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The Oil-for-Bananas Summit

Yesterday, in the southern Cuban city of Cienfuegos, Venezuela’s Hugo Chavez opened the Petrocaribe Summit. The day-long gathering attracted about a dozen Latin American and Caribbean heads of state, including Nicaragua’s Daniel Ortega. Raul Castro, who is effectively running Cuba for his ailing brother, was there as well. American allies also showed up.

And it’s not hard to see why the meeting was well attended. Chavez, who sits on top of the world’s largest oil reserves outside the Middle East, was offering energy on easy terms. At present, Venezuela ships almost 100,000 barrels of subsidized oil a day to Cuba. Cuba pays for the oil by stationing thousands of its doctors in Venezuela, where they provide free care for the poor. Chavez, at the summit, wanted to extend the barter arrangement to other nations by accepting local products such as bananas and sugar.

The barter option—“a new mechanism” in the words of Chavez’s Oil Minister Rafael Ramirez—is already available to members of Petrocaribe, the Venezuela-funded energy alliance founded in 2005, but it does not appear to be widely used. That doesn’t mean Chavez’s “brothers” in the region have not been taking advantage of his largesse. In about a year, they have accumulated debts of almost $1.2 billion to Venezuela. Chavez thinks the debt will grow to $4.6 billion by 2010. At present, Petrocaribe members can defer payment of 40 percent of their oil bill and take as long as 25 years to pay Caracas with 1 percent interest when the price of crude exceeds $40 a barrel. Is it any wonder that even Honduras, a traditional friend to Washington, became the alliance’s seventeenth member yesterday? Guatemala may also want in.

“We have begun to create a new geopolitics of oil that is not at the service of the interests of imperialism and big capitalists,” the Venezuelan leader said yesterday. Unfortunately for him, subsidized arrangements do not last, and that is all Chavez is offering to his neighbors. The American vision of trade binding the region together is sustainable, but it is failing for a multitude of reasons. One of them is Boss Hugo, who blasted Washington. “Free trade doesn’t exist,” he said as he asked his fellow leaders to resist the failed “dictatorship of world capitalism.” Chavez may sound like a buffoon, but whether we like it or not, he is challenging the notions that underpin the West. It is time for President Bush—and the candidates seeking to replace him—to focus on the region that borders our own.



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