Washington's Antilles energy diversification initiative moves forward

Given the success of Venezuela's oil diplomacy in the Caribbean countries (the islands account for 13 of the 35 votes in the OAS), the United States launched its own initiative in 2014 so that these small states have greater energy diversity and do not depend on Venezuelan crude. The Maduro regime's financial difficulties have reduced Chavista influence in the Caribbean, but Trump is also cutting back on U.S. aid. Diversification of energy sources, however, is moving forward because it is a real need for the islands.

▲ The tourism boom increases electricity consumption in the Caribbean islands, where there are hardly any energy sources of their own.

article / María F. Zambrano

In the Caribbean islands, energy security is at the center of national strategic concern, due to their high dependence on fossil fuels, mostly imported. Energy security is the focus where the geopolitical, diplomatic and economic interests of these small states converge, and not only of them: the great vulnerability due to the lack of their own energy sources was taken into account by Venezuela to promote in 2005 the Petrocaribe cooperation agreement , which gave it great influence in the Antilles; since 2014, the United States has been trying to counteract that program with the Caribbean Energy Security Initiative (CESI), launched by the Obama Administration.

The rivalry between the two energy diplomacy initiatives will not really be settled by a political pulse between Caracas and Washington, but by the real need of the Caribbean islands to diversify their energy sources. This will reduce Venezuela's influence in the region and open the way for the U.S. offer, focused precisely on promoting alternative sources.

The main risk to national security in the Antilles lies in the high costs of Caribbean electricity. On the one hand, the islands have replaced historically agricultural economies with others driven by tourism, which forces them not only to meet the needs of their citizens but also to rely on the fixed cost of an industry with high levels of electricity consumption. On the other hand, production does not have diversified generation Structures . With the exception of Trinidad and Tobago, Suriname and Belize, the islands are supplied by oil as the only installed production capacity; in addition, 87% of primary energy (basically crude oil) is imported. We are facing a problem of high consumption and another of oil dependence.

In view of this status, and given the demands posed by energy security, understood as the physical protection of infrastructure and also the effort to guarantee the continuity of supply, Petrocaribe became a clear option for Antillean interests. Generous financing credits -from 5% to 70% for a 25-year period- contributed to the extension of the program. During the first 10 years of Petrocaribe's existence, from agreement with data of the Latin American and Caribbean Economic System (SELA), Venezuela covered on average 32% of the energy demand of the participating States; the Dominican Republic, Jamaica, Nicaragua and Haiti received 87% of the supplies. The agreement also led to investments in the islands' refineries, which increased their processing capacity to 135,000 barrels of crude oil per day between Cuba's Camilo Cienfuegos refinery (65,000), the refinery near Jamaica's capital (36,000) and the Dominican Petroleum refinery (34,000).

The alliance alleviated for these countries the rise in the price of crude oil, but the region was left in the hands of the volatility of market prices and those of the main supplier. A November 2017 IMFreport estimates that real crude oil price movements affect GDP growth in the Caribbean by 7%, with wide variations from country to country: 15% in Dominica, 9% in Jamaica and less than 1% in Guyana. In turn, the continued drop in Venezuela's production, which began to allocate fewer barrels to Petrocaribe, left the area predisposed to new approaches that would reduce its exhibition to market shocks.

Caribbean Energy Security Initiative

This expectation was addressed in a new energy security framework that sought to increase independence and reduce vulnerability through diversification. Taking advantage of the steep drop in crude oil prices in 2014, which relaxed energy costs for the islands and gave them more room to maneuver, Washington launched the Caribbean Energy Security Initiative (CESI). The program has focused on supporting countries in diversifying electricity generation, addressing their significant renewable energy potential. Thus, through CESI, US$2 million in technical support has been allocated to C-SERMS (Caribbean Sustainable Energy Roadmap and Strategy), a roadmap developed by CARICOM's energy policy division. This roadmap had already harmonized the goals of the 15 member states at subject in terms of energy efficiency and the implementation of renewable energies: two strategies that sought to solve the problems previously mentioned.

The Inter-American Bank of development (IDB) estimated that for the implementation of the C-SERMS roadmap the Caribbean energy sector would require an investment of 7% of the regional GDP between 2018 and 2023. Countries with stronger financial sectors would have the capacity to finance the projects without altering debt sustainability, with these projects being self-financed over a 20-year period.

