The prognosis for the recovery from cancer of President Hugo Chavez is uncertain. If he is not able or does not assume the Venezuelan presidency, then it brings into question the continuation of PetroCaribe on which Caribbean countries are heavily dependent.
The termination, phasing out, or revision of the terms of PetroCaribe would have devastating repercussions for the region already struggling to survive the global economic crisis.
PetroCaribe, which was established in 2005, benefits Antigua, The Bahamas, Belize, Cuba, Dominica, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, the Dominican Republic, St Kitts, St Vincent, St Lucia, and Suriname.
The programme allows beneficiary countries to purchase oil from Venezuela on concessional terms, deferring part of the payment through a 25-year financing agreement at one per cent interest. Without this concession, the region would have been in a far worse economic crisis and the future would be bleak if the Caribbean was exposed to the full brunt of oil prices, which have been volatile and can escalate exponentially.
Future oil prices have been virtually impossible to predict because they are influenced by world events. Oil prices, for instance, could remain high or even escalate, given the rapidly increasing demand from China and India as well as supply rigidity.
Since oil reserves are ultimately finite, the easily accessible oil is being exploited, therefore oil must become harder to find and more expensive to produce. Many scientists are convinced that physical limits are already affecting the scarcity of the commodity. Additionally, environmentalists are making it difficult to get permission to exploit marginal oil and gas deposits.
The future of PetroCaribe is difficult to predict although politicians on both sides of the divide make bold, uninformed comments about the continuation of PetroCaribe. Venezuelan diplomats across the Caribbean have also been giving assurances that PetroCaribe will continue. No wonder it is said that a diplomat is an honest person sent abroad to lie for his country.
In reality, no one can make any predictions, given the power struggle which has already begun in Venezuela and the enigmatic and volatile nature of Venezuelan politics.
There is some comfort in the fact that President Chavez continued and expanded the support to oil-dependent Caribbean states, which has been a practice of Venezuelan foreign policy since the days of Carlos Andres Perez in the 1970s.
The support provided by PetroCaribe put the beneficiaries of the agreement in the awkward position of interrupting relations with Trinidad and Tobago, which publicly expressed its umbrage. This overreaction was a resurrection of Dr Eric Williams' description of Venezuela's initial forays into the Caribbean as a new imperialism.
There is no free lunch, and President Chavez's support for the Eastern Caribbean states induced an opportunistic fealty to ALBA, which at times annoyed the United States. Fortunately, Jamaica maintains good relations with both the United States and Venezuela.
Caribbean governments must quickly but carefully formulate recovery strategies based on a worst-case scenario of the abrupt termination or phasing out of PetroCaribe. In the long run, the region must develop alternative sources of energy such as gas, solar, wind and hydro. Meanwhile, Caribbean governments must launch a diplomatic campaign to keep PetroCaribe in place in the short run.