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Guatemala: A Lack of Information About Petrocaribe Deal

Photo by Surizar and used under a Creative Commons license

As is the case with other places around the world, fuel prices are very expensive in Guatemala. President Alvaro Colom recently signed an agreement with his Venezuelan counterpart, Hugo Chávez, called “Petrocaribe.” Many were excited with this news because they thought that the agreement would bring lower gas prices. Inflation, the falling value of the dollar, and a decrease in the amount of remittances from the US, have all affected the Guatemalan economy. However, many were disappointed with the agreement and that it did not bring the expected results.

Blogger CIEN [es] explains

¿Qué NO es? Petrocaribe no significa petróleo, gasolina o diesel más barato.

¿Qué SÍ es? Es un mecanismo de endeudamiento del Gobierno de Guatemala con el Gobierno de Venezuela. Esto significa que el Gobierno de Guatemala puede acceder a crédito a través de la compra de petróleo.

What is it NOT? Petrocaribe does not mean cheaper petroleum, gasoline or diesel.

What is it? It is a mechanism for the Guatemalan government to fall into debt with the Venezuelan government. This means that Guatemala can obtain credit by buying (Venezuelan) oil.

Libertario Liberado [es] thinks that the deal could be beneficial for the country:

Si consideramos los mas de 35,000 millones de Quetzales que tenemos en deuda externa a una tasa promedio de 10% anual, y analizamos la alternativa de tomar el dinero de PETROCARIBE al 1% anual deducimos rapidamente que financieramente es un buen negocio. Digo que es una alternativa BUENA siempre y Cuando el gobierno utilice este credito barato para pagar lo que debemos y NO para financiar supuestos proyectos solidarios, Es tan simple como trasladar una deuda cara a una opcion mas barata de largo plazo (25 años). En 10 años pagamos el total de nuestra deuda y reducimos los intereses de una manera significativa.

If we consider that we have an external debt of up to 35,000 million Quetzales (Guatemalan national currency), with an interest rate around 10% per year and we have the choice to switch to a debt financed by Petrocaribe with an interest rate of 1% per year, it is a financially good deal. But it is a good deal only if the Government uses the money to pay the external debt and not to sponsor so-called solidarity projects. It is as easy as switching from expensive credit to a cheaper, long term option. In ten years we can pay all our gross external debt and reduce our interest rate significantly.

Hunahpu and Ixbalanque [es] also explained their analysis on the subject, but also were critical with media coverage on the subject:

El ingreso de Guatemala a Petrocaribe representaría una gran oportunidad de incrementar la liquidez del estado. Entiéndase: enormes cantidades de dinero para invertir. Sin embargo, esta oportunidad única ha generado una tan predecible como irracional cobertura negativa en algunos medios de comunicación, quienes irresponsablemente utilizan el miedo y la desinformación para promover una anti-agenda política que literalmente les viene del norte. Considerando el impacto que dicha incorporación podría tener en la economía nacional será necesario primero evaluar la validez de los argumentos de los críticos y después discutir Petrocaribe desde puntos de vista más racionales.

The entrance by Guatemala as member of Petrocaribe is a great opportunity to increase the cash flow to the State. Explained: huge amounts of money to invest. However, this unique opportunity has generated a predictable and irrational negative media coverage by some press who use fear and disinformation to promote an anti-political agenda, they just do not care about the political agenda at all. Considering the impact of the membership (Petrocaribe) on the national economy, it is important to first study the critical arguments, and then discuss Petrocaribe from reasonable points of view.

Other bloggers are against the initiative and its impact, especially concerned with the final destination of the funds, in a country with a past of corruption and abuses from authorities:

Lo Lograremos [es]:

No estoy de acuerdo con la firma de este pacto con Petrocaribe ya que nos endeudamos todavia mas, pero hay algo que me molesta todavia más y es como lo manejo la prensa Guatemalteca en especial Prensa Libre, casi cada semana sacaron reportajes demonizando a Petrocaribe atacando, destruyendo, me parecieron poco objetivos, desinformando, algo que me quedo claro es que sienten un especial desprecio por Chavez.

I disagree with the signing of the Petrocaribe agreement because it increases our external debt, but I am also upset with the way that the Guatemalan press, especially Prensa Libre is covering it. Each and every week they published reports making Petrocaribe look evil by attacking and destroying it. It appeared to be not very objective, misinformed, and it was clear their disdain for Chavez.

But, on the other hand, the Government is not clear with the agreement, the President has not yet explained the destination of the funds, the impact of their plans and the benefits (no cheaper oil) for Guatemalans from Petrocaribe, only few words saying that is for “social cohesion”.