In the framework of the U.S. initiative, energy efficiency was materialized in the CHEER program (Caribbean Hotel Energy Efficiency and Renewables program) that has provided attendance technical assistance to the hotel industry, the main consumption source . However, in this field, the IMF urges the implementation of broader public policies to further reduce oil imports and increase GDP in the long term deadline.

In the implementation of renewable energy, the U.S. Overseas Private Investment Corporation (OPIC) has promoted infrastructure with public-private financing. Among other projects, it financed the construction of a 36 MW wind power plant and a 20 MW solar power plant, both inaugurated in 2016 in Jamaica. These projects also have macroeconomic influences on reducing dependence on crude oil; in the case of Jamaica, however, dependence has been decreased mainly by the expansion of natural gas receiving capacity, which has allowed that country a reduction from 97% to 80% dependence on imported oil (in fact, it no longer imports Venezuelan crude oil). Since 2016, the business New Fortress Energy has been working on the submission of liquefied natural gas to Jamaica's Bogue plant.

Since its launch, OPIC has financed up to $120 million in energy agreements. Added to that are those promoted by the CEFF-CCA fund, also from the U.S. Government, which provided $20 million non-refundable for projects in initial phases; in 2015 began the project "Clean Energy in the Caribbean", with a duration of five years and with special incidence in Jamaica.

Venezuela... and Trump's clippings

The U.S. initiative for energy diversification in the Caribbean had its response from Venezuela. In 2015, Petrocaribe held a special summit where it quadrupled the ALBA Caribe fund, raising it from $50 million to $200 million, destined to finance mainly social projects, along the lines of what Javier Corrales and Michael Penfold have called "social power diplomacy". However, Venezuela's severe economic crisis and the reduced finances of its national oil company, PDVSA, have forced the government of Nicolás Maduro to cut back on Venezuelan oil diplomacy.

For its part, the arrival of the Trump Administration has led to a significant decrease in the investment earmarked for CESI. In the framework of a generalized cut to financial aid programs abroad, Washington reduced to $4.3 million the amount earmarked for boosting new energy sources in the Caribbean.

The United States, in any case, is not the only one trying to occupy the energy space previously filled by Venezuela. In 2015, the Renewable Energy and Efficient Energy Center was inaugurated in Barbados, promoted by UNID (United Nations Industrial Development Organization) with the support of Austrian and German funds. In addition, last year Russia made fuel shipments to Cuba, replacing supplies that Venezuela had not been able to cover.

[Admiral James Stavridis, Sea Power. The History and Geopolitics of the World's Oceans. Penguin Press. New York City, 2017. 363 pages]

review / Iñigo Bronte Barea [English version].

In the era of globalisation and its communication society, where everything is closer and distances seem to fade away, the body of water between continents has not lost the strategic value it has always had. Historically, the seas have been both a channel for human development and instruments of geopolitical domination. It is no coincidence that the great world powers of the last 200 years have themselves been great naval powers. The dispute over maritime space is still going on today and there is nothing to suggest that the geopolitics of the seas will cease to be crucial in the future.

These principles on the importance of maritime powers have changed little since they were set out in the late 19th century by Alfred T. Mahan. Today, Sea Power. The History and Geopolitics of the World's Oceans, by Admiral James G. Stavridis, who retired in 2013 after leading the US Southern Command, the US European Command and the supreme command of NATO.

The book is the fruit of Mahan's early reading and an extensive degree program of nearly four decades on the seas and oceans with the US Navy. At the beginning of each explanation of the different sea spaces, Stavridis recounts his brief experience in that sea or ocean, then continues with the history, and the development they have had, until arriving at their current context. Finally, there is a projection of the near future of the world from the perspective of marine geopolitics.

Pacific: China's emergence

Admiral J.G. Stavridis begins his voyage in the Pacific Ocean, which he categorises as "the mother of all oceans" because of its immensity, since it alone is larger than the entire land surface of the planet combined. Another remarkable point is that in its vastness there is no considerable landmass, although there are islands all over the world subject, with very diverse cultures. This is why the sea dominates the geography of the Pacific like nowhere else on the planet.

