Cuban oil
Journalist Anne Louise Bardach, who has written a lot on Cuba, guest blogs at the Washington Post and gets a little carried away. Here is her chain of thought:
1. The BP disaster has opened lines of communication regarding oil with Cuba.
2. There will be oil drilling soon in Cuba
3. Cuba could become an oil exporter
4. That could make Cuba more independent of Venezuela
5. So the U.S. should pursue oil diplomacy with Cuba
This is not a particularly persuasive argument. Does anyone truly believe Cuban oil will "spew forth" (her phrase) to such a massive extent, and quickly to boot? Just a cursory Google search comes up with stories like how Petrobras can't decide whether it wants to pursue drilling because profits just aren't assured.
Further, the Venezuela reference seems almost like a non sequitur. The Castro-Chávez relationship is based on ideology, not oil. If Cuba no longer needs Venezuelan oil, the relationship won't likely change much.
A more reasonable argument would simply be that oil diplomacy could lead to other types of diplomacy that might be beneficial both to U.S. interests and to the Cuban people.
16 comments:
5 billion gallons of oil and 10 trillion cu. feet of nat gas is nothing to sneeze at. Problem is it that the stuff is hard (and expensive) to get to. Hence the recent wave of foreign investment.
I agree that Bardach's argument is a little weak. But it is aimed at folks on the fence who are looking for additional reasons for engagement. Her argument plays on the fear that others will get their hands on Cuban oil before we do, that a spill in Cuban waters would be bad news for Florida unless we are on good terms with them and that the US could coax Cuba away from the Chavez orbit. Yeah, good luck on the latter...
The Castro-Chávez relationship is based on ideology, not oil. If Cuba no longer needs Venezuelan oil, the relationship won't likely change much.
You cannot plausibly claim that the huge number of Cuban doctors (and other Cuban professionals) working in Venezuela is purely the product of ideology. Oil is a huge factor. Venezuela's natural resources have permitted it to compensate Cuba for its services in ways that other Latin American governments couldn't dream of doing. To overlook this basic fact is to completely distort the nature of Cuban-Venezuelan relations.
Why do you insist on employing the simplistic binary logic that Cuban-Venezuelan relations must be rooted in either oil or ideology (rather than a combination of the two factors)?
Cuba maintains large numbers of doctors and profressionals in many countries around the world, not just Venezuela. Most of the time, compensation is not part of the program. Cuba has also trained doctors of every nationality to go back and serve in their homelands, completely free of charge. So I would argue that ideology is more important in explaining this unprecedendted internationalist program than any amount of oil or money.
It is true that in Venezuela, Cuba has a consierably larger presence. And that is due in large part to ALBA, which facilitates the bartering of services and products. But the program would not exist without an ideological foundation that places a value on improving social and health services. But I agree, it is not an either/or situation.
I don't think its that far-fetched an analysis. The Spanish site, ICNR that seems to have good sources among Repsol, Petrobras, and the Spanish government and is read by oil execs, has a similar take as far as points 1, 2, 3, and 4. article here
As far as the other point: wanting to look for alternatives from Venezuela oil-wise, the high Cuban aparat is arguably in the best position to evaluate the long-term survivability of the Chavez government. Odds are, they are hedging their bets.
there are also grumbling amont the Chavez international clientele that
1. Chavez over-promised and is under-complying with all the oil gifts promised mid decade to buddies including Cuba. Infraestructure investments promised (refineries, pipelines) are not being built, or are late.
2. That where PDVSA is complying with "gifts" promised like oil supplies that it is "modifying" payment terms including raising transport costs on subsidized oil - mysteriously raising it to market rates, or asking for higher interest.
1 and 2, might make Raudel nervous
It is true that in Venezuela, Cuba has a consierably larger presence. And that is due in large part to ALBA, which facilitates the bartering of services and products.
