Venezuela’s oil workers are at the heart of Venezuela’s PetroCaribe initiative.
Photo: Reuters/Jorge Silva
Political parties allied with Venezuelan president Hugo Chávez swept the December round of local elections, winning all of the 167 seats up for grabs. The latest victories prompted the big-business press and U.S. State Department to intensify their misinformation campaign against the Bolivarian Republic of Venezuela. What accounts for this new wave of inflammatory editorials and belligerent State Department remarks?
On one hand, the local Venezuelan elections set back the U.S-supported opposition and confirmed the popularity of the Chávez government. Most significantly, however, was a parallel development that took place outside of the Venezuelan polling sites. The United States delegation was unable to strong-arm the other states to accept the Washington-backed Free Trade Agreement of the Americas at the November meetings of the Summit of the Americas in Argentina. New economic agreements in Latin America and the Caribbean make it clear that a new economic pole is crystallizing around oil-rich Venezuela.
Opposition forces have cast Chávez’s frequent references to the 19th century South American liberator Simón Bolívar as demagogic populism. But the “Bolivarian dream” of a united and integrated Latin America in fact has made historic progress.
Using its vast natural resources, Venezuela has initiated a whole range of oil and trade agreements that aim to break the relationship of economic dependence for Latin America and Caribbean countries that have suffered under U.S.-sponsored neoliberal policies. A primary goal of these initiatives is to develop the industrial infrastructure in the formerly colonized countries.
In many cases, Venezuela has offered preferential rates and trade conditions to the poorest countries. The Venezuelan government has even initiated a program to sell cheap heating oil to communities in the South Bronx, Boston and Chicago—some of the poorest communities in the United States.
PetroCaribe initiative advances
In September, 14 Caribbean countries signed bilateral agreements with Venezuela that deepen their participation in PetroCaribe, an oil initiative that commits Venezuela to send 77,300 barrels of crude and refined products per day to the signing countries. The agreement gives the signing countries 25 years to pay for the shipments at a one percent interest rate, with a three-year grace period. Venezuela will pay for 40 percent of the cost if oil continues to sell over 50 dollars a barrel, as it is now.
Venezuelan President Hugo Chávez visits a Bronx, N.Y. community center. Sept. 17, 2005
Photo: Reuters/Heidi Schumann
Venezuela will assume all transportation costs and costs for the development of oil infrastructure in participating countries. In the past, underdeveloped countries with vast oil resources were still beholden to the imperialists that possessed a near monopoly on oil refinement necessary to make the oil useable. The construction of independent oil refineries therefore represents a major step towards breaking the Western imperialist powers’ control. For example, Venezuela has initiated two joint-owned oil refineries in Brazil and Argentina, and has proposed the construction of a Latin American oil pipeline.
Most notably, the PetroCaribe deal allows for borrowers to repay Venezuela in goods such as rice, bananas or sugar. Historically, underdeveloped Latin American and Caribbean countries have been forced to purchase their oil from the United States with hard currency like the U.S. dollar. On the one hand, this dependence on foreign hard currency results in unfair trade agreements that favor the imperialists. On the other hand, it causes enormous economic distortions that have the underdeveloped countries producing a great quantity of consumer goods—like televisions—for the West at the expense of direly needed essential goods for the home population.
The expanded PetroCaribe initiative in effect allows for underdeveloped countries to deal in the commodities they are best suited to produce. For instance, the Dominican Republic, which is teetering on bankruptcy in large part due to the excessive costs of oil, can repay its oil shipments in kidney beans. The Dominican Republic already owes $3 billion to the United States for oil this year.
In essence, Venezuela hopes to use its oil resources to stimulate a “global South” trade network that will draw on its rich and varied natural resources and to provide greater self-sufficiency to the region as a whole. In Chávez’s words, PetroCaribe puts Venezuelan oil “at the disposal of South America and the Caribbean.” (Inter Press Service, July 19, 2005)
PetroCaribe is a critical part of PetroAmerica, which would function as the backbone of what Chávez has called the Bolivarian Alternative for Latin America (ALBA). The ALBA is a trade network that would connect South America, Central America and the Caribbean into a cohesive whole. It stands in sharp contrast to the so-called “free trade” agreements, backed by the United States that have ravaged local production and plunged the region into nearly unprecedented poverty.
Assisting poor U.S. communities
The Venezuelan government has made the point that this network extends beyond Latin America. Poor communities in the United States, just like poor communities in the underdeveloped world, suffer daily from greedy, capitalist price gouging.
In the final months of 2005, gas prices have soared while multinational oil corporations have made record profits. Commuters have found themselves spending a good chunk of their daily wages at the gas pump. This winter, many homeowners will be unable to pay their heating bills. At the same time, the federal government has continued to cut the Low Income Heating Energy Assistance Program, which provides assistance for poor families with heating costs.
In the face of this grim reality, Venezuela proposed that oil corporations that are swimming in money create a fund to give discounted oil to low-income families. In his September visit to the United Nations, Chávez stated his willingness to participate in such a plan.
It was no surprise when only Citgo, the U.S. subsidiary of Venezuela’s state-owned oil company, responded to the call for discounted oil. Citgo agreed to deliver 12 million gallons of oil to poor communities in Massachusetts—helping over 40,000 families. It also began supplying 75 apartment buildings in the Bronx with oil at a 40 percent discount.
Steps toward increased sovereignty
Venezuela has a special relationship with revolutionary Cuba, forged out of solidarity and common goals.
ALBA was initiated by Cuba and Venezuela, with 49 trade and cooperation agreements signed by both countries in Havana in 2005. These agreements guarantee favorable terms of trade and exchange of goods and services.
Cuba has agreed to train 30,000 young Venezuelans to become doctors and provide free cataract operations for 100,000 Venezuelans in the coming period. That eye project is called “Operation Miracle,” and is now being extended to other Latin American countries. Now, 50,000 patients have had their vision restored from 15 Latin American countries, with the ultimate goal of curing 6 million people in Latin America and the Caribbean.
The Cuban revolutionary government has also provided essential assistance in the ever-advancing Bolivarian revolution in Venezuela—doctors, teachers, literacy workers and economic advisers. In return, Venezuela has provided Cuba with oil at advantageous rates.
Venezuela’s economic projects like PetroCaribe can be seen as an anti-imperialist show of solidarity toward poor countries in the region that have traditionally had no alternative but to rely on ties to the United States. They have given these countries breathing space to escape the ever-tightening stranglehold of neoliberalism.
These projects are also part of a wider trend among the more economically powerful Latin American countries, like Brazil, to develop within the world capitalist market but shielded from the worst aspects of imperialism. The Mercosur economic bloc of Brazil, Argentina, Uruguay and Paraguay has agreed to add Venezuela as a full member, another sign of growing independence from U.S. imperialism.
In mid-December, Chávez announced that Venezuela will contribute monetarily to Argentina’s efforts to eliminate its debt with the International Monetary Fund.
It is a welcome rebuff to Washington, which earlier had rejected Argentinean president Nestor Kirchner’s request for the United States to intervene politically with the IMF to ease its debt. Bush refused, angry with Kirchner’s cooperation with Chávez. Venezuela stepped into the void, helping further cement relations with Argentina.
The big business press in the United States hypocritically chastises Venezuela for using “oil diplomacy,” attempting to use its natural resources to develop political and economic relationships within the region. But the U.S. government has always used its great wealth as a battering ram to suppress all forms of political independence in the oppressed countries.
Venezuela has the full right to use its natural wealth to protect itself from the U.S. war-makers and create the continent-wide solidarity that can lead to real independent development.