ALBA-Petrocaribe: Weakened States in Denial

EspañolSince the 12th Summit of the Bolivarian Alliance (ALBA) was held last July in Ecuador, Nicolás Maduro has been pushing to integrate MercosurPetrocaribe, CARICOM, and ALBA into a “powerful economic area of shared development” — where power imbalances among its member countries are respected and even used as an advantage.

On December 17, during the second Extraordinary Summit of ALBA and Petrocaribe, hosted in Caracas, participants proposed further integration through the creation of a Special Economic Area — akin to the economic community that predated the European Union. According to the Venezuelan chancellor, Elías Jaua, within this framework participants would also continue working on a possible union between Mercosur and CARICOM.

The natural name for this alliance was Eco-Alba (as in economic-ALBA), since ALBA alone is a political organization, rather than an economic one. Although closely related, Petrocaribe emerged as an industry-specific alliance, where Venezuela supplies fuel to member countries with highly favorable conditions, including soft loans, low interest rates, and the option to pay with services and products. Since Venezuela provides the financial resources and oil, the country commands both ALBA and Petrocaribe.

According to Venezuela’s Minister of Oil, Rafael Ramírez, “In the last six years, the country sold 232 million barrels of oil to Petrocaribe’s 17 member countries.” Venezuela may be going through a severe economic crisis and have reduced oil production, but both member blocks still don’t have any option other than to continue to follow Maduro’s orders — assuming they are still interested in conserving their benefits, even if these have decreased.

The real challenge lies in achieving integration with CARICOM and Mercosur. These organizations are sub-regional blocks whose economic well-being does not depend on Venezuela, even if the country’s arrangements may be useful for them. Further, their members have interests and approaches that may not agree with the ones set out by the Bolivarian Revolution.

Brazil and Argentina, for example, are key Mercosur members and have been close allies of Venezuela’s regime — at least during the tenures of Lula Da Silva, Dilma Rousseff, and Mr. and Mrs. Kirchner. However, it’s unlikely this initiative will appeal to these two countries, since ALBA and Petrocaribe have expressed their clear intentions to “go against the Pacific Alliance” and their alleged “neoliberal” approach. Among other aims that would generate friction, ALBA members have announced their desire to establish a single currency for member countries and to create the Salvador Allende University of Health Sciences.

Brazil, Argentina, Uruguay, and Paraguay have all failed to identify themselves with Venezuela and Cuba’s Bolivarian project, and they haven’t even expressed any interest in joining ALBA. In fact, the members from Mercosur and CARICOM are aware that ALBA and Petrocaribe, and especially Venezuela as their main promoter, are weakened. It’s no coincidence that last November, Guatemala declined to become a full member in Petrocaribe, because Venezuela’s imposed conditions changed and weren’t as alluring as before.

Further, it’s necessary to highlight that Venezuela hasn’t been able to increase its oil production. In fact, between November 2012 and June of this year, it has fallen by more than 50,000 barrels per day. Also, oil exports have fallen to below 1.7 million barrels per day.

The idea of this superior block competing against the Pacific Alliance will only remain on paper, given economic realities. Venezuela’s regime will have to settle with the ALBA-Petrocaribe union arrangement. In the end, this new “ALBA-Petrocaribe Special Economic Area” will become another expensive influence block — at least for Venezuelans — that attempts to project Cuba and Venezuela’s power in the region.

Translated by Marcela Estrada.

Subscribe free to our daily newsletter
Sign up here to get the latest news, updates and special reports delivered directly to your inbox.
You can unsubscribe at any time