Under the PetroCaribe program, ten members of the Caribbean Community, along with the Dominican Republic, Nicaragua and El Salvador, buy oil from Venezuela. (St Lucia is preparing to receive its first shipment.) How much they pay upfront depends on market prices. The more expensive oil is, the more of the cost is loaned on very lenient terms: in the past, loans have been extended for 25 years at interest rates as low as 1%. The cash saved is earmarked for many purposes: energy subsidies, education, beach clean-ups.
Between 2011 and 2013, these deferred payments cost Venezuela an average of $2.3 billion each year in lost income. Similar bilateral deals, most notably with Cuba, add to the bill. That is much less than the $28 billion used for local energy subsidies, but no trifle in a country that is badly short of dollars and basic goods. So far, the desire for influence in the Caribbean has outweighed economic pressures in Venezuela. But there are already signs that PetroCaribe’s terms are becoming more stringent: Guatemala withdrew from the group last year after the terms became less favorable. The possibility that the program may eventually be wound up prompted a recent report from Scotiabank, a Canadian lender, to call PetroCaribe “more noose than lifeline”.