The formation of ALBA actually post-dates the massive influx of Cuban doctors into Venezuela, so I don't think that's a real explanation of Cuban-Venezuelan relations. There are six countries besides Cuba and Venezuela in ALBA. I suspect that none of these six countries has anywhere near as many Cuban doctors per capita as Venezuela does.
If Cuba were to base its allotment of doctors abroad only on ideology (and in total disregard of its own material needs), it would be in much worse shape than it is today.
In the contemporary world, the notion that any state has the luxury of being able to base its foreign relations on ideology alone is a utopian notion, not a Marxist one.
Fair enough Justin. I'd just note that the Cuba-Venezuelan "barter" agreements (trading services for oil) sort of formed the basis of ALBA. And the concept of bartering is in and of itself an ideological formation. Capitalism usually does not permit such things, while it has always been a big part of socialist economics...
Boli-Nica, PDVSA and Venezuela have offered no petro "gifts" to anyone. A gift is something given for nothing. The oil gets paid for based on market price - but the payment is allowed to be deferred and the interest rates are very low. Also services are allowed to be used as payment. If you have proof that interest rates have been modified outside of the Petrocaribe agreements, I'd love to see that. However, its likely that you are referring to changes included in the agreements, which allow for different terms based on the price of oil though. So when the price was cheap earlier in the year, the terms were not as good for participants...
And there are millions of construction projects on hold or delayed throughout the world. To single out PDVSA with an anecdotal reply is a little unfair. Plus they have done loads - getting a refinery in Cienfuegos Cuba up and running, a PLG Filling plant in St Vincent, a fuel storage and distribution plant in Dominica and numerous power plants under devlopment currently in Nicaragua, St Kitts, Haiti, Antigua, etc. Argentina just announced fast-tracking a LNG terminal with PDVSA... more than a half billion in investments. Again, these are not gifts.
Leftside, I wonder what you read, because you sound absolutely clueless.
How can you ignore how corrupt and inefficient PDVSA and the Venezuelan State are?
Inefficient - in 10 years of Chavista misrule what was once the premier State oil company in the region produces 1 million less barrells of oil a day than it did before. Chavez has deprofessionalized the oil company, firing the best Venezuelan professionals and technicians and filled the company with cronies and hacks. he has also decapitalized it, by failing to make key investments.
According to Transparency International, Venezuela's State administration - of which PDVSA is a huge part - is among the least transparent (in other words MOST CORRUPT) in the world. The key criteria in determining this are in government contracting and transparency in government spending. PDVSA is a huge piggy bank that has been a source of widespread theft and corruption in a period of time when 3/4 of a trillion dollars in oil revenue have come in. That is why you have all these "new" billionaries.
Inefficient and corrupt at home, translates into inefficient and corrupt abroad, which is why there are scandals over PDVSA deals in Paraguay, Argentina, and in Bolivia where PDVSA brought in a drilling rig so it could sit in a corner of the field doing nothing for a year, while PDVSA charged Bolivia about 10k a day.
Boli - I asked you for documentation on your off base assertions and you do nothing but change the subject - to something else that you have no proof of - corruption and inefficiency.
You begin by repeating the lie that PDVSA is producing 1 million less barrels a day than before Chavez. In fact, we now know (after extensive international audits) that the IEA and other so-called experts were wrong all along (or to be generous, used different counting methodologies) and that PDVSA's figures have always been spot on. Right now they are producing 2.94 million BPD. That is a modest decline from the 3.3 figure in 1998, but it largely represents the (roughly) 270,000 BPD they cut in 2009 due to OPEC requirements. The IEA's latest report says: "Numerous causes were responsible for the lower level of production, including natural decline at older fields, maintenance at some of the strategic associations, and compliance with production cuts announced by OPEC." Corruption and mismanagement were not mentioned you see...
And sorry, but Transparency International's index was based 100% on a complete fallacy. Their report claimed PDVSA was keeping secret audited reports as well as information on revenues, taxes and royalties. In fact, all the basic information they claimed was missing was/is published on their website. It is quite clear to me why TI lies. They are funded by the leading titans of industry, including Exxon Mobil and Shell, whom vehemently afraid of the Venezuelan (or any socialist) project (in fact Exxon is in a bitter lawsuit vs Venezuela).
