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Pandemic crisis pushes for long-overdue economic reforms, but may be ineffective due to fears of out-of-control openness
The Cuban government has wanted to undertake economic reforms for years, but the distraction brought about by Chavista Venezuela's aid and internal doubts about the model economic openness delayed firm decisions. The Venezuelan collapse, first, and especially the pandemic, later, have brought the Cuban Economics to a breaking point that is forcing it to take measures, because the island's population is beginning to show some concern. framework Raúl Castro's departure from the scene constitutes an opportunity for change, but the uncertainties of the future can stiffen any transition, however modest it may be.
article / María Victoria Andarcia
After a particularly complicated 2020, Cuba took significant steps in the first months of 2021. In February, the government announced a massive expansion of permits for private initiative in different economic sectors. The Minister of work, Marta Elena Feito, announced that the list of sectors in which private enterprise would be authorised to operate would grow from 127 to more than 2,000 and that the state would reserve exclusivity in only 124 areas, which she did not detail.
With the development of "cuestapropismo", approximately 600,000 workers were employed in private activities in Cuba, 13% of the labour force. The vast majority of these initiatives are linked to the tourism industry, which has been affected by Donald Trump's tightening of sanctions and especially by the Covid-19 pandemic, which practically wiped out tourism in the Caribbean. According to ECLAC, at the height of the pandemic, 250,000 self-employed workers had suspended their licence from work. This unemployment is preventing the self-employed sector from being able to take on the public sector workers that the state wants to shed in order to slim down loss-making activities.
The Cuban Ministry of Economics puts the economic decline suffered by the island in 2020 at 11% of GDP, the worst since the dissolution of the Soviet Union, which left Cuba without the support of its economic breadwinner and led to the time of extreme hardship known as the "special period". Already in 2019 there was hardly any growth. In 2020 there was a 30 per cent reduction in imports, which has exacerbated the growing shortages of basic commodities and price inflation on the island, also driven by the exchange rate readjustment.
1 January 2021 was "day zero" of the monetary and exchange rate reform, 62 years after the triumph of the revolution led by Fidel Castro. This is the most complex economic reform undertaken by the country in the last three decades, after years of waiting. Since the "special period", two currencies had been in circulation in Cuba: the Cuban peso (CUP) and the convertible (CUC), equivalent to the dollar, which has been eliminated with the merger of the two currencies. The currencies were exchanged at different rates: for state enterprises, one dollar or CUC was equivalent to one Cuban peso, while for the population, the exchange rate was 24 pesos to the dollar. Unification has been accompanied by the fixing of a single exchange rate of 24 Cuban pesos to the dollar, the first official devaluation of the peso since 1959.
Rising inflation has affected the price of many products and services. While there has been an increase in salaries in the state sector, the price of electricity has increased threefold, water sixfold and bread and flour twentyfold.
The disappearance of the CUC has been compensated for by the opening of shops where one can buy with "freely convertible currencies", thus protecting the free circulation of the dollar and implying, at final, a covert dollarisation (in addition, a black market in foreign currency continues to operate, where the dollar is worth almost double the official exchange rate). These are establishments for tourists, but where the nomenclature can also buy products that are not available to the rest of the population. This has even contributed to internal criticism of a status of inequality, as Raúl Castro himself acknowledged in April in his speech to the 8th Communist Party . speech before the VIII congress of the Communist Party of Cuba (PCC).
Rising prices and growing inequality are contributing to a social malaise that is giving rise to increasingly timid public complaints. This is occurring in a context of isolated protests, such as that of the artists' guild, which speak of a growing unease that economic reforms should satisfy in the medium term deadline but which, if applied without decision or if they are not effective, could lead to a frustration of expectations.
In fact, the government's conviction in promoting economic reforms has so far been rather weak. In 2011, at the PCC's VI congress , in which Raúl Castro consolidated his leadership after succeeding his brother in 2008, a path of economic reforms was approved but only partially implemented. The aid provided by Chávez's Venezuela during the boom years led to the postponement of the most urgent measures, in what in reality amounted to a lost decade.
