BAHAMAS: ENERGY MINISTER TO ATTEND MEETING WITH

C O N F I D E N T I A L SECTION 01 OF 02 NASSAU 001191 SIPDIS STATE FOR WHA/CAR WBENT E.O. 12958: DECL: 06/27/2009 TAGS: ENRG PREL KDEM BF VZ SUBJECT: BAHAMAS: ENERGY MINISTER TO ATTEND MEETING WITH CHAVEZ REF: A. STATE 117564 ¶B. NASSAU 754 Classified By: DCM Robert Witajewski, Reasons 1.4 b and d ¶1. (U) Ambassador raised CARICOM's upcoming meeting with Venezuelan President Chavez in general terms with Foreign Minister Mitchell on June 23. Minister Mitchell indicated that The Bahamas would be represented by the Ministry of Trade of Industry, which has oversight over the country's energy matters. Minister of Trade and Industry Leslie Miller has attended the previous discussions of PetroCaribe. ¶2. (C) DCM conveyed Ref A talking points on June 27 to Dr. Patricia Rodgers, MFA Permanent Secretary (the #2 position at the Ministry) and Ms. Helen Ebong, Permanent Secretary at the Ministry of Trade and Industry. Dr. Rodgers privately expressed concern that a "loose cannon" like Minister Miller would be representing The Bahamas and that rather than request him to speak out it might be better for both countries if he stayed in the background, but offered no other substantive comment. PS Ebong, a long-time skeptic of PetroCaribe whom Minister Miller no longer consults on the subject, believed the summit-like nature of the event might prompt the Prime Minister to expand the Bahamian delegation beyond Minister Miller. She promised to forward the talking points to both Minister Miller and the Prime Minister's office. Minister Miller Responds -------------- ¶3. (C) Shortly after receiving a copy of the demarche from his Permanent Secretary, Trade and Industry Minister Miller called DCM to discuss his trip. He promised to take the points made in the demarche up with his CARICOM colleagues at a meeting scheduled for Tuesday evening, June 28, in Caracas that he is chairing. Responding to DCM's urging that the best long-term solution to the energy situation would be a market-based solution within the context of a stable, democratic political system, Minister Miller said that in petroleum, economics and politics always mixed. He called on the United States to itself construct new oil refineries in the U.S. to relieve supply shortages. Miller then went on to describe himself as a "nationalist" saying that he understood why the "dirt poor people in Ecuador, Bolivia, and Argentina" were upset with oil companies. When DCM cautioned about concluding an agreement with an unstable government whose president had a penchant for tearing up and re-writing contracts, Miller responded by declaring that paying royalties from extracted natural resources of "one percent" was "ridiculous and unfair." Miller went on to comment that unless oil companies shared their profits more equitably, it was understandable that governments would seek to abrogate existing contracts and re-write them to retain more of the proceeds. This, he argued, was the only way to create a stable middle class. He pointed out that he had negotiated a contract with a company currently exploring for oil in The Bahamas that called for 12-25 percent of the profits to be paid to the government. DCM responded that investment required stability, transparency, and predictability and that all of these were in short supply in President Chavez' Venezuela at the moment. ¶4. (C) Miller promised DCM to provide a full debrief of the meeting upon his return. COMMENT -------------- ¶5. (C) Recent headlines in Bahamian newspapers are trumpeting the possibility of $4 (or more) a gallon gasoline in The Bahamas. Minister Miller has been promoting PetroCaribe as a politically easy way to lower local gasoline prices without reducing the government's per gallon tax or distributors margins. He also dreams of creating of a National Energy Corporation under his control to administer the program (Ref B). Prime Minister Christie has remained silent on the issue but has shown no inclination to embark on the type of sweeping project that Minister Miller envisions. On the other hand, Christie has also shown no inclination to silence a minister whose more outrageous comments regularly make for embarrassing headlines. Minister Miller is an erratic figure within the Christie cabinet and his frequent dramatic pronouncements on issues ranging from PetroCaribe to hurricane relief funding to liquefied natural gas projects are taken with a large grain of salt. His recent comments on high gasoline prices have focused less on Venezuela and more on decreasing the fixed markups that local gasoline importers and retailers are permitted to charge. ¶6. (C) The Bahamas is sufficiently interested in possibly lowering its energy bill to keep sending Minister Miller to PetroCaribe meetings, but it has little in common politically with President Chavez. The one possible exception is Cuba, with which The Bahamas shares a pragmatic working relationship based on migrant issues and other people-to-people matters such as tourism and medical training and treatment. ROOD