Caribbean countries spend approximately 13% of their Gross National Product on the importation of fuel. This represents an enormous burden on their economies making Caribbean residents extremely sensitive to fluctuations of gasoline prices. This was made evident in the violent protests that erupted in Haiti in July 2018 when the government attempted to raise gas prices to curb the national deficit. Such challenges presented the late president of Venezuela, Hugo Chavez, an opportunity to spread his influence in the Caribbean and in Central America by offering these countries more favorable terms for importing fuel.
In 2000, President Rene Preval considered Venezuela’s proposal as mutually beneficial and signed Chavez’ Caracas Accord. This accord was also signed by the leaders of Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Jamaica, Nicaragua, and Panama. This set the stage for a Caribbean and Central American agreement which would not be implemented until 5 years later. In 2005, Chavez met with leaders of 14 countries who agreed to participate in what would become known as Petrocaribe. Haiti was absent for the 2005 meeting. The transitional government of Latortue/ Boniface did not participate. It wasn’t until 2007, when Rene Preval regained the presidency, that the collaboration with Chavez resumed and Haiti became a participating member of Petrocaribe. By 2017, Petrocaribe had grown to include 19 countries.
President Preval’s efforts to have Haiti participate in Petrocaribe began in 2006, but the US government along with Exxon Mobil and Texaco Chevron tried to sabotage those efforts. American petroleum companies control as much as 50% of fuel distribution in Haiti. Repeatedly, these companies made it clear to President Preval that they would not purchase Venezuelan gas from the Haitian government. On April 28, 2006, the US Ambassador to Haiti, Sanderson stated that Preval assured the US government that he had no special liking for Chavez but the advantages of Petrocaribe were simply too good for him to ignore the opportunity that it presented for Haiti. Wikileaks documents revealed that Sanderson acknowledged that Haiti would save 100 million dollars annually through its participation in Petrocaribe. Nonetheless, in a letter dated April 11, 2006, the ambassador wrote to Preval to inform him that any accord with Chavez would create problems with the US.
The Petrocaribe agreement permitted member nations to buy Venezuelan petroleum at a discount. When the price of a barrel of petroleum exceeded 40 dollars on the world market, member nations would have 90 days to pay 60% of the price of the petroleum obtained from Venezuela. They would have 25 years to make payments on the remaining 40% at an annual interest rate of 1%. If the price of petroleum were to fall below 40 dollars per barrel, then the interest rate and term of the debt would change to 2% interest over 17 years.
Participating countries could also pay with other assets. Venezuela was flexible in accepting goods other than cash payments. For example, the Dominican Republic made some of its payments with cement. Venezuelan petroleum largess was possible because according to OPEC, it has the world’s largest oil reserves and most of its oil is exported to non Petrocaribe nations. China, India, and The United States receive 80% of Venezuelan annual oil production. The total amount of petroleum exported to Petrocaribe nations accounted for only 5% of Venezuelan total annual oil production.
After the Haitian Parliament finally ratified the Petrocaribe agreement in 2007, President Preval made structural changes in the management of the country’s oil imports to facilitate the implementation of the agreement. He changed the name of the office that would administer the plan from PL-480 to the Center for Monetization. This center bore the task of organizing how the Petrocaribe oil would be sold. The Center for Monetization sold the oil to the private sector which in turn sold it to oil companies operating in Haiti. As its name indicates, the Center for Monetization sold and thereby converted the Venezuelan oil to money. Haiti’s Prime Minister was responsible for determining how the proceeds would be spent.
It’s important to point out that Haiti never received any funds directly from Petrocaribe. Instead, Haiti brought fuel through an agreement that allowed it to delay a portion of the payment which it could then use on development projects. This debt would have to be repaid over 17 or 25 years depending on the purchased price of the oil.
Daily price fluctuations make it difficult to determine how much it cost Haiti on any given month to buy Venezuelan oil. In addition, the price at which the government sells the oil to the private sector also varied. Without accurate daily records from the Center of Monetization, it is nearly impossible to follow how much the oil cost the government and how much it made on selling it.
By January, 2010, Haiti owed Venezuela 295 million US dollars of Petrocaribe payments, but the Earthquake of 2010 led Venezuela to cancel this debt. However, despite this annulment, a Senate report showed that the Center for Monetization continued to claim that it had continued to service this debt. Between 2010 and 2018, the Haitian government has accumulated 2 billion dollars of debt to the Venezuelan government.
The Senate report went on to say that although the government dispensed large sums of money acquired from the sell of oil from Petrocaribe, many projects never materialized. For example, the report accused Senator Bautista, a Dominican politician who often financed electoral campaigns in Haiti of having received no-bid-contracts worth approximately 200 million dollars for projects which were either never completed or never executed. Bautista’s company which received the contract has since dissolved. Today, the American government has intervened and taken sanctions against Bautista for his corruption. His assets in the US have been seized and his VISA terminated.