The island's Economics is highly dependent on foreign trade, although it is not a market Economics . The goods it exports are limited to its natural resources and traditional products with little processing: nickel, zinc, sugar, tobacco and rum. Services are the main item of Cuban exports, especially health services sent to Venezuela and other countries of similar ideological orientation. The need to import raw materials, oil and foodstuffs conditions the growth of the island's Economics . The USSR was a lifeline, above all because of its contributions of oil, as later happened with Venezuela, whose crude oil Cuba refined and exported as a gift, thus improving the flow of foreign currency.
Relations with the United States
The Venezuelan collapse was followed by increased pressure from the Trump administration. Although the US has maintained an embargo on the island since 1962, Barack Obama sought a mutual rapprochement that led in 2015 to the re-establishment of diplomatic relations. The embargo remained in place, as its lifting depends on congress, but Obama encouraged its relaxation through presidential decrees that increased contacts between the two countries, with the resumption of commercial flights, the authorisation of greater purchases on visits to the island and the promotion of tourism. source In addition, it allowed family travel to Cuba and facilitated remittances, which constitute an important source of foreign currency for Cuba, after income from professional services abroad and tourism. Thus, remittances increased by 143% between 2008 and 2017 (from USD 1.447 billion to USD 3.515 billion).
Trump maintained diplomatic recognition (although neither Obama nor he appointed an ambassador) and the sending of remittances, but reversed most of the decrees approved by Obama and also applied several rounds of sanctions. These included, among others, the suspension of visas for Cubans and the expansion of the list of Cuban companies run by the Armed Forces with which Americans cannot interact (even as tourists).
With the arrival of Joe Biden in the White House, it was hoped that relations between the historic enemies would improve again, but months later there are still no signs of change and Obama's former vice-president has not returned to Obama's strategy towards Cuba, but maintains the sanctions pressure of his immediate predecessor.
China and Russia
If in relations with the Obama Administration, Raúl Castro was looking for a new sponsor to somehow replace Venezuela, as Venezuela had replaced the USSR (in fact, secret negotiations with Obama began when the death of Hugo Chávez opened up uncertainties about Venezuela's future), Washington's slamming of the door may lead to greater rapprochement with Russia or China. Such rapprochement has been taking place in recent years, but for the moment there is no definite dependence on Moscow or Beijing.
If Russia's return to the Caribbean can be circumscribed to the availability military access (in Nicaragua, Cuba and Venezuela), in the case of China, there is a clear commercial stake. China has become the island's second most important commercial partner partner. Several Chinese companies such as Huawei and Haier have helped the Cuban telecommunications system development . Beijing recognises Cuba's strategic importance, given its geographic proximity to the United States, and can leverage this relationship to challenge its American enemy.
Both the deepening of this link and a firm step forward in economic reforms, perhaps imitating Vietnam in opening up the market without abandoning communism (Vietnamese communism, however, is a model with ballast), will depend on the new generation of leaders. Raúl Castro, more inclined to reform than his brother Fidel, did not push the process forward decisively because the boom in commodity prices, from which Cuba benefited very directly through Venezuelan oil, relativised its urgency. This is now being considered, but the new Cuban president, Miguel Díaz-Canel, to whom Raúl Castro also passed his last position in April as first secretary of the PCC, does not have the internal authority or the ascendancy over the army, which controls a large part of the Economics, that the Castros enjoyed.
Venezuela's worsening crisis reduces vigilance at sea, increases official corruption and pushes coastal villages to seek subsistence
April 2018 saw the attack with the highest death toll in recent years issue : 15 Guyanese fishermen died in Surinamese waters
Increased attacks prompted Trinidad and Tobago authorities to create an elite air unit to fight piracy
Coast-wide alert as news broke in 2018 that the previous year's incidents had risen from 27 to 71, up 167 percent
▲ Coast of Guyana, whose fishermen have been affected by increased piracy.
report SRA 2019 / Manuel Lamela[PDF Version].
