On Wednesday, Guatemalan Vice President Roxanna Baldetti submitted a petition to Petrocaribe, an oil trading alliance among Caribbean nations and Venezuela, threatening that her country will leave the block unless the Venezuelan government agrees to maintain originally established interest rates.
Former Venezuelan President Hugo Chávez created Petrocaribe in 2005 to sell crude oil to neighboring countries at preferential prices and low interest rates—below 2 percent.The idea was to bolster regional cooperation, to supply oil cheaply to Venezuela’s’ neighbors and to help finance Venezuela’s oil infrastructure.
In May, Guatemala officially joined Petrocaribe, and Honduras was re-incorporated into the group, which now includes 18 Caribbean and Central American nation. Honduras joined Petrocaribe in 2008, under then-President Manuel Zelaya, but Chávez revoked the country’s membership in 2009, when the military ousted Zelaya.
However, potential interest rate hikes have raised concern in Guatemala.
In June, Venezuelan President Nicolás Maduro, Petrocaribe’s leader, suggested that interest rates might more than double to 4 percent to account for a global increases in oil prices. In response, Guatemala submitted to Maduro a petition to cap interest rates, noting that it joined the block to avoid the effects of rising world oil prices.
During the block’s VII annual summit in June, member nations drew up a framework to make membership more attractive by expanding economic cooperation among members, including preferential prices for other goods such as sugar and rice, as well as cooperation on tourism, communications and transport. Still, Baldetti claims that higher interest rates would render the agreement unattractive to Guatemala.
Correction: This post was originally worded so that it appeared as if Manuel Zelaya was the president of Guatemala in 2008. He was president of Honduras.