Editorial | CARICOM and Venezuela

This week’s agreement between Nicolás Maduro’s government and the Venezuelan opposition on the broad parameters for holding next year’s presidential election has material significance for the Caribbean Community (CARICOM), including Jamaica.

One has to do with symbolism and optics. While Tuesday’s accord between the opposition leaders and Jorge Rodríguez, the president of Venezuela’s National Assembly, was facilitated by the Norwegian government, the meeting and signing was hosted by Barbados, further burnishing that country’s image as an assertive voice on the global stage, championing the welfare of developing countries. Indeed, the island’s prime minister, Mia Mottley, has been at the forefront of the campaign to overhaul the global financial architecture. Her so-called Bridgetown Initiative has not only gained significant attention, but has influenced change by multilateral financial institutions in their approaches to some forms of lending to debt-burdened, developing countries.

What, however, is more significant in a larger geopolitical frame is the agreement’s implication for improved relations between Venezuela and the United States, and how this might redound to the benefit of Caribbean countries. Indeed, the region might have, in a separate development, benefited from the lessening of tensions between Washington and Caracas. Coincidentally, almost at the same time that political arrangement in Bridgetown was being announced, in Port of Spain, the Trinidad and Tobago capital, that country’s energy minister, Stuart Young, confirmed that the Americans had amended the financial conditions under which it green-lighted an arrangement by Caracas and Port of Spain for the joint development of a major gas field in Venezuelan waters.

The two countries formalised the long-contemplated Dragon field project several months ago. But with its sanctions against Mr Maduro’s government, the United States had initially insisted that the Trinidadians could not pay Venezuela cash for any of the gas it processed. The Americans could impose those restrictions because of their control of the global financial system.

ECONOMIC LIFELINE

The estimated US$1-billion project – which went into abeyance with the Americans imposed sanctions after Venezuela’s disputed 2018 election – will be an important economic lifeline for the Venezuelans. It will also provide throughput for Trinidad and Tobago’s gas and petrochemical facilities, which have been operating below capacity as domestic gas production fell.

Once on stream, therefore, the Dragon field will afford Trinidad and Tobago a welcome cushion while it continues its exploration and development of recent new offshore discoveries that show good promise.

But the agreement between the Venezuelan players could also have additional value to the Caribbean if it leads to, as is expected, a further easing of sanctions on Caracas. It could, for instance, facilitate renewed access to Venezuelan oil, on concessional rates, by Caribbean countries, which had collapsed under the weight of sanctions and Venezuela’s production difficulties.

Last year, in the aftermath of the Russian invasion of Ukraine, triggering a sharp spike in oil prices, the Biden administration began its engagement of Mr Maduro. Several US citizens who were in jail in Venezuela were released.

Last November, the Americans approved the resumption of oil production in Venezuela by the US firm Chevron. But like with the original arrangement for the Dragon field, Chevron was not permitted to pay Venezuela cash for any oil it pumped and exported. Instead, the earnings were to be used to offset debts owed to it by the Venezuelan national oil company, PDVSA.

HYPOCRISY

Speaking at the United Nations General Assembly, Ms Mottley criticised the hypocrisy of powerful nations being allowed Venezuela’s oil, while its preferential PetroCaribe scheme for poor countries in this hemisphere was stymied.

“How is it possible for Chevron and the European Union to access the oil and gas of Venezuela, but the people of the Caribbean cannot access it at the 35 per cent discount offered by the people of Venezuela?” she asked.

The upshot of this dichotomy, Ms Mottley explained, Barbados, given higher oil prices, was faced with an energy bill that increased by four per cent of its annual GDP.

Part of that answer to Ms Mottley’s rhetorical question is in the admixture of geopolitics and for policymakers in Washington, the primacy of America’s domestic interests. Allowing some Venezuelan oil on the markets helped to moderate prices, contributing to the easing of the impact of inflation felt by US consumers. It was in part why the Biden administration earlier this year threw Juan Guaidó, the self-declared, US-backed ‘president’ of Venezuela under the bus, leading to the disintegration of his supposed government that was recognised by several countries.

For Jamaica, which had supported the US attempt to isolate the Maduro government in the Americas but was stopped just short of recognising Mr Guaidó’s legitimacy, there is a lesson somewhere in the developments.

Hopefully, too, the agreement between Mr Maduro and his opponents will lead to political and economic stability in Venezuela, which has lost more than seven million people over the last eight years, in one of the world’s great migration crises.