The significant increase in piracy in the Atlantic waters between Colombia and Suriname, with Venezuela at the center of this criminal activity, has fueled media headlines about "the new pirates of the Caribbean".
Although far from the scale of piracy recorded in and around the Gulf of Aden between 2008 and 2012, and then in the Gulf of Guinea, the issue of attacks in these other waters increased markedly in 2017, and 2018 saw the highest issue casualty attack.
The deterioration of maritime security, which mainly harms local fishermen and some pleasure boats, from which pirates steal gasoline, engines, fish and whatever valuables they can find on board, has gone hand in hand with the worsening of the Venezuelan status and also affects neighboring countries.
Suriname and Guyana
The attack on four boats on which twenty Guyanese fishermen were fishing, which occurred between April 27-28, 2018, turned out to be the piracy incident with the highest issue death toll in recent years. Suriname authorities recovered five bodies and reported ten fishermen missing, whose bodies were possibly left at the bottom of the sea, as the perpetrators of the attack forced the crew members to throw themselves into the water with the anchor or other weights attached to their feet, from agreement with the official report. Only five occupants of the fishing boats were able to save themselves, with at least one of them freeing himself from the ballast to which he was tied, according to his own testimony. Subsequently, a thirty-man group was arrested for these events.
Despite the fact that the status is not unknown to Guyana or Suriname the increase in both issue and violence of this subject of incidents in the last year is remarkable. At the beginning of 2018, a report published by the NGO One Earth Future, within its Oceans Beyond Piracy program, indicated that the issue of attacks recorded in Latin American waters increased in 2017 from 27 in the previous year to 71, an increase of 167%. Most of them (64) occurred in territorial waters, without affecting international routes as was the case with Somali pirates or happens in the Gulf of Guinea. While on these routes the main targets were merchant ships or large fishing vessel owners, including the hijacking of vessels and crews, in the case of what is occurring mainly in the waters of Venezuela, Trinidad and Tobago, Guyana and Suriname it affects small boat owners.
Gulf of Paria, Trinidad and Tobago
Particularly thorny is status in the Gulf of Paria, located between the coasts of the Venezuelan state of Sucre and the island of Trinidad, separated by only 10 nautical miles at their closest point. The geographical peculiarity of the area is a perfect scenario for illicit activities. The area was already known for the existence of several gangs dedicated to smuggling and trafficking of basic necessities, such as diapers and other items in high demand among the Venezuelan population. Given the shortage suffered by Venezuela, this is a relief for the demand of certain products and injects dollars to the already large Economics submerged. To the ineffectiveness and passivity of the governments of both countries when it comes to combating piracy, as reflected in their failed bilateral negotiations in 2017, is joined by a more than presumable cooperative relationship between officials and criminal gangs, as pointed out by the Venezuelan NGO association civil de Gente de Mar.
Other areas of Trinidad and Tobago's territorial waters, in addition to those of the Gulf of Paria, are affected by piracy, which is contributed to by local gangs fed by the arrival of Venezuelans who find it difficult to find a job employment. In the last few years some 40,000 Venezuelans have migrated to the neighboring country, destabilizing the already precarious working conditions of Trinidadian society. With a population of just 1.3 million, the archipelago has a relatively high crime rate, which in 2018 manifested itself in the commission of close to 500 murders. These figures are starting to hurt tourism, which is one of the main economic assets. Trinidad and Tobago is at risk of being perceived as a successor to the infamous Tortuga Island, a haven for 17th century Caribbean pirates.
Faced with this status, the island authorities announced at the end of January 2019 the creation of an elite air unit within the Police to act against illegal migration, piracy, kidnapping and smuggling of weapons and drugs. The advertisement came immediately after six fishermen from Trinidad were kidnapped and taken to Venezuela by their kidnappers, who demanded a ransom of $200,000.
