Introduction
In a November 2017, investigatory report the Haitian Senate found that approximately $1.7 billion from the Petrocaribe Fund was either lost, squandered, or embezzled between the years 2008 and 2016. Petrocaribe is an alliance between Venezuela and numerous nations in the Caribbean where Venezuela would allow the petrocaribe members to purchase oil at a discount. The unremitting surging global price of oil has crippled the economies of many small, poor nations, and the tourism-dependent Caribbean countries are among the most vulnerable. Into this bleak picture has emerged a possible savior in the person of Venezuelan president Hugo Chávez and his principled Petrocaribe plan. Now, Haitians all over the world are demanding answers to where the money from the Petrocaribe fund has gone. The missing funds from the oil assistance agreement are meant to improve public services, and social development as well as provide social care. Today’s estimate is that approximately $3.8 billion of the funds, which account for the 40% of Venezuelan oil revenues between the 8-year span, are missing or misspent. A 38% spike in gas prices in early July of 2018 and the petrocaribe challenge, a worldwide social media anti-corruption campaign that started with a hashtag, shed light on the misuse of the Petrocaribe funds, and triggered violent protests.
PetroCaribe Background
Petrocaribe was established in June of 2005 by former Venezuelan president Hugo Chavez, and is an oil alliance between 15 Caribbean states and Venezuela to purchase oil on conditions of preferential payment. “Venezuela supplied the Petrocaribe member states with daily shipments of oil and products (around 300 kbpd involving all the country members) offering payment facilities and discounts, with the ultimate goal of displacing U.S. and European oil companies throughout the region while promoting the socialist ideology in the zone.” (See Exhibit 1)
Source: https://oilprice.com/Geopolitics/South-America/The-Demise-Of-Petrocaribe.html
Chavez’s aims of petrocaribe were to be a solution to the Caribbean energy crisis, to drive the development of energy infrastructure as well as promote improvement in social development and public services.
The structure of the deal is based on a system of deferred payment, as Venezuela’s OPEC obligations do not allow for them to sell under market value. Within agreements, the countries pay a percentage of the market price up front, and the remaining balance is converted into long term low interest loans, the countries have 25 years to pay Venezuela back at a 1 percent interest rate. Venezuela will also cover the cost of shipping, aid in development of distribution infrastructure, storage sites and provide duel efficient systems. However, member countries’ debt may also be partially amortized by means of paying in goods and services like Venezuela’s existing arrangement with Cuba. That popularly known as “doctors for oil,” in which Cuba sends over ten thousand doctors, nurses, and dentists to provide free health care in clinics in Venezuela’s poorest communities, in exchange for 90,000 barrels of Venezuelan oil per day.
“The one catch is PetroCaribe will only deal with a state controlled entity, meaning that the PetroCaribe agreement is based on eliminating all intermediaries. “We’re not talking about discounts…We’re talking about financial facilities, direct deliveries of products, [and] infrastructure,” said Energy and Petroleum Minister and President of PDVSA, Rafael Ramírez; the goal is to cut down on unnecessary, middlemen costs. This means that existing U.S. area distributors, Shell and Texaco, would be excluded from purchasing subsidized Venezuelan oil under the envisaged program. In effect, participating CARICOM countries will be edged in the direction of de-privatizing their oil industry infrastructure in favor of setting up state-guided facilities. Distribution will be managed by PDV Caribe, a subsidiary of PDVSA, which will be set up to handle shipment and delivery of the crude, although questions regarding the establishment of regional refining capacity remain.”
Haiti Background
Officially the republic of Haiti is an island located on the island of Hispaniola shared with the Dominican Republic, and is the third largest nation in the Caribbean after Cuba and the Dominican Republic. Haiti has an estimated 10.8 million people making it the most populous country in the Caribbean Community (CARICOM) and the second most populous country in the Caribbean as a whole. Haiti was “discovered” in December 1492 by Christopher Columbus on his first voyage to India. Christopher Columbus landed in modern day Bord de Mer Limonade in northern Haiti. He encountered the Taíno people, which were the indigenous people of the island. Was a former colony of both France and Spain, with plantations of sugarcane and slaves bought from Africa.
During the French Revolution (1789-1799), the slaves on the island of Haiti revolted and became the first ever successful slave rebellion, and the first independent nation of the Caribbean and South America. The Haitian Revolution started in 1791 with the leadership of the first black general of the French Army Toussaint Louverture and Jean-Jacques Dessalines and ended in 1804 with the abolishment of slavery on the island. Later in 1825, Haiti and France were in agreement that reparations of approximately $40 billion or 90 million francs were to be paid to France to compensate for the loss of property, money and trade in exchange for diplomatic recognition by France. Haiti agrees out of fear of invasion due to threats by King Charles X.
Haiti’s current governmental system, the semi-presidential republic where the president (elected by the popular election) acts as head of state, and the prime minister, appointed by the president and National Assembly acts as head of government, was set forth in the Constitution of Haiti.
There are many factors contributing to the corruption of Haiti, an early start to independence left the country in shambles due to a high debt to their colonizer, the major natural disasters, dictatorships, and foreign occupations. The country is the poorest in the western hemisphere and the corruption might be to blame. Haiti is amongst the most corrupt countries in the world, in 2008 it was the 4th most corrupt nation in the world according to BLANK. “Conversely, according to the 2013 UNODC report, murder rates in Haiti (10.2 per 100,000) are far below the regional average (26 per 100,000); less than ¼ that of Jamaica (39.3 per 100,000) and nearly ½ that of the Dominican Republic (22.1 per 100,000), making it among the safer countries in the region.” Understanding corruption in Haiti aids in understanding the patterns and the frustrations with the government and the fraud with the petrocaribe funds that were there to gear Haiti in the right direction.
Venezuela Background
Officially the Bolivarian Republic of Venezuela, is located on the northeastern portion of South America, with the capital city of Caracas. Colonized by the Spanish, Venezuela gained its independence in 1811, becoming among the first of the New World colonies to gain their independence.
Venezuela is currently one of the world’s leading exporters of oil, and has the world’s largest known oil reserves, even though they only recently discovered their oil in the 20th century. However, due to success in the oil industry, Venezuelans ditched their other industries such as exporting coffee and are now suffering the effects of hyperinflation. The annual inflation rate reached 83,000% in July, according to a recent study by the opposition-controlled National Assembly. Prices have been doubling every 26 days on average. This has resulted in many Venezuelans struggling to afford basic items such as food and toiletries. With small items like a cup of coffee costing a whopping 2.5m bolivars until recently, it also became increasingly difficult to pay for goods in cash.
In 2014, the oil price dropped drastically, causing Venezuela to experience a shortage, as its oil revenues make up approximately 95% of its export earnings. Since Venezuela solely exports oil and does not produce anything, they have to import all products from abroad, making it difficult to import goods at the same level as before, and imported items became harder to come by and pricier as businesses increased prices causing inflation to sky rocket.