Sanders answers: Will US help Caribbean Energy Woes?
Friday 24 April 2015
Inter-American Dialouge's Latin American Advisor -Energy
www.thedialouge.org April 20-24, 2015
Will U.S. Efforts Help Address the Caribbean's Energy Woes?
U.S. President Barack Obama announced this month in Jamaica that the United States will offer $20 million in funding for clean energy investments in the Caribbean, a region that has become increasingly dependent on oil from economically troubled Venezuela and where high power costs have curtailed growth. One of the aims of Obama's trip, during which the U.S. Department of Energy also signed a statement of intent with Jamaica's Science and Energy Ministry to cooperate on infrastructure, storage and diversification of fuels, was to deepen U.S. energy ties with the region. What's driving the Obama administration's push for Caribbean energy cooperation? Is it a commitment the United States will continue after Obama leaves office? Are U.S. efforts focused on the right areas to make a difference in the Caribbean's energy problems? What potential issues could cause plans to fall short of expectations?
Sir Ronald Sanders, consultant, former Caribbean ambassador and senior fellow at the Institute of Commonwealth Studies:
"Twenty million dollars is a very small sum to fund clean energy investments in the Caribbean in any serious way. The enormous cost of building the infrastructure to transition from fossil fuels requires Caribbean governments to have access to concessionary financing from international financial institutions (IFI’s). The US government has undertaken to support change in the criteria for concessional financing so as to allow qualification for Caribbean countries that up to now are “graduated” because (apart from Haiti) they are not low-income countries. The change, if it occurs, will not do so with the required immediacy. The majority of Caribbean countries also now confront high debt. With oil prices now substantially lower than they have been for decades, there is little incentive to incur the huge capital cost of moving to clean energy sources.
What appears to be driving this belated US interest in the Caribbean’s energy sector are two things: a desire to neutralise the reliance of many Caribbean countries on Venezuela which supplies petroleum and petroleum products under a payment scheme that incorporates long term loans at low interest rates; and the wish to sell US natural gas and clean energy technology to the region. The latter will not be achieved unless the US provides (a) direct funding on a concessionary basis; and (b) inducements to its private sector to invest. On the matter of Venezuela, Caribbean governments that now benefit from the advantageous payment scheme will not turn away from it while it continues.
If any US government is seriously concerned with improving conditions in the Caribbean to achieve higher levels of prosperity that discourage refugees and illegal migration as well as reduces crime and promotes greater political stability, it needs to develop a comprehensive plan for the area. It would best do so by consulting with regional governments on such a plan.
Saturday 18 April 2015
A new commentary has been posted. It is entitled: Orphans of Obama's policies? It argues that normalisation of US-Cuba relations has implications for Caribbean countries. Cuba is already a major competitor in the vital tourism industry. The number of Canadian, European and Latin American visitors to Cuba is greater than that of tourists to any CARICOM country. In part, the larger number of visitors to Cuba is due to the fact that its prices are cheaper because of lower wages for workers. Now, with Cuba off the SSOT list, the country will benefit from a number of things, including access to financing from International Financial Institutions. This will increase Cuba's competitiveness and other Caribbean countries may become the orphans of US President Obama's policies.
Cuban President Raul Castro and US President Barack Obama - making Cuba no longer an orphan.
The previous commentary is:US-Caribbean: Brief Summits not enough. The commentary looks at the meeting between US President Barack Obama and leaders of 14 Caribbean Community (CARICOM) countries and concludes that it is doubtful that much came of that, primarily because the entire encounter was scheduled to last only 90 minutes. The effectiveness of a 90-minute dialogue by 15 leaders would have required extensive, comprehensive and detailed preparation by officials such that only ratification would be required. But, there appears to have been no such preparation.The value of the meeting, therefore, seems to have been no more than an opportunity for leaders to raise issues in the hope of addressing them fully at a later time. Such brief summits are not enough.
US President Barack Obama and CARICOM leaders in Jamaica on April 9
The previous commentary is:A changing tide in Nigeria's fortunes?. The commentary considers the recent Presidential election and argues that by conceding defeat in the manner that he did the incumbent President Goodluck Jonathan spared Nigeria widespread violence and unrest that many observers had feared might be a consequence of the elections. Had that unrest occurred it would have further set back Nigeria’s economy which has been reeling from the falling prices for oil, the main money earner for its economy. It would also have complicated even more the battle the country’s military forces are fighting against Boko Haram, an insurgent and violent group that has now publicly associated itself with ISIS (or ISIL as it is sometimes called) in the Middle-East. Boko Haram has killed thousands of Nigerians, displaced millions internally and externally, kidnapped hundreds of schoolgirls, and at one time held portions of the country that amounted to the size of Belgium.
Outgoing President Goodluck Jonathan and incoming President Buhari