Venezuela: Sucre and Anzoátegui
The economic and social crisis in Venezuela is one of the main causes of the increase in piracy. This is carried out especially from the state of Sucre, which has already been mentioned, and from the coastal state of Anzoátegui.
The criminals operating in the area can be divided into two types. On the one hand, there are well-trained, well-armed attackers who are part of a criminal organization and related to the drug trafficking that controls the Paria peninsula (the eastern end of Sucre). Specifically, there are two different criminal gangs fighting for control of the area. These drug trafficking groups are based in the towns of San Juan de Unare and San Juan de las Galdonas, in the municipality of Arismendi. Through violence and extortion, they have managed to take over the most important maritime routes, driving away all fishermen who might witness their actions. Their activity is mainly focused on drug and arms trafficking. written request Regarding the former, the merchandise is obtained from Colombia and after crossing Venezuela is shipped to the coasts of Trinidad and Tobago to be transported to the European market, sometimes with a stopover in West Africa. As for the arms, the shipments are obtained in Venezuela itself, coming from theft and smuggling (corruption and lack of security also affect the national factories that produce armament; in 2019 it is foreseen the entrance operation of a factory with capacity to produce 25,000 AK 103 rifles per year).
On the other hand, piracy activity is also carried out by simple thugs, of a lesser criminal profile and with less equipment and resources. Despite this, they are the ones that create the greatest alarm, given their proliferation among a population with hardly any sources of income and coordinates of action that are less specific than those of organized crime, which makes their attacks more unpredictable.
Chavista mismanagement in the fishing industry is another of the main factors that have generated this increase of criminals coming from the local population, mostly dedicated to fishing. With the arrival of Hugo Chavez to power in 1999, a great process of nationalization of this sector was carried out, with the expropriation of shipyards, boats, ports... Following this process of reforms and further strengthening its relationship with Cuba, in 2008 a binational public business called business Joint Socialist Joint Industrial Fisheries of the Bolivarian Alliance (PESCALBA) was created with the goal to make the product more accessible to the social strata with less purchasing power. All this contributed to the fact that between Chávez's ascension to the presidency and 2017, the catch decreased by 60%, with a flight of ships to other countries, such as Panama or Ecuador, the cessation of activity of processing plants, the mooring of ships due to lack of maintenance and the increase of unemployment. As a result, the state of Sucre has result with a broken society, with no means of subsistence, which finds in crime its only way to survive.
Moscow strengthens its relationship with Venezuela, Cuba and Nicaragua, in the 'near abroad' of the U.S.
Putin's military display in Caracas: sending bombers (December 2018), special forces (January 2019) and a hundred military personnel (March 2019).
The head of the US Southern Command denounces "not benign" purposes of the Police School opened by Russia in Managua for the training Central American agents.
The agreement to install a Glonass station in Cuba revives suspicions that the Russians may again use the island for spying on the US as in the Cold War.
▲ Venezuelan defense minister's reception of two Russian bombers at Maiquetia airport, December 2018 [RT broadcast].
report SRA 2019 / Irene Isabel Maspons [PDF Version].
In recent years Latin America has become an increasingly strategic arena for Vladimir Putin's Russia. Although it is not the main focus of the Kremlin's attention area , its calculated moves in the area allow it to gain influence on the southern flank of the United States. Since 2006 Russia has increased its interests in the region, taking as an incentive the lesser attention of the US towards the rest of the continent due to the change of priorities implied by 9/11 in 2001 and taking advantage of the appearance since then of leftist populist governments, in a political cycle inaugurated with the arrival of Hugo Chavez to power.
Russia's relationship has been special with the ALBA (Bolivarian Alliance for the Peoples of Our America) countries -Venezuela, Nicaragua, Cuba and Bolivia-, particularly with the first three, as this allows it to geopolitically confront the United States in the Caribbean, as the USSR did in its day. Being one of the main arms producing countries, Russia has also sold arms to other Latin American countries, but in addition to a commercial attention , in the case of Venezuela, Nicaragua and Cuba a strategic relationship has been established.
