Thread: Oil aids Venezuelan leader's influence

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Saturday, September 10, 2005 · Last updated 11:17 p.m. PT

Oil aids Venezuelan leader's influence

By PETER PRENGAMAN
ASSOCIATED PRESS WRITER

SANTO DOMINGO, Dominican Republic -- When nine Caribbean countries signed oil trading agreements with Venezuelan President Hugo Chavez, it was a marriage of convenience.

Fragile Caribbean economies scored modest relief from rising fuel prices, while the leftist South American leader advanced his campaign to become a counterweight to U.S. influence in the region, analysts say.

"A lot of what Chavez is doing right now is just bravado," said Vinay Jawahar of the Washington-based Inter-American Dialogue. "But it's going to make the United States' life harder."

Jawahar said Chavez is trying to increase his influence in the 34-nation Organization of American States, whose top human rights panel has often criticized the Venezuelan government.

The OAS also is the venue for negotiations for the Free Trade Area of the Americas, a U.S.-backed effort that Chavez opposes. Caribbean countries, who have concerns about how the FTAA would affect their struggling industries, often try to vote in a bloc in the OAS, making their support pivotal to many decisions.

Jawahar said Chavez also is trying to build regional support for his friend and ally, Cuban President Fidel Castro. The United States routinely backs resolutions condemning Cuba's human rights record in the United Nations. In recent years, votes on the resolutions have been close.

At a signing ceremony for the oil deals in Jamaica on Tuesday, Chavez urged Caribbean governments to consider Cuba-style socialism as an alternative to capitalism.

"Fidel, I think you were always right: It's socialism or death," he said.

Yet Chavez can only go so far in eroding U.S. influence in the Caribbean, analysts say. The United States is the biggest trade partner of most Caribbean countries and their largest market for tourism.

The same day the Dominican Republic signed the Petrocaribe oil agreement with Venezuela, its legislature overwhelmingly approved a free trade agreement with the United States and five Central American countries.

"Only a crazy person would have turned down Chavez's deal with oil at $70 a barrel," said Miguel Ceara-Hatton, a U.N. economist in the Dominican capital of Santo Domingo. "This won't change relations with the United States."

Still, the Petrocaribe agreement left Caribbean countries indebted to Venezuela. Nine countries - Antigua, Belize, Grenada, Guyana, Dominica, Suriname, St. Kitts, St. Vincent and the Dominican Republic - signed deals under the initiative in Jamaica. Cuba and Jamaica had previously signed.

Under the plan, Caribbean governments would pay market price for Venezuelan oil, but they only would be required to pay a portion of the cost upfront and could finance the rest over 25 years at low interest rates. Governments also could pay partly with services or goods such as rice, bananas or sugar while Venezuela would provide help expanding shipping and refining facilities.

The agreement allowed the Dominican Republic to scrap a major fuel conservation plan that would have raised gasoline prices and limited private vehicle use.

Although it may be too soon to know how much influence Chavez will gain through Petrocaribe, the initiative comes at a time when Washington appears to be having a harder time getting its way in the region.

Earlier this year, Washington's first choice for secretary-general of the OAS, former Salvadoran President Francisco Flores, dropped out of the leadership race for lack of support. It was the first time the United States' chosen candidate did not win the OAS leadership.

Venezuela had vehemently opposed Flores, who had applauded a 2002 coup that briefly ousted Chavez, and supported Chilean Interior Minister Jose Miguel Insulza, who won the post.

"Chavez has been generous," said Larry Birns, an director of the Washington-based Council on Hemispheric Affairs. "And in certain respects, he'll expect dividends."

I wouldn't look for Venezuelan President Hugo Chavez at Pat Robertson's next picnic.