Is there a link between Petrocaribe and Carvajal?

The return of the consul
The return of the consul

As we try to make sense of the bizarre happenings of the past weekend regarding the jailing and subsequent release of Hugo Carvajal, it is worth revisiting a crazy theory I put out back in March. It goes something like this: the US sees Maduro as the lesser of two evils, because Petrocaribe ensures a certain modicum of stability for the Caribbean basin. Anything that rocks the fragile relationship between the Venezuelan NarcoState and the Caribbean countries is a source of concern for the big kahunas in the North.

I think the politics of the Caribbean basin are an important factor when analyzing Venezuela’s relationships with some of its antagonists in the first world. We’ve tried to address the importance of Venezuelan subsidies to the region’s economies, and even brought in a Caribbean analyst to spell it out for us. It’s a topic that still eludes us somewhat, but we should be mindful of it.

On this topic, I stumbled upon this compelling, in-depth report on PetroCaribe by David L. Goldwyn and Cory R. Gill of the Atlantic Council. Even though I disagree with some of the things it says – I think they underestimate the deep antagonism within the Venezuelan opposition toward the idea of continuing with the Petrocaribe subsidies – the main point is relevant to the events of the weekend: the US should be deeply concerned about the end of Petrocaribe. Any moves that might “rock the boat” will have severe economic consequences for the economies of the islands. This goes for Haiti, Cuba, or perhaps even Aruba (even though Aruba is not part of PetroCaribe, the refineries in the Netherland Antilles are an important source of employment for the islands’ inhabitants).

In other words, the weekend may have been driven by the issue of refineries and the local economy. The money quote:


Looking ahead, Venezuelan cooperation with [the Dominican Republic, Jamaica, and Nicaragua] will persist as long as PDVSA continues to support loss-making investments. However, if Venezuela proved to be unable to sustain refinery support, the consequences would be far more complex than those facing smaller countries solely reliant on Venezuelan product. PDVSA’s inability to shoulder half of the operating costs at the Dominican Republic and Jamaica refineries would likely lead to the shuttering of both, resulting in significant job losses.

The Caribbean economies are mighty fragile. The last thing the US, the Netherlands, and other colonial powers need … is for Maduro’s instability to spill over into the islands.

Anyway, that’s my crazy theory. Hopefully there is some truth in it.

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  1. Well, if true, Maduro are essentially pawns of the US. Poetic justice, albeit one that does little good to Venezuelans. The country will be bled dry, and discarded when it’s no longer useful. The current state of affairs can be dragged on for quite a while, but Venezuela will never be in a position to pose a threat to anyone.

    • Indeed. I have always thought Venezuela as it is now is good for almost everyone outside Venezuela in the Americas…as long as millions of Venezuelans don’t start to flee the country, only highly-skilled and a few others.

  2. You have been modest with the word “link”… There is a mighty “bridge” between the fragile economies of the Petrocaribe beneficiaries and the powerful narco state government of Cuba/Venezuela…We just witnessed the best example of the efficient and powerful reach of Narco Diplomacy…diligently played out by the “providers”…

  3. What went on this weekend only has a simple explanation: petroleum. As long as we have it, they will use it to buy freedom for its people, injustice and inmorality. This weekend’s events clearly proves that to the leaders of the rest of the world, the Venezuelan people are just “bichitos” or little bugs trying to make some noise asking and begging for democracy, liberty and justice, but since we are just bichitos, in a soil full of oil, iron and bauxite, they said: “oh!!! let the narco corrupt Venezuelan Goverment keep on expraying its pesticides of oppression againts its bichitos as long as we keep our refineries, and our barrels of oil!.
    The people in the Goverment are narcos? Who cares they also control the oil.
    How did oil and drugs ever get mix together? What a business! I bet you Al Capone is wondering why he never thought of that one.

  4. How hard would it be for the US to replace petrocaribe subsidies with its own, if Venezuela ever declines to do so? Apart from Cuba, which would get nothing, the total population of the area isless than that of many states. Add in the huge increase in US production, the end of the ban on export of petroleum, and I don’t think it would be very hard at all.

    Assuming, without evidence, that the US prefers Maduro to having to make this subsidy payment, is a mistake.

  5. Before PetroCaribe there was the Pacto de San Jose. Whilst an opposition government could scale down the program I doubt that they would abolish it completely -just a scale down and some tinkering around the edges (more help to Costa Rica / Panama ) less or none for Cuba and Nicaragua that’s all. Also from a cost/benefit analysis, how much does the US spend fighting a war on drugs? (am asking), and how has this cost evolved? What are the US security implications of having the Iranians/Russians running around Venezuela? I don’t think these considerations can trump stability in Cuba/Haiti….