The ties with these three nations have grown closer in the last year: the latest major crisis in Venezuela has made this country even more dependent on Moscow; the presidential and constitutional change in Cuba has led Havana to secure the Russian sponsorship in this time of complicated transition, while Russia's activity in Nicaragua has raised the Pentagon's public alert.
The fact that since last fall the United States has been referring to Venezuela, Cuba and Nicaragua as the "axis of evil" in the Western Hemisphere is precisely due to the perception in Washington of increased Russian activity in the region. If the last decade marked the "return" of Russia to the Caribbean, 2018 saw the "return" of the United States to a policy of priority attention to what is happening in that geographical area, precisely because of the increased activity of Russia, and also of China. Moscow is showing the US (and its allies) that it can be reciprocal in the face of the pressure it is receiving in its own near abroad, as highlighted by a recent report of high school Elcano, and Washington has begun to answer those moves.
On the other hand, 2018 was an election year in a good issue of countries. The White House warned of the possibility that Moscow wanted to interfere especially in Mexico, to propitiate the election of Andres Manuel Lopez Obrador, considering him uncomfortable for the US. Although in small volumes, Mexico is Russia's second largest commercial partner in Latin America, after Brazil, and the second largest buyer of Russian arms, far behind Venezuela (the third country is Peru). However, there was no evidence of particular Russian activity in these or other Latin American elections. There is evidence, however, that Russian capabilities for the dissemination of fake news in the Spanish-speaking globosphere have counted on the financial aid of Venezuelan networks.
Russia's influence in Venezuela in the last year has been visible in various aspects. To follow a temporal order, it is worth mentioning the launch of the Petro cryptocurrency, presented in February 2018 as a form of digital cash supposedly linked to the value of Venezuela's oil reserves. A research conducted by Time magazine revealed that Russian businessmen had acted as advisors to the Government of Nicolás Maduro for the launch of the Petro, although the Russian Ministry of Finance denied that Moscow authorities were involved in the initiative. With the creation of this virtual currency, Maduro hoped to have a mechanism to evade the sanctions decreed by the United States against Venezuelan bonds and PDVSA. If there was a Russian interest, it could have been to take advantage of the Petro to evade some of the sanctions imposed on Russia by the US and the European Union, although the Petro soon proved to be of little use as a financial vehicle.
With the worsening of the status in Venezuela -from the presidential elections advanced to May 2018, whose result was not recognized by a large issue of countries, to the consequences of the swearing-in of Juan Guairó in January 2019 as legitimate president of the country-, Russian military elements have staged a show of support for Maduro. In December, two Tupolev-160 strategic bombers landed at Maiquetia airport as part of alleged joint maneuvers between the two countries. The following month, Reuters reported the presence in Venezuela of private military contractors arrived from Russia, belonging to the private company Wagner, which has provided various services to the Kremlin. In March 2019, two cargo planes of the Russian Ministry of Defense unloaded in Maiquetia a hundred military personnel, with General Vasily Tonkoshkurov, head of staff of the Army, at the head and 35 tons of various unspecified military equipment, which allegedly could have been destined for the implementation of the anti-aircraft protection of the area of Caracas.
In 2018 Russia continued, with its credit policy, to take positions in the Venezuelan oil and mining sectors. Although the $17 billion that Russia has given in credit to Venezuela since 2006 - mostly for the purchase of Russian armaments - lag far behind the $67.2 million granted by China since 2007 in exchange for oil in the future, the fact is that the Kremlin has become in the last couple of years a major supporter of the Maduro regime: in 2016 China lowered to $2.200 million dollars its loans to Venezuela and granted none in 2017; only at the end of 2018 it returned to previous volumes, with a credit of 5 billion dollars. In contrast Russia has been very actively aiding the Venezuelan energy sector through Rosneft, which in 2016 took as collateral for a loan with 49% of the shares of Citgo, PDVSA's subsidiary and one of the Venezuelan state-owned company's major assets. In 2017 Russia agreed to refinance US$3.15 billion of the debt contracted by Venezuela, delaying almost all payments until 2023.
