Many countries throughout the region have been enjoying cheap oil through Venezuela's Petrocaribe program, but continued dependence could spell disaster.
Venezuela’s economic collapse seems inevitable at this point, economic mismanagement has been evident for some years now, but being such an oil powerhouse in the region, other countries must be wary of their advances.
Petrocaribe has become Venezuela’s flagship in central America, it provides oil and oil goods at preferential prices to 14 countries in the Caribbean, effectively aligning them to Venezuelan foreign policy. Included in Petrocaribe are countries like Antigua & Barbuda, St Kitts and Nevis, Dominica, Jamaica, St Vincent and the Grenadines and St Lucia. It has become an essential development tool for many of the smaller nations, particularly in the Antilles, who lack much of the resources and economic independence of larger nations.
Further tying Caribbean countries to Venezuela is the fact that Petrocaribe works through debt, which has been accumulating for over 10 years.
If conditions in Venezuela continue in their accelerated deterioration, one of the first programs to collapse is sure to be Petrocaribe. With Venezuela’s rising incapacity to afford its internal sustenance, a priority would be to request payment of the debt accumulated by Petrocaribe countries. A payment that in order to be effective would need to be almost immediate.
Caribbean countries, which amount small GDPs and house underdeveloped industries will find themselves in between a rock and a hard place. They must either attempt to pay off existing debt which is sure to divert resources from other key areas, stop receiving cheap Venezuelan oil, or dig themselves further into debt.