  6. Plausable theory.

    My thinking is that the powers (U.S. principally) are simply waiting out the total entropy of the Venezuelan oil production machinery, Infrastructure on ageing oil fields is already obsolete; there’s no point in reinvesting in those particular areas, if that were even politically feasible. So let it all rot under the Maduro govt.

    The day that a new Vz administration becomes a better manager of, well, everything, and the future looks brighter for the Vzlan economy, will be the day that the powers will reinvest, but in newer fields, using newer technologies.

    My theory seems to be shared by an article in today’s WSJ:

    Oil Prospectors Shift Back to Wealthy Lands

    After decades focusing on less-developed nations, big oil companies are piling back into wealthy countries with political stability that provides more-predictable cash flow.

  7. Juan, although your hypothesis seems cogent, we have to wonder why the hell did the Americans insisted on imprisoning Carvajal. Allegedly it were our dearest Dutch pals the ones behind the forced release of “el pollo”

  8. I’m starting to think that Maduro might be right and this was a kidnap. The Venezuelans agreed to pay the $$$ that the king and queen of Holland couldn’t get in the last visit. El Pran of the Pays Bas.

  9. Is Curacao part of Petrocaribe?? We forget how dependent Curacao’s economy is on its Pdvsa Leased Refinery . What would happen if Pdvsa simply stopped sending crude to the Refinery?? The Curacao economy would suffer a break down causing thousand of jobless Curazoleños to seek economic asylum in the Dutch homeland were the Govt would have to maintain them as per Dutch social policies at a very heavy cost to its finances. Oil gives Venezuela a perfect tool for extorting countries like Curacao and Holland . Of course it is inconceivable that a country like Venezuela would resort to such gangster tactics to obtain the release of one of its most eminent regime figures even if the US claims to have proof that it is involved in drugtrafficking and other international crimes . The man is evidently innocent and the regime is right to protect it from Criminal prosecution by the hounds of the Empire !!

    The US claims ( todays papers) that Holland was threatened by Venezuela in order to obtain the release of Carvajal , now lets ask ourselves , how could the regime possibly threaten Holland in order to obtain such release , evidently by making it known that they would resort to international courts to seek Holland to release its prisioners using those indisputable arguments that International Law affords it .

    Once again justice thriumphs in this world .!!

    • Shame on Diego Arria who has said on Colombian Tv that the reason Carvajal was released was precisely because of the regime threat to shut down crude supplies to Curacao refinery with frightful financial consequences for Holland . Precisely what I said above could never happen given the democratic law abiding nature of the Regime.!!

      • Could PDVSA really relocate that oil to another refinery without incurring in huge loses?

        Also, what is going on with the US government? dont they have anything to offer to Aruba/Curacao/Holland that thumps the threats from a shitty country like Venezuela?

        Does the US has any power left in the region? if yes, why do they not use it?

        Obama is a joke

        • Dont know how much crude Venezuela is exporting to Curacao now a days , disposing of it to other destinations might not be so easy in the short term , but mid term its doable . There are two problems associated with any such measure . for curacao there is no other oil source which geographically can replace venezuelan crude while maintaining its economies . For Venezuela that at least part of its petrocaribe supplies might suffer unless Cuba’s Cienfuego Refiney has spare capacity (which doubtful) .

          Venezuela might have problems disposing of its increasing extra heavy crude productions because that requires mixing it with large volumes of lighter crudes or diesel so as to allow for its sale and transportation. so cutting some of its traditional conventional crude customers to maintain its extra heavy crude production may be less a problem than it seems.

          What can Obama do ? Many things but nothing thats worth the hassle of Venezuela creating havoc with caribbean and dutch finances . This shows that this govt will stop at nothing when facing a foreign decision that makes it lose face , they will cut their nose to spite their face, they are fearful in that they appear to have no inhibitions about resorting to kami kaze strategies .

          • It’s true… in any confrontation with foreign powers, they display no hesitation to go nuclear.

            But, one day, they will go too far and someone will call their bluff…

        • PDVSA would never stop production at the Curacao refinery, they need the gasoline for internal consumption and the balance, if any, sold to the US for the much needed dollars. I think stopping production at Curacao would hurt Venezuela more than Curacao.

