Wendell
Mottley's stellar presentation at the recent Petroleum
Conference in T&T focused on the role (reviewed
briefly below) that President Chavez appears to be
carving out for his country, Venezuela. That country,
now with a growth rate of five per cent, earns annually
some US$26 billion in petroleum revenues compared
with T&T's US$2 billion.
Chavez
has broken the control that FDI had on his country's
natural resources and is directing these oil earnings
on structuring domestic and international policy.
Chavez has been concentrating at home on land redistribution,
large investments in health, education, infrastructure
(e.g. water distribution) and agriculture. But the
President understands that with US political policy
against him, he had to take this political and economic
revolution, the "Axis of Good", into the
region.
For
example he has signed with Brazil, Uruguay, Argentina,
Bolivia and Argentina, PetroSur, a joint venture to
execute oil projects in the countries, agreed to supply
Uruguay with one million barrels of fuel per month,
similar to PetroCaribe, in which 75 per cent is to
be paid in 90 days and the rest over 15 years. Some
payment can be made in cattle and other food products.
Also,
Chavez has bought out US$1.6 billion in Argentina's
government bonds such that that country could entirely
repay the IMF, purchased US$25 million in defaulted
Ecuadorian bonds and appears to be supporting the
idea of the 'Bank of the South' that would make loans
in competition with the IMF without the Washington
conditions.
Further,
Jamaica sought finance from Venezuela for several
projects. Mr Mottley postulated that Chavez did not
offer T&T better conditions to enter PetroCaribe
since he may be unhappy with T&T's model of its
energy sector which relies largely on FDI, one that
contrasts with the tight control Venezuela, Brazil
and Bolivia exert on their petroleum resources.
Though
Chavez exports to the US, he has gas development plans
that include a pipeline going West and South to provide
gas for the development of regional economies. One
can be very sceptical that Chavez will allow the cross
border drilling for gas or even LNG in T&T using
Venezuelan gas under the present marketing conditions
of T&T.
What
Mr Mottley did not address are the implications for
the FTAA given the creation of the Axis for Good in
the region. For example on his arrival in Argentina
on November 4, 2005 to participate in the Fourth Summit
of the Americas, Chavez said that the FTAA is dead.
This attempt to resurrect the FTAA talks (stalled
now for the last two years) failed to resolve the
key differences over how to create a hemisphere-wide
free trade zone, amid violent anti-US protests.
Three
factors are of concern, viz, the US and Brazil have
made little progress in resolving key negotiation
issues, member governments have shifted their focus
from the FTAA to bilateral and multilateral agreements
and a new negotiating strategy and co-chairmanship
by US and Brazil have so far failed to push progress.
In
particular, Brazil complained that the US market-access
offer to the Mercusor partners provided least favourable
market liberalisation for consumer and industrial
goods and agricultural products, as well as, the group's
most competitive products are in a class with the
longest phase-out period for tariff elimination. A
bone of contention is the agricultural subsidies of
the US that contribute to making the region's products
more uncompetitive. On the other hand Brazil et al
are concerned about the rules on such topics as services,
intellectual property rights, investment and government
procurement. In certain cases these rules go beyond
the WTO commitments.
Simply
to keep the talks going the Miami ministerial meeting
in November 2003 agreed on a substantial shift from
the previous vision of the FTAA as a single undertaking
applying to all countries to that of a two-tiered
agreement with varying degrees of national commitments
to cut barriers and abide by trade rules. Even with
this concession the meeting in Argentina in November
2005 failed. The FTAA appears to be collapsing and
Chavez is using his huge war chest of petrodollars
to drive the other nails in its coffin as he builds
a trade area in the South, while our Minister of Trade
keeps hoping that T&T will be chosen to host the
FTAA HQ/tomb.
The
choice before us is whether to ignore these political-economic
manoeuvres in the region and continue our merry way
of liquefying gas and exporting it North with dubious
financial returns or move towards closer collaboration
with this new move in the region. Ignoring PetroCaribe
is to our detriment but involvement in the Axis of
Good carries its own political risks.
Mary
King
is
a columnist in the Trinidad Express ( maryking@tstt.net.tt
) .
Trinidad Guardian's Weekly Business Review.
Petroleumworld not necessarily share these views.
