E. CARIBBEAN AND VENEZUELAN FOREIGN AID: RHETORIC

C O N F I D E N T I A L BRIDGETOWN 000737

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAR, WHA/AND, WHA/EPSC, EEB/ESC/IEC/EPC,
AND INR/I
CARACAS FOR ANDREW BOWEN
SOUTHCOM ALSO FOR POLAD
ADDIS ABABA FOR ANTHONY FISHER

E.O. 12958: DECL: 02/05/2017
TAGS: ENRG EPET PREL PGOV XL
SUBJECT: E. CARIBBEAN AND VENEZUELAN FOREIGN AID: RHETORIC
OR REALITY? (C-AL7-00733)

REF: A. STATE 66324


B. BRIDGETOWN 573

C. BRIDGETOWN PETROCARIBE CABLES 1-33

Classified By: CDA Mary Ellen T. Gilroy for reasons 1.4 (b) and (d).


1. (C) Summary: Five Eastern Caribbean countries have signed
Petrocaribe agreements. St. Lucia nullified its agreement
with Venezuela under the new Compton administration in 2006.
Barbados also turned down the Petrocaribe offer, but it is
still a beneficiary of other Venezuelan assistance. Hugo
Chavez's assistance package for most of these island nations
is a combination of both reality and rhetoric: while some
countries are enjoying short-term benefits, almost all have
experienced delays in implementation. However, the region
has little choice but to be patient, given the economic
constraints faced by most Eastern Caribbean microstates. End
Summary.

Rhetoric: What Governments Have Been Promised
--------------


2. (C) With the exception of Grenada, Embassy Bridgetown was
unable to confirm with government officials the exact value
of Venezuelan assistance delivered. Eastern Caribbean
governments are generally reluctant to share information
regarding the assistance they receive, especially from
potentially controversial sources like Venezuela. While some
data was obtained from post's sources, most of the following
data comes from press reports. Given the Eastern Caribbean
governments' limited capacity, no specific coordinators for
Venezuelan aid have been named. Usually, the Prime Ministers
play a key role, with relevant ministers providing support as
necessary.

ANTIGUA AND BARBUDA
--------------

a. 80,000 Barrels of fuel (delivered),USD 47.5 million
90,000 Barrels of fuel (expected),USD 59.4 million
b. ALBA Grant (expected),USD 7.5 million
c. Housing Loan (expected),USD 20.0 million
d. LIAT Loan (expected),USD 20.0 million
e. Airport rehabilitation, USD 7.0 million
f. 12 Portable Electric Plants (expected),value
unavailable, (to produce 10 megawatts per hour)

BARBADOS
--------------

a. Fuel Cost Absorption to Prevent the Shutdown of Arawak
Cement Company (delivered),USD 3.4 million

DOMINICA
--------------

a. Oil Refinery to produce 10,000 bpd (expected),USD 80.0
million
b. Housing Development Program (expected),USD 12.0 million
c. Melville Hall Airport Expansion (expected),USD 10.1
million
d. Debt Forgiveness (delivered),USD 1.5 million
e. 200 Barrels of Asphalt (delivered),value unavailable
f. 5,000 Barrel Storage Tank (delivered),value unavailable
g. Scholarships, value unavailable

GRENADA
--------------

a. Hospital Construction (expected),USD 10.0 million
b. Low-Income Housing (expected),USD 10.0 million
c. Youth Development (expected),USD 4.0 million
d. Assistance to Low-Income Families (expected),USD 5.0
million
e. Youth Rehabilitation (expected),USD 1.0 million

ST. KITTS AND NEVIS
--------------


a. Housing Program (expected),value unavailable
b. 18,500 Barrels: Jet, Diesel and Fuel (expected),value
unavailable
c. 1,700 Barrels: Asphalt (delivered),value unavailable
d. 800 Barrels: Bitumen (delivered),value unavailable

ST. LUCIA
--------------

Petrocaribe Agreement Nullified by Compton Administration.


