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Andres Oppenheimer: Obama's plan
to counter Venezuela's oil clout



For years, U.S. officials have been in a quandary about how to counter Venezuela's political influence in Central American and the Caribbean through its subsidized oil exports. Now, the Obama administration is quietly launching a plan that it hopes will help counter its importance.

In a little-noticed Aug. 27 ceremony in Washington, senior officials from the United States and Grenada signed an agreement that U.S. officials say will serve as a pilot program to help 17 Caribbean and Central American countries to become more self-sufficient in energy, and less dependent on Venezuelan exports.

While some critics say the program is too little, too late, most agree that — if successful — it could change not only the Caribbean Basin's economy, but also Latin America's political balance.

Thanks to its Petrocaribe oil agency's exports at favorable financing terms, Venezuela has gained the loyalty of 17 Latin American countries in regional organizations, such as the Organization of American States, to oppose most U.S. initiatives. Venezuela's oil diplomacy has also allowed President Nicolás Maduro's government to commit widespread human rights violations, including torture and point blank killings, without drawing virtually any criticism in the region.

But things are beginning to change. Venezuela's oil production has plummeted to nearly half of what the country produced when late President Hugo Chávez took office in 1999, and the Maduro government has begun to demand steeper cash payments from some Petrocaribe member countries.

Caribbean and Central American countries are getting increasingly nervous about being cut off from Petrocaribe's easy credits. Meantime, the United States is benefiting from its own energy boom, and is seeing an opportunity to come to the rescue of energy-strapped Caribbean Basin countries.

According to U.S. officials, the Obama administration began working at full speed on its new plan — they don't want to call it “U.S.-Caribe,” but it's clearly meant to be a Petrocaribe antidote — in May, when Vice President Joe Biden visited Trinidad and Tobago and met with Caribbean leaders to discuss greater energy cooperation.

In June, Biden visited the Dominican Republic, and announced that the United States would launch a “Caribbean Energy Security Initiative” to help the region become more self-sufficient in energy. But the announcement was so vague that few paid any attention to it.

The Sept. 3 U.S.-Grenada energy cooperation provides greater details about the plan. U.S. officials describe it as a “pilot program” to help Caribbean Basin countries change their energy laws and improve their infrastructure to encourage private and international financial institutions to invest in wind, solar, geo-thermal, natural gas and other energy sources.

Amos Hochstein, the senior State Department official who signed the deal with Grenada, told me that the ultimate goal is to help these countries become more reliable in renewable energy sources, and less reliant on crude oil.

“Grenada is the pilot,” Hochstein said. “It's all about helping the countries helping themselves, and ensuring that the Caribbean island states and Central America become more energy self-sufficient.”

But a recent Atlantic Council report entitled “Uncertain Energy: the Caribbean's gamble with Venezuela” warns that the Obama administration's evolving plans to help Caribbean Basin countries develop their own renewable energy industries is a good long-term strategy, but won't help much in the near term.

“For the short and medium term, a strategy focused on natural gas can deploy faster and at lower cost,” the report says. It adds that natural gas would be the most cost-effective alternative energy source for Caribbean Basin countries, and that the United States and international financial institutions should provide funds to allow Caribbean countries to build natural gas import terminals.

In addition, David Goldwyn, a former U.S. official and the report's lead author, told me that “Washington should focus on the biggest and most vulnerable Caribbean countries, such as Jamaica and the Dominican Republic. Those are the most dependent on Venezuelan oil.”

My opinion: The United States should do more than provide technical assistance to Caribbean Basin countries. Venezuela's oil industry is in a free fall (see my recent column “Venezuela: from oil power to importer) , and Venezuelan oil-dependent Caribbean countries may soon find themselves in a major crisis, while U.S. energy production is booming.

With relatively little money — as little as $30 million per country, according to a recent Inter-American Development Bank study — Washington could help build regasification technology and off-loading facilities in the Caribbean. That's very little money, would help Caribbean Basin countries reduce their dependence from Venezuela, and would do more than a thousand speeches to improve U.S.-Caribbean Basin ties.


 

 

Andres Oppenheimer is a Miami Herald syndicated columnist and a member of The Miami Herald team that won the 1987 Pulitzer Prize. He also won the 1999 Maria Moors Cabot Award, the 2001 King of Spain prize, and the 2005 Emmy Suncoast award. He is the author of Castro's Final Hour; Bordering on Chaos, on Mexico's crisis; Cronicas de heroes y bandidos and Ojos vendados, and most recently of "Cuentos Chinos" (Plaza & Janes, Mexico.) A new Oppenheimer Report appears every Sunday and Thursday (aoppenheimer@herald.com ). Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was originally published by the Miami Herald, on Sept 4, 2014. Petroleumworld reprint this article in the interest of our readers.

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