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.