Yesterday, Haiti began a three-day mourning period over the death of Venezuelan President Hugo Chavez, a “great friend” of the country, as Le Nouvelliste now calls him.
Many Latin Americans and people of the left have long set aside the repression and intolerance sown by Chavez to champion him “as a bulwark against U.S. economic and political dominance in the region,” as The Miami Herald puts it. In the paper’s article on Chavez’s legacy in the region:
“He was the great leader of the left in Latin America and advocated for a Latin American—and Caribbean—way of doing things as opposed to a U.S. way of doing things,” said Erick Langer, director of the Center for Latin Studies at Georgetown University.
Haitians love Chavez for the more than one billion dollars that Venezuela’s PetroCaribe program has given the country in recent years. It’s funded projects across Haiti, including power plants and airport runways, in addition to its main thrust: 14,000 barrels of oil a day that Venezuela sends Haiti on credit, most of which is burned to help produce the scant electricity Haiti generates. The government of Haiti pays for about 60 percent of the fuel now, with the remainder to be paid at 1 percent annual interest over the next 25 years. Also from The Herald article, on PetroCaribe:
In Haiti, for example, the savings from the Petrocaribe program financed 15 percent of Haiti’s meager $3 billion annual budget and account for 22 percent of the road and infrastructure projects, said Kesner Pharel, a leading Haitian economist.
“Chávez was the only guy giving money to Haiti without asking questions, and Venezuela is the only country giving credit to Haiti,” said Pharel. Without that help, he said, Haiti “will be in trouble.”
But if you’re buying gas on credit, you’re probably already in trouble. An AP report last July noted that after getting debt relief post-earthquake, Haiti’s “borrowing habits” had resumed: “Of the $988 million [in U.S. reconstruction funds] spent so far, a quarter went toward debt relief to unburden the hemisphere’s poorest nation of repayments. But after Haiti’s loans were paid off, the government began borrowing again: $657 million so far, largely for oil imports rather than development projects.”
The AP report also noted that since taking over in May 2011, “President Michel Martelly’s administration has borrowed $657 million, largely from Venezuela for basic fuel needs … Next year Haiti is expected to spend close to $10 million servicing those debts, according to the IMF.”
So those PetroCaribe imports are already saddling a financially-paraplegic government with millions in debt-servicing costs, let alone the bill-plus-interest that will come on that fuel one day. And the buying-regional-influence-through-oil-gifts diplomacy strategy doesn’t seem to be doing Venezuelans back home too many favors either. Again, from The Herald:
“Somewhere along the line … reality must set in,’’ said Anthony Bryan, a senior associate at the Center for Strategic and International Studies in Washington.
“Venezuela is currently giving away one-third of its oil production at below market prices: this includes loans-for-oil deals with China, and heavy subsidies in the domestic market,” he said.
With soaring inflation, a recent devaluation, high import bills, over-dependence on oil and shortages of everything from meat to toilet paper, the Venezuelan economy is in a downward spiral and the next president may be forced to concentrate more on domestic issues.
Chavez was “a leader that understood the needs of the poor”, as one particularly daft U.S. Congressman put it, who amassed a personal fortune of a billion dollars while handing out his country’s oil reserves to buy political clout and (at least some of) the people’s love at home and abroad. Haitians love him today. But will that love, or PetroCaribe’s import scheme, prove to be sustainable over the next 25 years?
Haiti’s bigger question over sustainability, however, comes by way of a detail from the AP’s report last year: “More than half of Haiti’s annual $1 billion budget comes from foreign aid.”
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