While the White House tightens the grip on Venezuela, the Trump administration is simultaneously drafting contingency plans for the U.S. energy sector to assist Caribbean and Latin American governments that have been reliant on Venezuela oil.
The White House is meeting with foreign leaders in the hemisphere to discuss how the U.S. government and energy industry can provide them with fuel and infrastructure needs in the event the Maduro regime collapses and the political crisis in Venezuela chokes off the supply of subsidized oil.
“This is a great time for the U.S. to be both promoting the infrastructure work that the U.S. can do, but also be exporting some of the extra energy that is coming out of the shale deposits,” a senior administration official told McClatchy.
The White House is threatening an oil embargo against Venezuela. That could starve the oil-dependent Caracas government of desperately needed cash during a spiraling economic and humanitarian crisis, plus impact regional governments dependent on Venezuela’s cheap oil.
Venezuela's subsidized oil export program, Petrocaribe, has been a powerful tool that Venezuelan President Nicolas Maduro government has used to wield political influence in the region.
Caribbean and Latin American nations like Haiti, St. Vincent and Grenadines, Dominica, St. Kitts and Nevis and Nicaragua receive billions in cheap loans for oil. And in return, they have helped Maduro retain crucial diplomatic support and block hemispheric efforts to punish the regime.
What made Venezuelan petroleum so attractive were the discounts that Caribbean governments received. Money saved was supposed to be invested in social programs, but the governments have also come under scrutiny for mismanagement and criticism. One example is Haiti, where a special Haitian Senate commission is accusing former government officials of embezzling and wasting $2 billion in Petrocaribe funds.
The subsidized oil program allowed some countries the luxury of embracing anti-U.S. rhetoric. But now they’ve been forced to reduce their reliance on Venezuela's subsidized oil export program and are looking north for help.
During a recent meeting of the 15-member Caribbean Community, or CARICOM, bloc in Haiti, St. Vincent and the Grenadines Prime Minister Ralph Gonsalves acknowledged that the United States' sanctions on Venezuela was having an adverse impact. Nations like his, which otherwise would have acquired oil from Venezuela, must now buy it on the open market. Haiti also has been forced to purchase oil on the open market as a result of Venezuela being unable to fulfill all of its needs.
The Trump administration sees an opportunity to wedge itself between countries that once depended on Venezuela oil and the Maduro regime.
David Malpass, the Under Secretary for International Affairs at the U.S. Department of the Treasury, outlined to a group of Latin American and U.S. security experts at the Center for Strategic and International Studies an 11 part strategy he dubbed “Americas grow” or “America Crece.” The goal, he said, is to promote U.S. exports of energy and energy infrastructure and make it easier for U.S. businesses and U.S. finanicial markets to invest.
“The anchor for growth initiatives is the region’s need for energy and infrastructure investment,” Malpass said.
The White House appears to be taking a page from the Obama administration, which launched the Caribbean Energy Security Initiative launched by former Vice President Joe Biden. That program also sought to reduce the Caribbean’s reliance on Veneuzelan oil through U.S. guidance and increased access to finance and energy investment.
Mark Feierstein, the White House National Security Council's senior director for Western Hemisphere affairs under Obama, said the calculation the Caribbean must make is at some point Maduro will be gone. The new government will likely be led by opposition leaders looking for any money they can to reconstruct their own country, he said. Petrocaribe would be a likely political target, Feierstein added.
“It’s not really in the interest of the Caribbean to seem soft on Maduro and not supporting efforts toward a democratic opposition,” Feierstein said.
Secretary of State Rex Tillerson, who came to Trump cabinet from Exxon, declared a “U.S. energy renaissance” at the start of a five-country trip to Latin America and the Caribbean last month.
In Jamaica, Tillerson acknowledged the United States was studying how its own oil reserves could help mitigate the impact of potential sanctions.
“I don’t want to get into specifics because we’re going to undertake a very quick study to see if there are some things that the U.S. could easily do with our rich energy endowment, with the infrastructure that we already have available what could we do to perhaps soften any impact of that,” Tillerson said.
Jamaican officials estimate an end to Petrocaribe could cost the country $600 million a year. Already, the country has amassed about $2.4 billion fuel bill, said Wesley Hughes, the chief executive of the PetroCaribe Development Fund in Jamaica, according to a statement on the government’s website.
Jamaica used the cheap oil financing to roll over its more expensive debt as part of an agreement with the International Monetary Fund, which has been helping Jamaica resuscitate its ailing economy. But Jamaican Prime Minister Andrew Holness said that Jamaica now hardly imports oil from Venezuela.
“With the new dynamics in the global trade and energy and with the United States now becoming a net exporter of energy resources, Jamaica can, in this new paradigm, benefit from that,” Holness said in a press conference with Tillerson last month.
The senior administration official is already seeing signs of this realization. While Jamaica has shown signs of support, the Trump administration expects even greater support from the Caribbean bloc as Venezuelan oil becomes “less and less reliable.”
“You’re going to see less reflexive defending of Venezuela,” the senior administration official said, adding. “You’re going to see a sudden change as opposed to ones or twos pulling away. You’re going to see a block,” the official said.
The administration will have several more opportunities to push their energy agenda as its planning to play a significant role in several additional events in the region, including the Summit of the Americas in Peru in April and the G7 summit in Canada in June.