You say there is massive corruption in PDVSA, which is creating billionaires. In fact, it is quite clear where the Billions are going - development projects and to the poor. Sure, this is not "efficient" from a capitalist point of view. But neither is making sure the people are well fed and housed.
And I am quite sure there was some idiotic story in a right-wing Bolivian newspaper about an idle rig (I can't find it). But in fact the rig has been busy drilling since January.
Dude, get a clue and quit citing stupid stuff.
Are you specifically denying that the Transparency International COUNTRY Reports for 07, 08, 09, and their perception of corruption indices are flawed? you are taking one particular report on the oil industry that did make a wrong claim on financial statements, and saying that the COUNTRY CLAIMS ARE FLAWED.
In fact the Transparency International report that placed Venezuela 162nd out of 180 countries in the corruption perceptions index.has been cited by the likes of The Guardians Rory Carroll in this article Note that is not USAID, or Gustavo Coronel's article republished by the Cato Institute, who have also cited Transparency International. And Coronel's article does have a good recount of some of the corruption in Chavista circles.
From the Guardian -
The allegations come amid wider complaints that the revolutionary socialist movement known as "chavismo" has been hijacked by money-driven opportunists inside, or close to, the government.
Nationalisations, the creation of new state enterprises and a maze of price and currency controls have spawned well-connected millionaires nicknamed Boligarchs, after the independence hero revered by Chávez, Simón Bolívar .
Murky state finances meanwhile have put Venezuela 162nd, alongside Angola and Congo, out of 180 countries in Transparency International's corruption perceptions index.
So let me get this straight, Boli-Nica. You place more faith in the claims of the opposition hack Gustavo Coronel than in a report by the US Department of Energy?
Ok fine Boli, since you seem to want more proof of your lies, lets talk about the obviously unprofessional biases your lone source - Transparency International - has against the COUNTRY of Venezuela.
Well, we can start out by noting that TI's Venezuela bureau's (Directors) are Robert Bottome, the publisher of Veneconomia, a strident opposition journal, and Aurelio Concheso, previous director of the (business group) Fedecamara, who's President, incidentally was Pedro Carmona (the 2002 coup leader installed as Venezuela's dictator for a day).
The "data" in in TI's report was gathered by Mercedes de Freitas, a longtime anti-Chavista, who ran a US government funded opposition "civil society" group. Her response to the 2002 military coup was to email her friends at the NED in Washington defending the military and Carmona, claiming the takeover was not a military coup.
Leftside, you quote Venezuelan government officialist propaganda as the gospel, so please don't talk about how bad my sources are. And I don't particularly care for Coronel, but he has decades of serious oil industry experience, including being on PDVSA's board. Which makes him more qualified than most of the corrupt hacks running PDVSA now.
NOW
Stephanie and Leftside, please pay attention -
The Venezuelan government says -
Venezuela currently produces 2.9 million barrels of crude per day (bpd)
Quoted in that article -
EIA estimates that Venezuela’s crude oil production (excluding other oil liquids) averaged 2.2 million bpd in 2009,
That is clear as heck....
if you include "condensates, and natural gas liquids" according to the EIA , it would be a total of 2.64 million bbl/d of oil in 2008, but, if you go by their criteria, a look at 2000 production levels, shows more than 3.5 bbl/d of oil produced according to that expansive definition. In effect a decline of production of close to a million barrels per day. Which is unaceptable considering the massive boom in oil prices since then.
Whatever your position, it seems to be a fact that there are NO RELIABLE NUMBERS given out by the Venezuela government, in terms of production and finances. Padded numbers and lack of transparency, plus a consensus that production is down massively is pretty much evidence of some serious mismanagement and inefficiency. Given the volumes of money raked in through oil sales, and the inefficiency, it is hardly surpsing that there is widespread corruption in the Chavista government. Actually, in numbers terms some of the worst corruption seen in a Latin American government in the last couple of decades.