  10. To understand what happened over the past 3 to 4 days one needs to look at the DEA. I am also of the opinion that most, of not all of the blame falls on the personnel currently administrating the DEA. They should have acted immediately! Who are THESE people that Obama employed? Where did they come from? Incompetent? After watching what happened over these past few days,….you betcha. The tip-off that something was ‘fishy’ in Aruba was when it was revealed that even after three or four hours post the announcement of Carvajal’s incarceration, he was still in Aruba! WTF! When you put your hands on this kind of criminal, in a small defenseless country like Aruba, you get him the hell outta there in a hurry. That is/was standard DEA operating procedure. So, like, who are these clowns operating at the DEA? This should be a huge news story, but it’s not. It’s being buried…

    • The problem was that Holland was the decision-maker, not Aruba, in the mix. And, as Arria said, the Curacaon PDVSA refinery was the trump card. Still, the U. S. really had the last word behind the scenes, giving in to Dutch economic expediency, and, in the process, losing what little face it still had in the Region Reagan invaded Panama for much less drug provocation than that represented by the Venezuelan Rogue Criminal Lawless Regime abetting trafficking in the Region/U.S./ Europe It’s a sad day for U. S. prestige in Latin America, and for its so-called “War On Drugs”, and a joyous day for two-bit anti-democratic dictator wannabes, of which there are many, throughout the Region.

    • Are you suggesting the DEA should have sent in covert forces and kidnapped him? I’m not sure what you are getting at.

      It’s not a huge news story. There was one article in the Washington Post, compared to dozens on Gaza, Iraq, Ukraine, Libya, etc. It’s not on any news programs I’ve seen here. Outside of the Venezuelan diaspora, no one knows or seems to care.. And to be frank, why should they?

      It’s very low on the radar. It doesn’t affect the US. If Coroval rots in jail, as he should, someone will just take his place.

      • No, no, no. It has nothing to do with sending in “covert forces” or “kidnapping him,” but everything to do with getting one of their DEA jets down there as quickly as possible, load him up, and get him outta there. Before the anyone wakes-up to the fact, it’s said and done. Once the negotiation process starts, it’s already over. Political pressure appears behind the scenes, big time. I understand that PDVSA was already ‘slowing down’ their refinery in Curacao. Other stuff happened as well. The economies of all three islands are heavily dependent on Venezuela. They must have scared the hell out of them! I suspect many people will write about this incident in years to come. I also suspect that these stories will have a lot to do about DEA incompetency.

        • So, DEA demands Aruban officials hand him over to them with no hearing or court proceeding? That would look very bad, violate Dutch extradition law, violate international law, etc.

          That would be a propaganda score for Maduro and company, I think. Big bad Empire came in and forced little island to hand them this guy, in a manner violating international protocol and law.

          Whatever, who knows what happened. I am as disappointed, of course. This man came exceedingly close to spending his life behind bars, and he knows it. At least he was scared shitless for a few days.

    • I think that to critize the US for what happened is crazy. Venezuelans should be asking this questions about their own government “who are these people running our government”? Where did they come from???? Incompetent??
      Don’t worry so much about the Obama Administration, we know how to switch power back and forth between political parties in US through elections. If you live in Vzla you should be more concerned on how to get rid of the current regime that is destroying and draining the country…

  11. Carcajal wasn’t a story in the Netherlands. At least I found no hit when searching De Telegraaf.
    Chavismo probably enjoyes it that they are employing their “behind-closed-doors-diplomacy” and opposition is limited to mere gueswork about issues, because there is no evidence.

    I find the Arias hypothesis more convincing than blaming the US, though. Something to be ashamed of as Western European. I have no proof, but I find it very plausible that they capitulated when Venezuela threatened with serious economic consequences for their caribbean ex colonies. Sad, but our democratic societies sometimes act like that.
    The Foreign Politics Commite or some such offered Ana Corina Machado a human rights mission to Venezula without asking the crooks for consent. Were is that mission?

  12. Reblogged this on anagrammatt2 and commented:
    Bizarre, things of power ! Drugs, Military and ?Religion go in hand! FALSE HOPES OF A GOOD LIFE in the “HELL” they make of LIFE…!
    USA did not contact him, to be infiltrated! So he is back to do what he wants as usual! MORE THAN BIZARRE…SURREAL…!

  13. ABC islands are not members of Petrocaribe.
    ABC islands are mere observer members of CARICOM.
    They aren’t even members of OAS.
    So, the answer is simple: There is no link.

  14. I disagree with your thesis that the US would prefer Maduro so that PetroCaribe is kept in place for the region, Juan. That would mean that the US would really be happier keeping the chavistas in power, rather than having the opposition!? Come on, do you really believe that, Juan?

    What I do think is that the US know exactly what is going on inside the PSUV and they know that there are different factions, some worse than others, inside chavismo. IMHO, the US perfectly understands the term “guatepeor”, so they are extremely careful.

  15. Agree Bruni, specially considering the opposition would send the Bielorusians, Rusians, Iranians and other likes packing. Venezuela on its current trajectory is a security threat to the region. Alas, the past decade it seems the US is only able to identity a threat ex-post (i.e. once it materialises). Reagan must be spinning in his grave!


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