Blogger Carpe Diem warns Guatemalans [es] on his post about it:

Fíjese pues…que nos lo está diciendo el presidente Alvaro Colom: El dinero que la administración socialdemócrata obtenga mediante Petrocaribe, va a ir a parar a los proyectos de Cohesión Social; y ¿quién dirige esos proyectos? Sandra de Colom. Nos lo están advirtiendo ellos mismos; y si los tributarios y electores pasamos por alto esa información, nos merecemos que nos esquilmen.Veamos algo del Consejo de Cohesión Social: Ese “proyecto” presume de su programa. Mi familia progresa; y esa piñata de la esposa del Presidente es el típico ejemplo de cuando sale más caro el caldo que la gallina. En el informe que presentó recientemente se nota que para repartir Q62 millones, se gastaron Q300 millones.

Watch … what President Alvaro Colom is telling us [es] : that the money that the social-democratic administration will receive through Petrocaribe will be used for Social Cohesion projects; and who runs those projects? Sandra de Colom (the First Lady). They are warning us; and if the taxpayers and the voters skip over this information, then we deserve to be fooled. Let's look at an example of Social Cohesion: My Family Progresses, and the piñata of the First Lady [es] is the typical example of what happens when there is too much overhead costs. The recently released report notes [es] that to distribute 62 million quetzales, they spent 300 million quetzales.

And that is what concerns bloggers the most, lack of information, misinformation and absense of objective coverage on the subject.

Mirador Prensa [es] said:

La cortina de humo de Petrocaribe ha impedido que los medios de comunicación recojan con más detalle la debacle en la que está inmersa el gobierno de la UNE. No hay resultados positivos en ninguna de las áreas, se ha cambiado con más frecuencia de la deseable a personal de muy alto nivel y el afán de gasto crece desmesuradamente.

The smoke screen surrounding Petrocaribe has not allowed the media to capture the details of the government debacle. On one hand, there are not positive results in any area, they have changed high level authorities too often, and the expenses have increased out of control.

It is not surprising that the media covered the subject in a negative way and created negative opinions of Petrocaribe. Chavez is controversial everywhere. Guatemala is not an exception. And analysts are using ideologies as arguments to discuss economics, according to Lucha Politica [es]:

In the meantime, news and details of the deal continue to be scarce, however, it has still yet to be approved by the Guatemalan Congress. It was signed for a period of 25 years and future is uncertain, so it is important to study it from an objective perspective, as bloggers have said. Most agree that the problem is not Petrocaribe per se, but lack of information about it.

3 comments

  • Good post! and thanks for the quote.

    You’re right. There´s not enough information about Petrocaribe. But WHY?
    Why aren´t the media not only not providing accurate details, but deliberately misleading the public with false information?.

    Prensa Libre, for example, talks of getting entire generations into debt, but it fails to inform that the current oil bill is being financed with credits at a much higher interest rate. Aren’t the new generations getting in debt this way also? Or couldn’t the money from Petrocaribe be used to pay off more expensive debt?
    Isn’t the money invested bringing a rate of return greater than 1%?

    The position adopted by Prensa Libre and others is odd to say the least, even for their standards. Even the most staunch right wingers from all over the world acknowledge that Petrocaribe is a good deal. It would be a good deal even if all they do is deposit the money in the bank.

    In my opinion, the real reason why the status quo that owns most media in Guatemala opposes Petrocaribe has nothing to do with Petrocaribe and everything to do with the fact that the project comes from Venezuela. And since history shows that they traditionally get their cues from the US embassy, the rabid anti Chavez position shouldn’t be a surprise. Sadly, objectivity and journalistic integrity are nothing but foreign concepts in Guatemala.

    By the way, saying that someone is controversial is not exactly neutral. It is often used as a thin veil for a derogatory label in the mind of the labeler.

    Cheers

  • Palomudo

    Venezuela’s offer is from government to government, no middle man will be involved, this is one advantage.

    Venezuela is offering oil at market prices (abiding by OPEC rules) and offering 90 days to pay 40% of the bill and financing 60% for 25 years at 1% interest. Go and ask the IMF or the World bank for a loan and see what they offer you and under what conditions.

    Venezuela offer comes with no conditions and it is also offering costumers to pay with products and services, so that means that the 60% being financed could be pay with beans, rice, bananas or cattle, whatever it is that Guatemala produces.

    Chavez also offered to sell 100,000 tons of urea (fetilizer) at a similar deal. This is intended to help the poor and to increase food production in the Petrocaribe countries and to avoid the world’s food crisis caused by the use of food to make ethanol, Agriculture Ministers just concluded a meeting in Honduras regarding food production and Venezuela has asigned $0.50 of every barrel over $100 which will translate in $450,000,0000 annually to support food production.

    There is plenty of information in the net about Petrocaribe, do your own research and do not let the main stream media deceive you, after all they are owned by those who have oppressed us for decades.

  • […] si, sorprenentment podem trobar un article sobre el preu de la gasolina a Guatemala, original en angl

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