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"Many countries would have had to turn off the lights and perhaps went bankrupt some time ago, if it had not been for Petrocaribe."
On June 29th, 2005, former Venezuelan President Hugo Chavez inked an important oil deal that would bring together the Bolivarian Republic and the Caribbean nations through an alliance known as ‘Petrocaribe’.
This historic agreement has embodied Chavez’s economic brilliance as this alliance has allowed Caribbean nations access to hydrocarbons without the adverse consequences of intermediation, prevailing market prices, and speculation.
The former Venezuelan President’s idea was the resolve "asymmetries in access to energy resources through new favorable, equitable and fair exchange schemes between the countries of the Caribbean region," without state control of the supply of resources.
The success of Petrocaribe was highlighted by Chavez during a speech in 2010, when he stated: "Many countries would have had to turn off the lights and perhaps went bankrupt some time ago, if it had not been for Petrocaribe."
In April 2013, one month after Chavez’s passing, Petrocaribe would expand its agreement under the new Venezuelan President Nicalas Maduro with the principles of the Bolivarian Alternative for the Peoples of Our America (ALBA) to not only focus on oil, but rather, the expansion of economic relations.
What makes the Petrocaribe alliance so remarkable is the fact it allows the Caribbean nations to purchase the oil at market value for 5%-50% up front, giving these countries a grace period of up to two years.
Through Petrocaribe, the short-term payment period for 60 percent of the Venezuelan oil bill increased from 30 to 90 days. The remaining 40 percent can be paid through a 17- to 25-year financing agreement with 1 percent interest if oil prices are above US$40 per barrel.
If these countries lack the liquidity to pay off what’s owed, Venezuela makes an exception by accepting a payment in goods and services. For instance, Cuba pays part of its through medical, educational, and athletic services, while Nicaragua pays with meat and milk.
The Petrocaribe alliance is currently comprised of 19 nations: Antigua and Barbuda, Bahamas, Belize, Cuba, Dominican Republic, Grenada, Guatemala, Guyana, Haití, Honduras, Jamaica, Nicaragua, Dominican Republic, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname and Venezuela.
Since its establishment, Petrocaribe has been a beacon for Caribbean peoples to affirm their independence and economic autonomy, as well as develop a series of social programs.