Boli, are you unaware of the extensive audits (done by some American firm I think) that validated PDVSA's production numbers? I don't have time to search for the link, but basically the audits put all this nonsense speculation to rest. But I guess you think an outside agency that admits its numbers are only estimates is in a better position to nail down the figure? Come on..
One fact that Chavez himself has admitted is that Venezuela's economy is shrinking - the only country in South America that is happening in.
Assuming arguendo that Venezuela produces 3 million bpd, where the hell does that money go? Regardless of what production levels are 2 or 3 million, just the fact that the economy of one of the largest oil producers in the world is shrinking is absolutely mind-blowing. In a heavily statitst economy like Venezuela's this condition is close to proof on its face of piss-poor administration, massive inefficiency, and colossal waste.
What further evidence of the total failures of Chavismo economic management and its model do you need Leftside? I mean besides negative economic growth in times of record oil prices, a country with 1 of the 3 largest hydroelectric complexes in the world whose electric grid came close to collapsing, where PDVSA cannot even import essential food items without thousands of containers rotting.
Those are facts. Where that money went?, how much crude was produced?, how much has been sent or promised to Cuba or anywhere else, we don't know, because the government keeps it quiet. That is a sign it is a retrograde, un-transparent, dysfunctional idiotic government.
this condition is close to proof on its face of piss-poor administration, massive inefficiency, and colossal waste.
So when Venezuela was the shining light in Latin America (from 2004 to 2007), growing faster than anyone and creating jobs faster than anywhere, this was proof on its face of world-class administration and efficiency? Just want to make sure I have your argument down. If one equals the other... "What more proof do you need?"
The next thing of any substance you mention is the power issues. Of course, it looks terrible on Chavez - unless you know Latin America a bit, or know how long it takes to put major energy projects out there, or the fact that the only reason there is a crisis is because 1) Venezuela developed so quickly and 2) there was a historic drought. Nevermind also that important Chavez-era thermo projects have just come online to reduce dependency on hydro. Much more is being built. But Chavez even took responsibility for this problem - despite all the obvious extenuating factors.
And yes, I was waiting for the food rotting. A horrific crime where high up Chavistas are already in deep water.
So when Venezuela was the shining light in Latin America (from 2004 to 2007), growing faster than anyone and creating jobs faster than anywhere, this was proof on its face of world-class administration and efficiency? Just want to make sure I have your argument down. If one equals the other... "What more proof do you need?"
Dude, thats evidence of a record, unprecedented, increase in world oil prices, producing what even Chavistas recognize as the largest oil bonanza in their history.
Of course its economy grew, the private sector grew, unemployement fell in many sectors, and obviously resources transferred to the poor worked to some extent. But, again, no one knows by how much. as the New York Times article from 07 put it
Oil profits are the basis of Chávez's intended socialist Revolution, which aims to help the poor in Venezuela and globally. Petrodollars finance social benefits such as free health care, free education and government-subsidized food, and oil profits permit the massive public spending that has helped fuel nearly four straight years of economic growth.
But large chunks of revenue have been managed so opaquely that it is hard to measure the state's success at implementing its social projects or to monitor corruption.
If you want to talk about evidence, this boom period (04 to 07)of crazy revenue - shows just how poorly run, mismanaged and corrupt the government is. A few short years after running surpluses and accumulating reserves, Venezuela's economy is shrinking, inflation is among the highest in the world, indebtedness is high, the country is more dependent on oil revenues than ever, the private productive sector has shrunk.
There is no excuse for a country which has received close to a trillion dollars in revenue in recent years to be in this sorry state.
Even much maligned Colombia with a bunch of lunatics running around blowing stuff up (and the same climatic conditions), has an oil company which is expanding production and has enough energy to be able to offer it to Venezuela.
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