of this column.
To recall, at the November 2014 Caracas PetroCaribe ministerial meeting, Venezuela had announced its re-commitment to the initiative over the long run, and more broadly, to the Hugo Chávez/ Simon Bolivar vision of an energy-secure, integrated, independent, sustained, and people-oriented development model for Latin America and the Caribbean. In official statements this model is described as: “seeking to promote a well-developed, united, independent Latin America and Caribbean that consistently provides programs for the poor, vulnerable and 
powerless.” This vision was endorsed by Guyana through its Minister of Finance who has publicly declared “PetroCaribe has proved to be tremendously transformational of the entire Caribbean region. Guyana is an appreciative beneficiary.”
However several contradictions have emerged since the initiative was established in 2005. I will highlight three of these in the remainder of today’s column.
Contradiction (1):
State-centric and non-transparent
First, despite the widely trumpeted ideological/political allusions to PetroCaribe as a grand peoples-based, anti-imperialist, solidarity, sovereignty and security-enhancing (especially energy security) initiative, both in its design and implementation the arrangement has essentially operated as a state-centric assemblage of states. State energy organizations and enterprises unmistakably dominate its oil operations. Organizationally, the leading decision-making/executing organs are the Council of Heads of State and Government, ministers of energy, and technical groups of public officials. There are no formal or indeed informal roles for political parties of Guyana’s opposition, civil society, private sector and other non-state actors. In truth the assemblage of states can be viewed as a coterie of leading members of the ruling political parties from among the initiative’s membership.
As a result of these circumstances, PetroCaribe is steeped in a culture of secrecy, non-transparency and lack of public accountability. Its financial, economic and operational details in Guyana are literally hidden from the public. Thus even the prices, credit and quantities of oil supplied by Venezuela are not publicly notified by that country in a timely manner. The same applies for the oil received, outstanding national debt, payments made as well as credit received by the net oil importing members of the initiative. Further even the details of four debt compensation deals (rice for oil) completed with Venezuela and mentioned in the annual national Budgets have not been made publicly available, together with the operational details of the Development Fund.
Contradiction (2): Asymmetry
By every benchmark imaginable, the PetroCaribe arrangement is heavily lopsided and asymmetric. Under its terms, Venezuela provides benefits and the other members receive these.
It provides oil through bilaterally negotiated terms under the rubric of a common framework of rising credit as the price of global crude oil increases and vice versa.
Members receive benefits in the form of one or more of the following: 1) concessionary oil imports; 2) exports to Venezuela as part payment for oil received (for example, rice exports from Guyana); and 3) projects funded out of the Development Fund created by Venezuela from the delayed portion of the beneficiaries’ charges for Venezuelan oil that is transferred to the fund for use as a source of long-term loans repayable at one per cent interest over 25 years (for example, the Hugo Chávez Centre for Rehabilitation and Regeneration in Guyana, a G$400 million facility for the homeless in West Coast Berbice).
Contradiction (3): Overly burdensome
The contradiction in the asymmetric relation of Venezuela to other members of PetroCaribe is compounded by the fact that, from a global standpoint, Venezuela remains, despite its relatively abundant oil resources, objectively a small middle-income economy with restricted capability, no matter what its political leaders believe. This means its ability to support other members of the initiative is limited, even though they are much smaller and less well-endowed with energy resources. Added to this it is has become evident that in designing PetroCaribe, there was no scenario analysis for the situation now facing the initiative, that is, rapidly falling crude oil prices over the past nine months. There is clearly no Plan B.
No Plan B exposes a stark reality of PetroCaribe. Its robustness is essentially a function of three variables, namely, 1) Venezuela’s economic situation; 2) Venezuela’s domestic political dynamics; and 3) the political willingness of its current leadership to embrace Hugo Chávez’s vision. As regards 1), Venezuela is in a deep recession. Its GDP fell by seven per cent in 2014. Its inflation rate last year was 70 per cent. Government revenue fell by one third. Shortage of imported items and foreign exchange is widespread. Black markets for these are common and the parallel economy is flourishing. As regards 2), the political situation is turbulent at best.
Rumours of coups, violence and public manifestations organized by the opposition are widespread. Further, PetroCaribe has been so demonized that it is likely it will be terminated if the opposition wins the next election. As regards 3) I am in no position to speculate.
As evidence that there is no Plan B, it is also reported that Venezuela is presently pursuing several options including 1) seeking foreign loans to keep the initiative afloat, and 2) negotiating with hedge funds to purchase its PetroCaribe portfolio at a discount of about 40 per cent. From all reports Venezuela needs an oil price of US$120-140 per barrel to meet its obligations fully including those to PetroCaribe.
Conclusion
Under the stress of falling prices PetroCaribe now threatens to yield what it had set about to prevent, regional disintegration in the age of globalization. Perhaps the original fault is that Guyana and other Caricom members did not participate in the initiative as a group, thereby ensuring that their parliaments, civil society, private sector, and other non-state actors played their accustomed roles in the initiative.
