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Oil War in the Americas

by

When Vice President Joe Biden convened the Caribbean Energy Security Summit in Washington on January 26, the Caribbean emerged from its diplomatic slumber as an area of United States’ strategic interest. In light of oil prices that dropped by more than 50 percent from a high watermark of US$115 per barrel in June 2014, the summit of CARICOM members nations was described by Biden as an effort to flag regional dependence on a “single, increasingly unreliable, supplier,” and ensure that “no country should be able to use natural resources as a tool of coercion against any other country.”

The thinly veiled effort to undermine Petrocaribe, the brainchild of the late Venezuelan statesman Hugo Chavez and the marquee regional program of the Bolivarian Republic, demonstrates the uneven geopolitics of cheap oil. Under the terms of Petrocaribe, Caribbean and Central American member states are permitted to purchase Venezuelan oil at preferential rates, with the remaining balance covered by low-interest loans repayable over a period up to 25 years. Cheap oil, often understood as a boon to consumers and net energy importers, poses a decided threat to Petrocaribe and the vulnerable national economies of the Caribbean.

Thus, when President Obama acknowledged the decline in oil prices as one facet of efforts to thwart the Russian economy, it confirmed the suspicions of many that the boom in domestic shale oil and gas production was not merely an avenue of energy independence, but diplomatic warfare. In turn, on the heels of announced sanctions against Venezuelan officials, current President Nicolas Maduro declared the plummeting crude prices a harbinger of “oil war” through which the United States sought to undermine its political adversaries through deliberate manipulation of the market.

With this in mind, a longer view of the Caribbean in the current geopolitical skirmish brings the global stakes of the latest energy crisis into sharper relief. While business analysts diagnose the dip in prices as a standoff between Saudi Arabian crude and American shale oil for global market share, the reentry of the Caribbean into U.S. diplomatic efforts and the burgeoning oil war lends further evidence to cheap oil as an effort to maintain American liberal democracy as a normative condition of world affairs.

Long neglected as an area of American strategic and diplomatic interest since the successful overthrow of Grenada Revolution by Operation Urgent Fury in 1983, the Caribbean has found renewed interest from U.S. officials alongside destabilization efforts in Venezuela that threaten Petrocaribe as an option to satisfy the energy demands of the region and provide momentary relief from international debt. The energy market, in this respect, is far from a neutral force in the international arena. Rather, cheap oil holds the potential to subvert existing circuits of south-south solidarity and, in turn, transform the political geography of the infant 21st Century.

The impacts of the oil war, then, extend well beyond the political borders of the Bolivarian Republic. Threatening the long term viability of regional initiatives such as Petrocaribe and the Bolivarian Alliance for the Americas (ALBA), which forged new regional cooperatives against the surging tide of American political and economic hegemony, the oil war can be understood as the latest incursion on Latin America and Caribbean sovereignty in the wake of political decolonization. While the overt military interventionism of the Monroe Doctrine is now dismissed as an outdated relic of U.S. “big stick diplomacy,” covert operations, diplomatic sanctions, and the deliberate manipulation of the market have revived its central tenets under different means, preserving the region as an incubator of corporate plunder and a reserve army of subaltern labor.

***

Due to their geographic proximity to the United States, the Caribbean and Latin America were of critical import to American officials during the Cold War. Once a hotbed of socialist governments in Guyana, Grenada, and Jamaica, the Caribbean subsequently ceded to American economic hegemony in concert with covert CIA operations, U.S. military intervention, and the market pressure of soaring oil prices. Yet, in the aftermath of the Cold War and the fall of the Soviet bloc, new spheres of economic and south-south cooperation such as BRICS and G-15 emerged concurrently with the pink tide of democratic socialism Latin America.

Petrocaribe became a fixation of U.S. foreign policy as Chavez surged in popularity throughout the Caribbean, extending the reach of his Bolivarian regionalism. Fueled by a bullish oil market, Chavez’s Bolivarian Republic exerted unprecedented influence over a region long regarded as America’s backyard. A special report in The Nation documented efforts by U.S. officials and their allies in the private sector to dissuade Haitian President René Préval from enrolling in Petrocaribe, a decision the Embassy conceded would save the debt strapped Government of Haiti more than US$100 million per year. Similarly, dispatches from the U.S. Embassy in Jamaica decried the inaction of leading Caribbean oil and gas producer Trinidad and Tobago to quell Venezuelan influence, which “in the face of rising oil price…pushed the region in Chavez’ arms.”

The leaked cables from the Jamaican embassy have not received the attention of the aforementioned “Haiti files,” but offer untold insight into emerging diplomatic campaigns in Latin America and the Caribbean. Jamaica saw its own experiment in democratic socialism halted by the signing an IMF loan agreement in 1977 that sparked a continued spiral of international debt. To this end, Jamaica remained squarely within an American sphere of influence in its dependence on foreign capital and lending institutions.

Accordingly, when Trinidad and Tobago was unable to provide an alternative proposal to Petrocaribe, it frustrated the desire of Jamaican officials to resist the generosity of Chavez and curry favor with Washington. The eventual decision to join Petrocaribe in 2005 was evidently pragmatic, understood by American operatives as “a case of ‘economic realpolitik,’ rather than any sign of an ideological shift, or even of fondness for Chavez the man.” In other words, the pursuit of national sovereignty in Jamaica, an objective disavowed by international debt and diplomatic pressure, found newfound potency in the attractive fiscal terms offered by Venezuela.

