Caracas taps PetroCaribe to challenge OAS: Update

OREANDA-NEWS. June 01, 2016. The increasingly isolated Venezuelan government is relying on small neighbors that benefit from its PetroCaribe oil supply facility to counter an unprecedented diplomatic offensive by Organization of American States (OAS) secretary general Luis Almagro.

Almagro today invoked the body Inter-American Democratic Charter against Venezuela because of what he says are systematic constitutional and human rights violations committed by the government of President Nicolas Maduro.

The action coincides with the Venezuelan government?s apparent stonewalling of an opposition-led petition to hold a presidential recall referendum amid acute shortages of basic goods and increasingly frequent blackouts.

Almagro, a lawyer and diplomat who served as Uruguay's foreign minister from 2010-15 before becoming OAS secretary general in 2015, detailed the breakdown of democracy in Venezuela in a 132-page report released today.

Almagro cited Article 20 of the Charter to summon an OAS permanent council to address the crisis and consider measures that could include Venezuela?s suspension from the body. The council will meet at its Washington headquarters on 1 June to consider "a Draft Declaration on the situation in the Bolivarian Republic of Venezuela," the OAS said today.

"The secretary general of the OAS considers that the institutional crisis in Venezuela demands immediate changes in the actions of its executive power," Almagro's report said.

The report explicitly cited the Maduro government's "continuity of violations of the constitution, especially as relates to the balance of powers, function and integration of the judicial power, human rights violations, the procedure for the recall referendum and its lack of capacity to respond to the grave humanitarian crisis that the country is living and which affects the social rights of the population."

Argentina currently holds the rotating three-month presidency of the OAS, lending support to Almagro?s initiative. A new government that took office in Argentina in December 2015 broke with the previous administration?s political alliance with Caracas.

But the outcome of an OAS permanent council vote on whether to actually apply the OAS Charter against the Maduro government is uncertain.

Maduro and former National Assembly president Diosdado Cabello, widely perceived in Venezuela as the president?s second in command, have rejected Almagro's efforts to enlist the OAS in mediating a solution for Venezuela's political crisis under diplomatic good offices outlined in the Democratic Charter. Both have separately declared that no OAS diplomatic missions will be allowed entry into Venezuela.

Venezuela's Foreign Ministry says Almagro lacks enough votes in the OAS permanent council to undertake any diplomatic initiatives in Venezuela.

The OAS has 34 member states and needs an absolute majority of 18 votes to launch any initiatives under the democratic charter, the ministry said.

Each member state has one vote.

"We are confident that the PetroCaribe states will vote against any OAS initiative attempted by Almagro that could harm Venezuela and also affect the interests of PetroCaribe," an aide to foreign minister Delcy Rodriguez tells Argus.

Caribbean states account for 13 of the 34 states that belong to the OAS, and Caracas expects that every Caribbean state that also is a PetroCaribe recipient will not vote against Venezuela at the OAS. "The PetroCaribe states are loyal allies and trading partners and they will side with Venezuela," the foreign minister's aide said.

PetroCaribe states held a previously unannounced meeting in Caracas on 27 May. Among the countries represented were Jamaica, the Dominican Republic and St Kitts and Nevis.

Caribbean governments consulted by Argus today declined to comment.

Under the program, which Venezuela founded in 2005, Venezuelan state-owned oil company PdV supplies crude and refined products on preferential terms that include barter arrangements. PetroCaribe supplies have diminished in recent years in line with the deterioration of Venezuela?s oil industry, reaching less than 100,000 b/d, not including around 80,000 b/d that PdV ships to close ally Cuba. Many of the countries are turning to market-based oil supplies and gas alternatives as well.

PetroCaribe?s terms and associated development projects are opaque, but preferential terms diminish as oil prices fall.

Caracas sees reluctance to vote against it in other Latin American countries as well.

The Foreign Ministry says Colombia will likely abstain from voting, because of close ties along the border, which Maduro ordered shut in August 2015.

Freezing Caracas out of the OAS also could undermine Bogota's efforts to negotiate a peace deal with the Colombian guerrilla group ELN, given the Maduro government's mediating role in the talks, the foreign ministry added.

There was no immediate comment from the Colombian government.

Brazil, like Argentina, has veered away from Venezuela after an interim government took over in mid-May. Both are likely to back Almagro.

The Foreign Ministry warned of consequences. "Any votes that isolate Venezuela internationally certainly could affect the eventual payment of outstanding debts Venezuela owes exporters and contractors in both countries," the ministry said.

"Panama's efforts to collect over \\$1bn that the Maduro government owes Panamanian exporters also could stall if the OAS votes to sanction Venezuela in any way," the ministry added.

The US government, which also has a vote at the OAS, and US lawmakers have come out overwhelmingly in favor of Almagro?s initiative.

The State Department said today it supports efforts to establish a dialogue in Venezuela, referring to informal talks between the Venezuelan government and some opposition members taking place in the Dominican Republic. The talks are mediated by former Spanish Prime Minister Jose Luis Rodriguez Zapatero and two former Latin American presidents.