Venezuela Insists on Cuba's Admission to San Jose Pact

By Luis Cordova, IPS, 6 August 1999

CARACAS, Aug 6 (IPS) - Venezuela will continue to insist that Mexico agree to allow Cuba and other nations to join the San Jose Pact, through which the two countries sell oil to 11 Central American and Caribbean nations under preferential conditions.

The Pact was officially renewed by presidents Ernesto Zedillo of Mexico and Hugo Chavez of Venezuela Thursday, without any of the changes suggested by Caracas.

Venezuela has proposed to Mexico the expansion of the accord to other Caribbean nations, including Cuba, Deputy Minister of Foreign Relations Jorge Valero said Friday. But Mexico raised objections to the inclusion of Cuba.

He clarified, however, that the question had already been discussed and agreed, and that there was no dispute with respect to the contents of the accord.

Mexico's objections involve the financing possibilities contemplated by the Pact and the mechanism for supplying crude oil to Cuba.

The Venezuelan government will continue insisting on the expediency and possibility of expanding the Pact to other countries, including Cuba, when it is renewed again in August 2000.

On Jul 6, Chavez announced his proposal to expand the Pact to other nations, including Cuba, because it is part of the Caribbean.

The San Jose Pact, or Programme of Energy Cooperation with the Countries of Central America and the Caribbean, has been in effect since 1980, and Mexico and Venezuela have renewed it every year in early August.

Venezuela and Mexico make a decisive and non-rhetorical contribution to development and the progress of sister nations, said Valero, who stressed the significance of the act of renewal and the positive results obtained by means of the Pact so far.

Under the terms of the agreement, Mexico and Venezuela sell 160,000 barrels a day, divided in equal parts, to Barbados, Belize, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Panama and the Dominican Republic.

The 11 countries enjoy preferential payment facilities, as well as the possibility of recuperating up to 20 percent of what they spend on oil through the Pact in the form of long-term loans for development projects. The credits, meanwhile, benefit suppliers of goods and services in Mexico and Venezuela.

Minister of Foreign Relations Jose Vicente Rangel has stated Venezuela's interest in using oil as a foreign policy instrument, in the best sense of the word.

He added that if expanding the San Jose Pact did not turn out to be an option, Venezuela might seek its own alternative formula.

Cuban Foreign Minister Felipe Perez Roque, who visited Caracas in mid-July, described Venezuela's position as generous and one of solidarity, and said that if the San Jose Pact were not expanded, his country would understand.

Cuba produces around 31,000 barrels of crude a day, not enough to cover its needs, according to the Quito-based Latin American Energy Organisation.

Oil is the Achilles' heel of the economy of Cuba, which obtains part of what it needs in exchange for sugar, through a contract with Russia.

Under the terms of the current contract, signed early this year, Russia is to provide 1.5 million tonnes of crude to Cuba by late December, in exchange for 800,000 tonnes of unrefined sugar. When the agreement expires, the Russian government is expected to put private companies in charge of supplying oil to Cuba.

In the weeks prior to the renewal of the San Jose Pact, local analysts in Venezuela criticised the agreement, arguing that the cash-strapped country was in no position to give away its oil.

Government spokespersons replied, however, that the oil was sold at international prices, and that local firms benefited from the projects financed through the Pact.

But according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), the San Jose Pact must adapt to the new conditions prevailing in the world today.

Since 1995, ECLAC has suggested that the statutes of the Pact be changed in order to include Colombia among the oil suppliers, guarantee better development of the energy sectors of beneficiary nations, reduce default penalties, and ease the obligation to buy products from Mexico and Venezuela.