PetroCaribe : a financial hemorrhage

Se le acaba el maíz a la gallina? Los pollitos se van a rebelar

 

According to figures from the Venezuelan Central Bank the member countries of PetroCaribe owe Venezuela more than $22 billion in unpaid petroleum bills. It is becoming increasingly evident that this debt will never be paid. PetroCaribe is an organization created in 2005 by Venezuelan President Hugo Chavez to supply subsidized petroleum to Caribbean countries. The terms are extremely generous: 40 percent of the bill can be paid back in goods and sevices, including bananas, black beans, kahki trousers and the like. The money portion is paid in 17-25 years, with two years grace and an interest rate of one percent, practically a give away.

Paradoxically the amount owed Venezuela by the PetroCaribe member countries is very similar to the amount owed by Venezuela  to China, for loans received during the last five years. For all practical purposes Venezuela has been borrowing money from A to give it away to B,C, etc.

With Chavez now dead, the new leaders of the regime have suddenly  realized that this extreme prodigality cannot go on. But the solution proposed recently seems to be too little too late: raising the interest rate on the unpaid portion of the bill from one percent to…. two percent, or even, up to four percent.  Since payment is dubious, this raise in interest rates will mostly  have a negative psychological impact on the organization, as the real payment from the countries  to Venezuela has not been in cash but in political loyalty. Through PetroCaribe Venezuela has essentially bought the vote of the 18 member countries in the OAS and/or the U.N. This strategy has allowed the authoritarian Venezuelan government to escape action from these organizations. Especially in the OAS the votes of the Caribbean block have been decisive to put to rest attempts by other countries to penalize the Venezuelan regime for their constant human rights violations and abuse of power.   

As reality catches on with the Venezuelan regime one of the early casualties could be PetroCaribe.