Alba.Petrocaribe.Venezuela.Nicaragua.debt

Nicaragua’s Illegitimate Debt to Venezuela?

Ordinarily, the 14 countries that are member of Petrocaribe would have reason to be grateful to President Hugo Chavez. Under the terms of the oil delivery terms, Venezuela has agreed to supply 100% of the country’s oil needs at market rates: 50 % paid in 90 days, but the other 50% over 25 years at 2% with two years grace. What is more, that unpaid 50% of the sales revenue would remain in the country for bilaterally-supervised social and development projects. Certainly, these are terms that no country could have expected from the oil corporations, private or multilateral banks, or even traditional “donor” co-operation. From the Jubilee South perspective, it may be a case where the debt should be repaid as it seems legitimate and fair priced.

However, social movements and various organizations in Nicaragua are challenging the legitimacy of that debt incurred by the Ortega government. The principal argument invoked is that the use and channeling of the funds is far from being transparent or subject to accountability, let alone citizen participation in the decision of how the funds/debt can be used. The process itself in Nicaragua, although not in other recipient countries, is incredibly convoluted. Venezuela provides the oil directly to Nicaragua’s oil distributor PETRONIC which then resells the petroleum to private companies such as Esso. PETRONIC then transfers 100 % of its sales revenue to ALBANISA, which in turn transfers 50% of the money back to Venezuela as payment within 90 days, and then pays the other 50 percent over 23 years at 2% annual interest. Of the money paid up front, half goes to the ALBA social fund and another half into Albanisa coffers. Private economist Adolfo Acevedo calculates that in the past year ALBANISA has handled 800 million in oil business, meaning there should be 200 million salted away in company fund for social projects. Ortega, however, has mentioned that Venezuela aid to Nicaragua already totals 520 million. So needless to say the numbers have everyone confused—and concerned given that this amount is roughly the equivalent of all external western “aid” to Nicaragua, and over one third the amount of Nicaragua’s total exports.

Amidst all the money transfers the question is posed where the money really ends up, who it belongs to, and who owes what to whom. Of late, the government claims that it is not a public debt and hence does not have to be legally submitted to the Parliament, scrutinized or reported in its budget. If Albanisa is a semi-public enterprise, then its “private” debt would have to be assumed by the State in case of a default.

The IMF has, up to now, gone along with governmental reasoning. Even the US has been silent, considering perhaps a good example of “public-private” partnerships.
Independent civil society groups and the Jubilee coalition in Nicaragua, by contrast, are calling for a public auditing of the arrangements. While some groups are ideologically eager to lambast Chavez and the Venezuela connection, other groups demand that the ALBA cooperation scheme deserves support on account of the principles its support including that of stimulating development and cooperation alternatives to the Washington Consensus model. The fact that the President of Petronic, the Vice President of Albanisa and the Treasurer of the Sandinista governing party is the same person speaks volumes.

Insistence on transparency, accountability and public participation is also part of an alternative development and politics. Venezuela must clarify whether it is the purpose of the cooperation to allowing Ortega and his governing party to use the ALBA/Petrocaribe funds for patronage purposes and strengthening its own business enterprises. If that is the case, ALBA may still be considered a geopolitical proposition wishing to win over governments and parties to its side, but the ideological component will be placed in doubt—that is, providing a genuine alternative to the neoliberal formulas for enrichment while paying lip service to the impoverished.

After all the money transfers and sleight of hand there are many unanswered questions about where that money really ends up, who it belting to, and who owes what to whom. If this is not cleared up, then both the legality and the legitimacy of the debt will be in question.