Between 2006 and 2016, the Haitian government issued 1.6 billion dollars of no-bid-contracts. This means that the government made no effort to hire the best and least expensive companies. Such approach to the dispensing of public funds raises suspicion for corruption as it leaves the possibility for rewarding cronies with government largess ensured by kickbacks.
In 2013, the Venezuelan ambassador, Pedro Antonio Canino Gonzalez said that under contract with anonymous Venezuelan companies, the Petrocaribe funds were well spent. Recently, Reginald Boulos denounced this statement by pointing out that Venezuela cannot be at once creditor, consumer and reporter. In view of this irregularity, Reginald Boulos proposed that Haiti cease all payments on the Petrocaribe debt so that the government can also investigate Venezuela's role in the corrupt use of the Petrocaribe funds.
Despite the irregularities in awarded contracts documented by the Senate report, in 2014, the IMF admitted that Petrocaribe had a positive impact on Haiti, permitting its national production to grow to 4.1%. During that year, Venezuela sent 120,000 less barrels of oil to Haiti, forcing the country to turn to Trinidad to make up the difference. According to the Miami Herald, Haiti entered into dubious arrangements with Trinidadian officials that involved multiple anonymous companies with sham board of directors and high ranking Haitian officials as shareowners. Their proceeds were then deposited in a Panamanian bank as revealed by the Panama Papers of 2016.
After 2014, oil from Trinidad was no longer critical. The amount of oil imported from Venezuela increased. By 2015, although Haiti was to receive 14 barrels of oil per day, it actually received 21 barrels a day. In an effort to offset the influence of Chavez in the Caribbean, the Obama administration promised to help Caribbean countries exploit renewable energy sources. Today, the current US administration has made no such promise. Caribbean nations continue to rely on Petrocaribe, viewing Venezuela’s current economic difficulties as an opportune moment to refinance their debt. Jamaica, for example, has been able to eliminate its 3.2 billion dollar debt by offering Venezuela just 1.5 billion.
In February 2018, as the United Nations was discussing the impact of the cholera it introduced into Haiti, Susan Page, the representative of the UN in Haiti encouraged investigations of funds raised from Petrocaribe oil. President Jovenel Moise boycotted the UN- Cholera meeting arguing that it was impertinent of the UN to suggest such an investigation.
A Senate investigation showed that after several hurricanes and a disastrous earthquake, the administrations of Rene Preval and of Michelle Martelly declared Haiti to be in a state of emergency necessitating those in charge to have quick access to public funds. This access was facilitated by the fact that funds obtained from the selling of Petrocaribe oil were not a line item in the national budget. Only the executive branch had oversight on this funding source, explaining why for years, the general public was unaware of the massive debt accumulating. The Senate report showed that after a total of 1.6 billion dollars allocated by the government from Petrocaribe funds, Haiti has very little to show for it beside a debt to Venezuela of nearly 2 billion dollars.
Today, the population of Haiti is demanding to know the whereabouts of the Petrocaribe funds. On social media and on the streets, people are calling for accountability. In a comment made on Twitter on August 14, Gilbert Mirambeau Jr. urged the population of Haiti to ask the government, where is the money? Later on Twitter, the artist Valckensy Dessin, nicknamed K-Lib, supported Mirambeau’s initial tweet and called it the Petro Challenge. Since August 2018, the Petro Challenge has gone beyond social media and has materialized on the streets of Haiti where marchers are demanding answers from the government.
Whether due to incompetent government oversight or to outright theft, marchers are shouting to authorities that they will not use their hard earned cash to pay for money squandered from the national treasury:
Non, non non, nou pap peye, nou pap peye lajan Petwo. Si pou n peye lajan Petwo, fòk tout vole al lan prizon.
No, No, No. We are not paying. We are not paying the Petro debt. If we must pay the Petro debt, then all thieves must be arrested.
A special thanks to Mr Georges Daniel who provided us some important references and shared his perspective on Petrocaribe
1. What is Petro Caribe, May 10 2013. Americas Society Council of the AmericasWikiLeaks Haiti: The PetroCaribe Files
2. How the US Tried-and failed-to scuttle a Venezuelan oil deal even though it would bring huge benefit to Haiti's impoverished people. Dan Coughlin adn Kim Ives. June 1, 2011
3. Report to the IMF on Petrocaribe. Frank Fuentes Brito, Dominican Republic's Representative at the IMF & Senior Advisor to the Executive Director of the Brazilian Constituency. January 2017
4. Haiti, U.N. clash over probe into alleged misuse of the Petrocaribe funds. Joseph Guyler Delva . Reuters. January 28, 2018
5. Where did the money go? Haitians denounce corruption in social media campaign. Jacqueline Charles. Miami Herald. August 23, 2018
6. Dominican senator accused of ripping off Haiti sanctioned by Trump administration. Jacqueline Charles. Miami Herald. June 12, 2018
7. Reginald Boulos propose L’arrèt du paiement de la dette Petrocaribe. Le Nouveliste, 9 Septembre 2018.