Venezuelan Election: Fingers Crossed North of the Darien Gap

Tomorrow, Venezuelans will have to decide whether they want another six years of president Hugo Chávez, or whether they want something different.

The results of the election will be not only of importance for the people of Venezuela; they are immensely important for the likes of Nicaragua, Cuba, and the rest of the countries attached to the Bolivarian Alliance for the Americas (ALBA).

ALBA is a political and economical alliance spurred by president Chávez, which started operating in 2004, when its first summit was held in Havana, Cuba. Its purpose, according to Chávez, is to achieve “Latin American and Caribbean unity” through a series of trade agreements and common institutional architecture.

The alliance currently has eight member nations, five of which are located north of the Darien Gap, which separates South America from Central America. These are Nicaragua, Cuba, Dominica, St. Vincent and the Grenadines, and Antigua and Barbuda.

Over 75 million people live in ALBA countries, and the regional bloc is very rich in natural resources, such as oil, gas, and minerals. Within ALBA, Venezuela, with its vasts oil reserves and political leadership, plays a crucially important role.

Economic Dependency

According to statistics released this week by the Nicaraguan Central Bank, since 2007 the country has benefitted from more than US$2.2bn of trade with Venezuela.

Exports to the South American country have risen from US$30m in 2007 to US$302m in 2011, making Venezuela the second largest importer of Nicaraguan products after the United States.

Nicaragua also receives lucrative oil loans from Venezuela, buying half of the oil upfront and then paying back the other half through loans. in 2011, Nicaragua made US$557m from oil financing. According to the Central Bank report, 62% of this oil revenue goes to fund social projects and small-business development.

Cuba also relies heavily on its ALBA ally for many of its economic necessities. In return for a part payment scheme for the 100,000 barrels of oil provided by Venezuela each day, Cuba sends more than 40,000 doctors, physicians, teachers, and other experts to assist in Venezuela’s social programmes.

Meanwhile, smaller ALBA members such as Antigua and Barbuda, Dominica, and St. Vincent and the Grenadines all benefit from favourable trade links with Venezuela. For  example, St. Vincent and the Grenadines, which became part of ALBA in 2009, has reaped the rewards of a subsidised credit scheme for oil imports and cheap machinery, used to build the new Argyle International Airport that has allowed for the development of a tourism trade on the islands.

Chávez’s main rival, Henrique Capriles, has given assurances to Latin American leaders that he will not instigate an immediate change to trade dealings if elected president. “Venezuela will not leave any integration process and therefore [Venezuela] will not leave the Bolivarian Alliance for the Peoples of America or the Mercosur common market,” he said to the French newspaper Libération.

However, he warned Cuba that Venezuela “cannot continue giving away our oil”. And to Nicaragua he said: “not a drop of black gold [oil] will leave this country for free”. Indeed, Nicaragua, Cuba, and the rest of the ALBA countries would to see a fall in revenue if favourable oil trade links with Venezuela were to end.

A 2011 report by the Nicaraguan Foundation for Economic and Social Development (Funides), an independent economic think-tank, warned of the “high degree of dependency of the economy in relations with Venezuela.”

It also said that a fall in Venezuelan trade would create a “shock” to the Nicaraguan economy and result in a significant fall in the GDP.

In Cuba, the economist and dissident Oscar Chepe said in an interview with the international press this week, that if Hugo Chávez loses it “may have dramatic consequences for Cuba”.

“With a moribund economy that has become parasitic, if [Cuba] loses the cord that feeds it from Venezuela, it would precipitate a disastrous and unsustainable situation”, he added.

Indeed, Cuba has not been a stranger to losing an ally it has fostered an economic dependency on. When the Soviet Union collapsed in 1991, the Cuban economy was sent spiralling and a large part of its recovery was due to an alliance with Venezuela. Part of the problem for both Nicaragua and Cuba, is that this ‘dependency’ has weakened trade links with other nations.

Carlos Muñiz, the executive director of Funides, advised the Nicaraguan government that they had to “seek new sources of funding.”

Heeding the warning, Nicaragua has begun to diversify its trade links this year. Last month, the government signed a ‘memorandum of understanding’ with a Chinese telecom giant to fund a project to build an inter-oceanic canal across Nicaragua to rival the Panama Canal. The company has also agreed to invest a considerable sum in Nicaraguan telecommunication infrastructure and internet technology. However, in 2011 the trade with China amounted to a mere $17 million.

The Collapse of Socialism of the 21st Century?

As well as serving as an economic figurehead for the ALBA bloc, Venezuela is also a source of ideological direction.

According to Nicaraguan president Daniel Ortega, the upcoming Venezuelan election “is a strategic battle for the Bolivarian revolution and Latin American people”.

Meanwhile the Cuban Foreign Minister Bruno Rodriguez, whilst speaking at the United Nations, expressed his country’s solidarity with the Bolivarian and socialist cause of Hugo Chávez’s government.

A loss by Chávez in the elections would see the end of the centrepiece and founder of ‘Socialism of the 21st century’. Whilst this would not necessarily mean an ideological collapse across Latin America, it would slow down the cause.

Indeed, Venezuela currently provides a counterweight to US influence within the continent. If Hugo Chávez is not reelected, countries like Nicaragua and Cuba may find themselves having to move closer to the United States for economic assistance and political support.

The Cuban opposition sees that such a scenario would have dramatic consequences for Cuban history. “Rather than a confrontation between political parties, it could mark a turning point in the history of the [Cuban] nation,” said Oscar Chepe.

Furthermore, the US itself will hold presidential elections next month. These could be just as important for the ALBA countries as the Venezuelan election.

Indeed, Republican candidate Mitt Romney has taken an extremely disapproving stance on the ideological leadership of Nicaragua and Cuba.

Speaking before a US-Cuba Democracy Political Action Committee event in Miami this year, Romney stated: “If I’m fortunate to become the next president of the United States, it is my expectation that Fidel Castro will finally be taken off this planet”.

So over this weekend Central American and Caribbean eyes will be fixed to television screens and ears squeezed up to radios, to await news of the result of the Venezuelan election. Current polls are indicating a lead by Hugo Chávez, but nothing can be presumed and everyone must anxiously wait to discover who will be in charge of Venezuela for the next six years.