Many in Latin America fear Hugo Chavez’s death will end Venezuela’s Santa role
03/06/2013 5:57 PM
09/08/2014 6:22 PM
Like planets gone slightly wobbly in orbit, a string of Western Hemisphere nations fretted openly Wednesday about the death of Venezuela’s Hugo Chavez, whose skein of relationships went far beyond mere rhetorical support to include major financial benefits.
Recognizing how much they owed Chavez – often quite literally – nations across the region declared at least a day of mourning for the fiery Venezuelan leader. Cuba declared two days. Argentina, Brazil and the Dominican Republic declared three.
Some 17 countries gained benefits under Chavez’s Petrocaribe program, under which Venezuela sent about 10 percent of its crude oil production to member states under generous terms. It permitted them to partially repay in goods or services – sugar, beans, rice – rather than in cash. Many now wonder about the program’s future.
A handful of Latin leaders thrived under Chavez’s large ideological umbrella – in Bolivia, Ecuador and Nicaragua – but even larger nations such as Argentina and Brazil felt his gravitational pull on their economies. Flowery tributes flowed in.
“Wherever you are, dear Hugo, our promise now more than ever is to take no step backward to fulfill your dreams,” said President Rafael Correa of Ecuador.
“Long live Chavez!” Daniel Ortega, Nicaragua’s president, shouted at a rally in Managua, a huge portrait of Chavez behind him. Chavez gave an estimated $2.6 billion to Nicaragua over the past six years. At least some of that went directly to Ortega and his ruling party and made Ortega, who began his political career a die-hard socialist, into one of his country’s wealthiest men.
Presidents Jose Mujica of Uruguay and Cristina Fernandez of Argentina arrived in Caracas overnight on Fernandez’s presidential plane. Among the first to arrive Wednesday was Bolivian President Evo Morales. An aide described Fernandez as “very anguished” over Chavez’s death.
Smaller nations not openly associated with Venezuela – Jamaica and the Dominican Republic, in particular – worry about the future of Petrocaribe and count on Chavez’s anointed successor, interim President Nicolas Maduro, remaining in power.
“There’s going to be a lot of hope that Mr. Maduro wins the election,” said Mark Kirton, a specialist in Latin America at the University of the West Indies.
Venezuela sent more than 240,000 barrels a day of crude last year to Petrocaribe member states. Crude oil production is controlled by the state oil company, Petroleos de Venezuela S.A.
“PDVSA has been nothing more than Santa Claus for a number of countries,” said Anthony T. Bryan, a Caribbean specialist who’s a senior associate at the Center for Strategic and International Studies, a research center in Washington.
Under the largesse of the Petrocaribe program, member nations pay only 5 to 50 percent upfront for the oil. After a grace period of one to two years, they pay the balance over terms of 17 to 25 years, at a 1 percent interest rate.
“It has really saved some Caribbean countries from collapse,” Bryan said.
Foremost is Cuba. Havana gets about two-thirds of its oil from Venezuela – nearly 100,000 barrels a day – and repays part of the cost by deploying some 35,000 Cuban doctors, nurses and teachers to work in Venezuela.
“It will be nothing short of disastrous for Cuba if that program came to an end,” Bryan said.
Risa Grais-Targow, an analyst for the Eurasia Group, a consultancy, noted that “all of the partners (in Petrocaribe) are probably very nervous” but “it’s not like you’re going to wake up tomorrow and not have free oil.”
Still, leaders around the Caribbean lamented the demise of a crucial patron.
“I have lost a colleague, a father, a brother, a friend,” Roosevelt Skerrit, the prime minister of the island nation of Dominica, told his nation in an address.
Dominican Republic President Danilo Medina tweeted that Chavez was “a warm and supportive friend of our country.”
Indeed he was. The nation gets at least 30,000 barrels of crude a day under the Petrocaribe program, and it’s run up a $3 billion debt to Venezuela. The soft terms have helped keep its currency stable.
While Chavez failed to attain a dream of a nationalistic and united Latin America with a distinctly anti-U.S. hue, he made sure that Venezuela’s oil wealth was felt through the 10-member bloc he spearheaded, the Bolivarian Alliance for the Peoples of Our Americas, and with targeted trade to such countries as Argentina and Brazil.
Brazilian President Dilma Rousseff and her predecessor, Luiz Inacio Lula da Silva, maintained strong ties to Chavez, although the relationship was in large part about commerce. Rousseff played a fundamental role in approving Venezuela’s entry into the Mercosur trade bloc last year in a last-minute decision after Paraguay’s suspension allowed such a vote to take place.
In 1999, Brazilian exports to Venezuela were a mere $537 million, but they shot up to $5.1 billion by last year, according to the country’s ministry of trade and development. Venezuelan sales to Brazil barely changed at all during that some period – $974 million in 1999, compared with $997 million in 2012.
Brazilian conglomerates benefited. Steel company Gerdau bought a Venezuelan steel company in 2007. Its chief executive said at the time that he had little fear of Chavez’s nationalizations affecting him.
In fact, Chavez gave preferential treatment to Brazilian businesses. In 2009, just after nationalizing the Argentine company Sidor, part of the Techint group, Chavez said, “We are in a phase of nationalizing companies, except for Brazilian ones.”
In 2008, just after Ecuador had kicked out the Brazilian construction firm Odebrecht, Chavez offered his endorsement at a meeting in Manaus, Brazil, with the presidents of Brazil, Ecuador and Bolivia.
“In Venezuela, this company is behaving very well,” he said, recalling that Odebrecht hadn’t participated in a 2002 work stoppage that shut down Venezuela.
Odebrecht’s projects in Venezuela include constructing part of the subway system in Caracas. It also donated money for a book on Simon Bolivar for Chavez to distribute.
Argentina’s companies also gained from Chavez’s so-called Latin America integration. Exports to Venezuela grew from $247.2 million in 1999 to $2.2 billion in 2012, according to the Buenos Aires consultancy Abeceb. As in Brazil, Venezuelans gained little: Argentina imported $79.3 million from Venezuela in 1999 but just $24.9 million last year.
Argentine agricultural companies provided the majority of exports as they expanded in Venezuela during Chavez’s era.
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