Zelaya to become political leader of PetroCaribe

Venezuela’s president and former military coupster Hugo Chavez has offered Honduras’ deposed president Manuel Zelaya the post as head of a newly formed political council in the PetroCaribe organization. PetroCaribe was formed to sell oil from Venezuela to poor countries in the Caribbean and Central America under very favourable credit terms.

A number of news stories talk about Zelaya becoming the head of PetroCaribe, but I have only found one in English, a Russian site, that is stating that he is to head a newly formed political council. Given how close Venezuela and Russia are, especially in PR (i.e., “Propaganda Related”; cf. e.g. how Pravda and Chavez both claimed that the U.S. had caused the earthquake on Haiti; weapons deals; presidential visits; etc), I’d keep an open mind to the possibility that it is the Russian source that is the correct one. When searching in Spanish this was seemingly confirmed by this Cuban site.

Zelaya’s role will be to “promote democracy.” We all know how well that went in his native Honduras, where he was found by the Supreme Court to be acting to overthrow the democratic constitution in place since 1981, and deposed by Congress after the court had ordered his arrest. He overstepped an article (239) that leads to immediately ceasing to be president, and he did so after the court had issued an injunction for him not to do so. Those who claim that his removal was a coup because he has the right to due process are thus misinformed; due process was followed, why it was no coup.

When PetroCaribe was formed, the critics – or conspiracy theorists if you prefer – said that it would become an instrument for putting political pressure on the members who were indebted to Chavez. The idea is not new, and now it seems that they are openly laying their cards on the table by creating this political council, intended to get involved in what is happening in the member states politically.

It has been expoused how the west uses that strategy with the world bank system (e.g., in “Confessions of an Economic Hit Man“): Put a country in debt, and then demand that they follow your will, or else. Those leaders who are so obstinate that they don’t give in not matter what arm-twisting is employed, are eliminated. The basic idea is to lend money to Third World countries to put them on the hook, making sure they cannot pay it back, ever. Those negotiating the loans have a bonus pay, so they get more bonus the more they can inflate the loan. This is not supposed to be public information, so the employee who told me made me promise not to reveal his name. However, I can deduce that it is true from other evidence. I once was asked to put a price tag on a project in Honduras, so I asked a Swedish colleague with many years expertise in exactly that field. However, the bank was very unhappy, and wanted me to inflate the price by a factor ten or so. In other words, the strategy is as follows:

Finance a project with a loan, give favorable interest (one to a few percent), but inflate the price so much that the project will never be profitable. It is important that the profit is taken out of the Third World country by giving the job to a First World company. This way the country stays poor and indebted for ever, while the cost for the rich county is not all that high since the money just goes around and quickly comes back into the national economy.

What Chavez – perhaps in cohorts not only with Cuba but also with Russia – is doing is not to duplicate this strategy, but to create another version of it. Chavez does not have coffers full of money, but he has oil. Instead of providing money he provides oil.

It does seem, though, that his plan is not all that well thought out. He is in fact lending money, since he is not getting paid until later. And unlike the world bank projects, the money does not immediately come back as income for Venezuelan consulting and construction companies. Chavez is actually providing something of value. He is, however, taking this from his citizens, the people of Venezuela. His country is going downhill rapidly, with hyperinflation, water shortages, electricity shortages, and security problems.

In short, the PetroCaribe plan has turned out not to be sustainable. Perhaps that is why Chavez has decided to openly try to cash in on it now, before the economy completlygoes belly up.

His political plans have already stalled; it started with Honduras stopping Zelaya’s coup attempt, and continued with a right-wing president being elected in Chile. Also Argentina and Brazil may loose their left-wing regimes soon according to opinion polls. The wind in Latin America seems to have shifted against him. When his economical power base now also is failing, Chavez has little choice but to act as swiftly as possible, before his chances are gone for good.

Zelaya has already proven that his attitude is “full steam ahead, damn the torpedoes” – even when there is nothing but torpedoes ahead. The question is how far can a conflict go? If it was just Venezuela and ALBA, there would be no worry. Although Venezuela has some of the best Russian-made fighter planes, they have no pilots trained on them, and not even manuals in Spanish. How many Venezuelan pilots read Russian?

However, Russia has decided to send its fleet back to the Caribbean. And Cuba has Spanish-speaking pilots who have studied Russian. Plus, what stops Putin from having Russian pilots flying the planes? USA allegedely had American pilots fly planes painted in Israeli colors during the 1967 war (although nobody has claimed they flew combat missions). By placing top-modern Russian war equipment in Venezuela, Russia has the equipment on stage so to say, in case a conflict would get ignited. Hopefully this is defensive in nature, and not offensive, even though Chavez did threaten war against Honduras, and keeps doing so against Colombia.

This may just be a sign that a new Cold War might be sailing up off Florida. What is a country like Honduras to do in this scenario?

My best advice is to not trust either side, but to seek out a neutral road of self-reliance. Nobody is thinking about Honduras’ well-being except Hondurans. Neither Obama nor Chavez has anything good to offer Honduras (beyond trade, of course). It is time that the country stopped pandering for recognition, stuck to its laws, and started working diligently on its own long-term economical plan.

Footnote: There are also ALBA loans for buying oil from Chavez. Zelaya used them, and so does president and former dictator Ortega of Nicaragua. The purchasing president only pays a fraction of the price to Venezuela, but sells it at full price. The remainder is a long-term loan, like 25 years. It sounds very similar to the PetroCaribe loans, and I am not sure what difference – if any – there is. Zelaya tried to convince the private sector in Honduras to get on board with this, arguing that 25 years is an eternity, so they didn’t have to worry about ever paying it back. They refused, though, wisely. The cash that this deal generates for the president is used as an illegal source of political cash, and is employed for corrupting the political process. While Honduras stood up to this corruption attempt, Nicaragua is now the next target, and only time will tell if it will succeed or not.

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