In its opportune alliance with Chavez, Jamaica exemplified the geopolitical potency of a Bolivarian Republic awash in windfall petrodollars. Despite concerted efforts by the U.S. Government to persuade Jamaica and Haiti against agreements that would provide much needed debt relief, Petrocaribe thrived in the short term. Between 2005 and 2007, seventeen current member nations joined the alliance much to the chagrin of the U.S. Department of State. If Petrocaribe failed to deliver on the unrealized promises of political independence, by substituting one source of dependence for another, it nonetheless provided much needed funds for impoverished Caribbean nation-states to pursue social and infrastructural development in the face of global recession.

While pragmatic in origin, the Petrocaribe alliance operated equally as challenge to American hegemony and a medium of solidarity across the global south. Still, Chavez’s generosity was considered reckless by some due to Venezuela’s reliance on oil revenues that diminished as tax hikes alienated investment from foreign multinationals. Chavez was rightfully hailed by the political left as a visionary leader who challenged neoliberal policies and improved social conditions for a broad swath of Venezuelans. But to neglect the crucial role of a fortuitous market would be a dangerous error. Just as oil revenues extended the reach of the Bolivarian Revolution, the current market slide may portend its untimely decline.

***

Energy security in the U.S., in this instance, is a matter of promoting viable alternatives to Venezuelan socialism as much as identifying reliable sources of oil. President Obama’s vaunted “all of the above” energy policy, which embraces a diverse portfolio of fossil fuels, nuclear energy, and renewables to reduce dependence on foreign oil, represents an avenue of economic independence and an instrument of geopolitical control. Similarly, the sudden concern for Caribbean energy security is motivated by an effort to provide alternatives to Petrocaribe and ease an eventual transition from socialism to neoliberalism in Venezuela and among its regional interlocutors.

From 2005, renewable energy was proposed as a means to challenge Caribbean reliance on Petrocaribe. Leaked cables from Jamaica accordingly suggest “assistance in seeking alternative energy sources, and encouraging a diversification of the country’s portfolio…to ease the burden of their crippling oil bill.” Alternative energy, rather than a means of reducing carbon emissions and mitigating climate change, is invoked here as a means of undermining the growing popularity and political influence of the Bolivarian Republic in the Caribbean. In other words, the shale boom and adjunct energy security measures spearheaded by the U.S. constitute a broader effort not to escape the clutches of foreign oil, but to temper the reach of Latin American socialism and its unfriendly stance toward private corporate interests.

Petrocaribe launched in June 2005, only three years after an attempted coup failed to oust Chavez in Venezuela. Coincidentally, shale operations in the U.S. exploded shortly after with the implementation of new extractive techniques such as slickwater fracking. By cutting production costs dramatically, slickwater techniques positioned fracking as a viable avenue of U.S. energy independence.

While it would be misleading to identify Petrocaribe as the causal factor behind the shale boom, the latter conveniently intervened at a moment where Venezuela enjoyed the spoils of a sustained rise in oil prices. As prices fall in accordance with the market glut spurred by Saudi crude and North American shale production, estimates of the break-even price for Venezuela to balance its national accounts remain at an unseemly US$120 per barrel.

Now, as Maduro continues to recruit allies as diverse as China and Goldman Sachs to weather the economic storm, we are reminded once again that no national economy is insulated from the vagaries of a global market. While Venezuela, Russia, and Iran certainly remain targets of economic war, equal attention must be drawn to those peripheral economies that stand to absorb the shocks of cheap oil and its political repercussions. The Caribbean beneficiaries of Petrocaribe serve as case and point. While the region was once embroiled in the tripartite political geography of the Cold War, it now indexes a more complex and uneven geography characterized by non-aligned and south-south cooperation as the latest challenge to North Atlantic neoliberalism.

***

The tragedy of what Vijay Prashad has recently dubbed the “poorer nations,” therefore, has been their reliance on natural resource reserves and specific market conditions to advance potent alternatives to Western liberal democracy. For instance, the unorthodox pairing of Venezuela with the corporate financiers of Goldman Sachs evinces a larger paradox of Latin American socialism and the unfinished project of postcolonial sovereignty. As Venezuelan anthropologist Fernando Coronil argued at the zenith of the Bolivarian Republic, Chavez followed his authoritarian predecessors by acting as a magician of state power who masked his continued dependence on a booming oil market to maintain his socialist ambitions. Chavez, in this view, typified the “tension between national conditions of state legitimacy and the international conditions of capital accumulation,” championing an oppositional socialism while remaining subject to the demands of neoliberal markets and corporate financiers.

As the oil war unfolds, it would behoove us to pay attention to Kingston and Port au Prince as closely as Moscow, Tehran, and Caracas. Instead a facile opposition between “sheiks” and “shale,” as The Economist has it, or a swell in tensions between the U.S. and Russia, the political geography of oil war is equally salient to global centers of fossil fuel production and its vulnerable peripheries. In its expedient alliance with Venezuela, Jamaica demonstrates that the principle of Westphalian sovereignty has yielded to the pragmatism of realpolitik as an effort to stave off the burdens of Third World debt. However, market indicators and civil unrest in Venezuela suggest that the respite enabled by Petrocaribe, which fueled longstanding ideals of national and regional autonomy, rests on a shaky foundation. In the oil war, the Caribbean—not unlike us all—hangs in the balance.

Ryan Cecil Jobson is a PhD Candidate in Anthropology and African American Studies at Yale University.

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