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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Message: http://www.houseoffusion.com/lists.cfm/link=i:5:198340 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