The great dominator of this marine space is Australia, which is very much aware of what might happen politically in the island archipelagos in its vicinity. It was Europeans, however, who explored the Pacific well (Magellan was the first, around 1500) and tried to connect it with their world in a way that was not merely transitory and commercial, but stable and lasting.

The United States began its presence in the Pacific with the acquisition of California (1840), but it was not until the annexation of Hawaii (1898) that the huge country was definitively catapulted into the Pacific. The first time this ocean emerged as a total war zone was in 1941 when Pearl Harbour was massacred by the Japanese.

With the return of peace, the Japanese revival and the emergence of China, Taiwan, Korea, Singapore and Hong Kong caused trans-Pacific trade to overtake the Atlantic for the first time in the 1980s, and this trend is still continuing. This is because the Pacific region contains the world's major powers on its shores.

degree program At area geopolitics a major arms race is taking place in the Pacific, with North Korea as a major focus of global tension and uncertainty.

Atlantic: from the Panama Canal to NATO

As for the Atlantic Ocean, Stavridis refers to it as the cradle of civilisation, since the Mediterranean is included among its territories, and even more so if we consider it as the nexus between the peoples of the Americas and Africa and Europe. It has two great seas of great historical importance, the Caribbean and the Mediterranean.

Undoubtedly the historical figure of this ocean is Christopher Columbus, since his arrival in America (Bahamas 1492) initiated a new historical period that ended with practically the entire American continent being colonised by the European powers in the following centuries. While Portugal and Spain concentrated on the Caribbean and South America, the British and the French concentrated on North America.

During the First World War, the Atlantic became an essential transit zone for the war development as the United States transported troops, war materials and goods to Europe during the conflict. It was here that the idea of an Atlantic community began to take shape, leading to the creation of NATO.

As for the Caribbean, the author sees it as a region that is rooted in the past. Its colonisation was characterised by the arrival of slaves to exploit the region's natural resources for purposes of economic interest to the Spanish. In turn, this process was characterised by the desire to convert the indigenous population to Christianity.

The Panama Canal is a driving force for the region's Economics , but Central America is also sailing along the coasts of the countries with the highest violence fees on the planet. Admiral Stavridis sees the Caribbean coast as a kind of Wild West, which in some places has evolved little since the days of pirates, and where drug cartels now operate with impunity.

Since the 1820s, with the Monroe Doctrine, the United States carried out a series of interventions through its navy to bolster regional stability and keep Europeans out of places such as Haiti, the Dominican Republic and Central America. In the 20th century, politics was dominated by caudillos, and soon communism and the Cold War came with them to the Caribbean, with Cuba as ground zero.

Indian Ocean and Arctic: from unknown to risky

The Indian Ocean has less history and geopolitics than the other two great oceans. Despite this, its tributary seas have gained geopolitical importance in the post-World War II era with the rise of global shipping and the export of oil from the Gulf region. The Indian Ocean today could be seen as a region for wielding smart power rather than hard power. While the slave trade and piracy have dwindled almost everywhere, they are still present in parts of the Indian Ocean. It is a region where countries around the world could work together to combat these common problems.

The history of the Indian Ocean does not inspire confidence about the potential for peaceful governance in the years to come. An important core topic to unlock the region's potential would be to resolve the existing conflicts between India and Pakistan (a conflict with the risk of nuclear weapons) and the Shia-Sunni divide in the Persian Gulf, issues that make it a very volatile region. Due to tensions in the Gulf countries, the region is today a kind of cold war between the Sunnis, led by Saudi Arabia, and the Shiites, led by Iran, and between these two sides, the United States, with its Fifth Fleet, is at the centre.

Finally, the Arctic is currently an unknown quantity. Stavridis sees it as both a promise and a danger. Over the centuries, all oceans and seas have been the site of epic battles and discoveries, but there is one exception: the Arctic Ocean.

It seems clear that this exceptionality is coming to an end. The Arctic is an emerging maritime frontier with increasing human activity, rapidly melting ice shelves and significant hydrocarbon resources coming within reach. However, there are major risks that will dangerously condition the exploitation of this region, such as weather conditions, unclear governance due to the confluence of five bordering countries (Russia, Norway, Canada, the United States and Denmark), and geopolitical competition between NATO and Russia, whose relations have deteriorated in recent years.