Wed | Jan 23, 2019

Editorial | Taking the gloves off with Venezuela

Published:Thursday | January 10, 2019 | 12:00 AM

The Jamaican Government ought to tread cautiously in its attempt at a takeover of Venezuela's 49 per cent stake in Petrojam, the local oil refinery, even though the Maduro administration looks increasingly indifferent to, and impotent in, fulfilling its obligations under a joint-venture pact and letter of intent inked over the last two years.

With its 51 per cent majority stake, Kingston has, on paper, the muscle to move to assume full ownership of the refinery, which has been racked by corruption and nepotism, and whose infrastructure the Jamaican prime minister, Andrew Holness, has acknowledged to be so aged, it is on the brink of obsolescence.

"Many of the equipment have reached their useful life, and in a meeting with the board, it disclosed that the largest tank had a significant leak, and that's just by virtue of the passage of time, and with the chemical reaction with the crude, the linings have deteriorated over time," Prime Minister Holness said last December. "Generally, the plant is old, so it's not operating at its true level of efficiency."

It had been hoped that Caracas, under the leadership of its mercurial and bombastic president, Nicol·s Maduro, would play a major role in the overhaul of the plant to drag it into the 21st century. Jamaica's energy security has been tenuous, which is why the northern Caribbean country has, incrementally, been pursuing a strategy towards diversifying its sources of power, as well as to radically increase efficiencies.

 

EXISTENTIAL CRISIS

 

But Mr Maduro's government has been enmeshed in an existential crisis which has seen the economy collapsing under stratospheric inflation, foreign investors shuttering businesses, health and social services deteriorating, and hunger rising. Crudely, everyone in Venezuela has been soiled as the smelly stuff hits the fan.

Jamaica's Foreign Minister, Kamina Johnson Smith, while mindful of the non-performance of the Venezuelans, must calculate carefully whether the intention to arm-wrestle Caracas could inflame tensions between the two governments. For left to his capricious devices, Maduro, the quintessential narcissist, may weave a web of conspiracy and engage the Jamaican Government in a drawn-out court battle in local or international jurisdictions.

Even though Mrs Johnson Smith and the Jamaican State might believe they have the upper hand in the impasse, Venezuela might be the unlikely beneficiary if undue haste attends the conclusion of the takeover. For if the Christopher Zacca-led committee reviewing the future of Petrojam assesses, in a report due May, that the refinery is junk, the takeover bid may not only be prejudicial and premature, but leave Kingston the loser, having bought out the Venezuelans on inflated terms.

 

SILVER LINING

 

If the Opposition is correct that arbitration was not sought, Mrs Johnson Smith or Mr Holness should make the case to Jamaicans on why such options were not pursued, or considered to have little chance of success. They could also give details on the legislative strategy for executing the takeover.

The silver lining, perhaps, is that the Venezuelans, having snubbed the initial buyout offer in March 2018, might seriously come to the negotiation table now that Kingston has signalled its intent on pressing ahead, whether or not the Maduro government wants to play ball. Mrs Johnson Smith might just call their bluff.

In a bid to arrive at a mutually beneficial position for both Jamaica and Venezuela, Mrs Johnson Smith should consider soliciting diplomatic intervention from Cuba - long-time allies of both Jamaica and Venezuela with a rich sociocultural legacy. Emissaries from Miguel Diaz-Canel would be ideal arbitrators of a deal, absent of the legal drama and histrionics that could sour the pot. Meanwhile, the Jamaican Government should update the country on whether it is exploring interest from new suitors to invest in the upgrade of Petrojam after the Venezuelans have left town.