ST. VINCENT AND THE GRENADINES
--------------

a. 12,000 Barrels for VINLEC activation (delivered),USD
2.0 million (Note: VINLEC is St. Vincent's state owned
utility company. End Note.)
b. Argyle Airport Construction (expected),USD 200.0 million
(total cost shared by Cuba, Taiwan and Mexico)
c. 51,000 10kg LPG Cylinders (delivered),value unavailable
d. Filling Station (delivered),value unavailable
e. 5,000 Barrel Fuel Storage Facility (delivered),value
unavailable
f. Low-Income Housing (expected),value unavailable

ASSISTANCE REALITIES
--------------


3. (C) Some Eastern Caribbean countries are already reporting
benefits from the Petrocaribe deal, from 180,000 barrels
delivered to Antigua and Barbuda, to six liquefied petroleum
gas (LPG) shipments and a storage facility in St. Vincent,
and even a "bananas and nutmeg for oil" deal in Grenada.
However, public skepticism is starting to surface as only
governments seem to be benefitting from Venezuelan
assistance. Promised social assistance that is supposed to
materialize out of "savings" from Petrocaribe agreements has
not yet reached the public. In addition, fuel prices at the
pump appear to remain unaffected.


4. (C) Obstacles to implementation exist as well. In
Grenada, a supply agreement has already been signed, but the
island is not ready to implement it due to a lack of storage
facilities. In Antigua and Barbuda, the government has still
not received the money it was promised to refurbish the
airport. In Dominica, a fuel shipment promised for November
2006 delivery has not yet arrived, while a new storage tank
built by Venezuela reportedly remained empty during Chavez's
visit to the country in February 2006. In St. Kitts and
Nevis, ports are too small for PDVSA tankers. In Saint
Lucia, the Compton administration nullified the Petrocaribe
agreement in December 2006.

WHAT GOVERNMENTS, PEOPLE, AND THE PRIVATE SECTOR ARE SAYING
-------------- --------------


5. (SBU) Grenada's former Attorney General, Raymond Anthony,
claimed that "many are no doubt beginning to see through the
(Petrocaribe) scheme by Hugo Chavez." Most government
spokespersons and analysts, however, agree that the slow
progress in implementing the Petrocaribe agreement is due in
large part to classic bureaucratic and managerial obstacles.
Eastern Caribbean countries lack control over their energy
infrastructure and have poor port, distribution, and storage
facilities. The president of Petroleos de Venezuela (PDVSA)
Caribbean in charge of implementing Petrocaribe, admitted to
the press that "the big problem is infrastructure.
Transportation and storage costs are being charged to the
countries, and are a heavy burden."


6. (SBU) Petrocaribe has also attracted criticism for
reasons unrelated to slow implementation. In Dominica, for
example, a proposed refinery has generated strong public
opposition because of the potential harm to the island's
environment and ecotourism industry. In St. Vincent,
opposition leaders and others have criticized the Gonsalves

administration for strengthening St. Vincent's relationship
with Venezuela at the expense of its relationship with the
United States.


7. (SBU) Still, Eastern Caribbean leaders continue to express
their gratitude to Hugo Chavez for what they claim is his
commitment to the economic and social development of the
region. This is particularly true in the case of Antigua and
Barbuda, Dominica and St. Vincent and the Grenadines, where
the Prime Ministers of each country publicly embraced Hugo
Chavez as a close friend and ally during his February 2007
visit to the region, and signed onto Chavez's ALBA
initiative. (Note: The three countries' actual commitments
and implementation plans for ALBA remain unclear. End Note.)


COMMENT
--------------


8. (C) It has been close to two years since the Petrocaribe
program made its debut in the Eastern Caribbean and there
appear to have been more setbacks than the region probably
anticipated. As the fanfare over initial Petrocaribe
announcements died down, the region's leaders have gradually
come to the realization that full implementation of
Petrocaribe will be complicated and certainly not
instantaneous. Similarly, the average Eastern Caribbean
citizen has seen almost no impact on his or her life, whether
it be from Petrocaribe or from the social assistance programs
promised under ALBA. While Venezuela got a lot of public
relations mileage from the initial Petrocaribe announcements,
it will need to step up its implementation efforts in order
to maintain its high profile in the region.
GILROY