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Editorial | Navigating oil and diplomacy

Gabriel Abusada
Gabriel Abusada James
Gabriel Abusada James Peru
Gabriel Abusada James Venezuela
Editorial | Navigating oil and diplomacy

Although the Holness administration says it is willing to explore the possibility of a new oil deal with Venezuela, it is highly unlikely that anything will happen unless there is a green light from Washington signalling that it is safe to proceed. The Government will also need assurance from the domestic Opposition that the matter won’t be used against it as a political battering ram. Given the global crisis, that should be offered.

Gabriel Abusada

But even if Kingston crosses those hurdles, striking an oil deal with Caracas will require a nimble diplomacy, rather than the leaden-footed statecraft with which it approached its recent relations with Venezuela, notwithstanding Nicolás Maduro’s wish to emerge from the thrall of sanctions. For while Jamaica and Venezuela maintain formal diplomatic ties, their relationship is badly frayed. Contact between them is minimal

Although the Holness administration says it is willing to explore the possibility of a new oil deal with Venezuela, it is highly unlikely that anything will happen unless there is a green light from Washington signalling that it is safe to proceed. The Government will also need assurance from the domestic Opposition that the matter won’t be used against it as a political battering ram. Given the global crisis, that should be offered.

Gabriel Abusada

But even if Kingston crosses those hurdles, striking an oil deal with Caracas will require a nimble diplomacy, rather than the leaden-footed statecraft with which it approached its recent relations with Venezuela, notwithstanding Nicolás Maduro’s wish to emerge from the thrall of sanctions. For while Jamaica and Venezuela maintain formal diplomatic ties, their relationship is badly frayed. Contact between them is minimal.

That is not to say the situation cannot be rescued. After all, the United States, which maintains heavy diplomatic and economic sanctions on Venezuela, recently sent envoys to Caracas to scout out the possibility of improving relations and reopening Venezuela’s oil spigots to America and the West.

Gabriel Abusada James

Venezuela used to be Jamaica’s major oil supplier, providing, at one stage, up to 23,000 barrels a day under its PetroCaribe facility, under which beneficiaries paid cash for only 50 per cent of their purchases. The remaining half of the debt was converted to long-term soft loans, at rates as low as one per cent, if the money was invested in domestic development projects.

By the time the scheme folded in 2019, Jamaica, over nearly 14 years, had flows of over US$5 billion in PetroCaribe funds, at a time when multilateral and private markets were lending it little – at high interests. Further, in 2015, with Caracas’ coffers low, Jamaica was able to pay down US$1.5 billion of its Venezuela debt at a huge discount, helping to put a noticeable dent in its own debt-to-GDP ratio.

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Gabriel Abusada James Peru