The last commitment took place in the meeting that Putin and Maduro held in December in Novo Ogaryovo, the Russian presidential residency program on the outskirts of Moscow. At its conclusion, Maduro announced that meeting had "guaranteed" an oil investment of more than 5 billion dollars and contracts for more than 1 billion dollars for the exploitation of gold", thus expanding the portfolio of Russian interests in the Caribbean country to that precious metal as well.
On the other hand, in March 2019 Maduro ordered the transfer of PDVSA's office for Europe from Lisbon to Moscow, with the goal to avoid its confiscation in view of the recognition progressively obtained by Juan Guaidó as president in European countries.
Part of the U.S. warning expressed in the last year about Russia's increasing activity in the region ran to position from the Pentagon. In his February 2018 appearance before the congress , the then head of the Southern Command, Admiral Kurt W. Tidd, already conveyed U.S. concern about the increased presence of Russia and China in areas of the Americas of strategic interest to Washington. That complaint took on greater specificity in the following annual appearance on Capitol Hill by his successor, Admiral Craig S. Faller, who in his February 2019 speech indicated that Russia is using the region "to disseminate information, gather intelligence on the United States and project power." In an interview then granted to Voice of America, Faller referred, among other specifics, to several Russian initiatives in Nicaragua.
The Southern Command chief placed special emphasis on the training Professional Police Center that Russia has built and runs in Nicaragua, inaugurated in October 2017 and intended for the training of Central American police officers in the fight against drugs and organized crime. "I don't know what other purposes that center might serve, but I'm sure they are not all naive and benign," Faller said.
Already in 2017 it was reported that around two hundred Russian military personnel rotate their presence in Nicaragua, garrisoned mostly at the Puerto Sandino military facility on the Pacific coast, which for all practical purposes functions as a Russian base.
Faller's warnings about intelligence gathering in the region by Russia have to do to some extent with a satellite station installed by Russia in Managua, a short distance from the U.S. Embassy. Since 2013, Russia has stationed four stations of its Glonass positioning system in Latin America: four stations are in Brazil and in 2017 one Nicaragua was installed. Unlike the stations in Brazil, which are managed with transparency and easy access, the one built in Managua is surrounded by secrecy and this has generated doubts about its real use, and it could be an installation intended for eavesdropping.
In May 2018, the scientific industrial corporation High Precision Equipment Manufacturing Systems (SPP, for its acronym in Russian) reported having signed a contract to locate a measurement station for the Glonass navigation system in Cuba.
That last advertisement gave rise to new rumors about the possibility of Russia reactivating the Lourdes base in Cuba, which during the Cold War had great resources as a signals intelligence center for U.S. espionage. Moscow has so far denied that there are any such projects. On the other hand, it has expressed the desire to have a military base in Cuba, Venezuela or Nicaragua, as the Russian Ministry of Defense itself has suggested on some occasions, but these plans have not been officially put into practice.
In 2018, relations between Havana and Moscow became institutionally closer, with the first visit of a Cuban president to Russia in almost a decade. The replacement of Raúl Castro by Miguel Díaz-Canel led both countries to stage their mutual commitment in the face of Western expectations about political changes on the island. A few months before that visit, both countries signed several agreements for the partnership in areas such as the steel industry, sports and customs services, while betting on strengthening the bilateral partnership , trade and investments of the Eurasian country in the island.
As a result of the serious Venezuelan crisis, in May 2017 Russia resumed the submission of significant quantities of oil to Cuba, as it had done decades ago, in order now to compensate for the reduction of crude oil sent by Venezuela. In a first agreement, Rosneft committed to supply 250,000 tons of oil and refined products, although it is not stated for how long and it was possibly a temporary or intermittent aid.
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.