Latin America's leftists have lost an icon - and their sponsor. Cuba, Nicaragua and other nations fear dramatic economic repercussions. The US hopes for a new beginning.
Venezuela has lost its head of state and Latin America's left-wing bemoans the loss of an icon that forged a common identity. Chavez was also an existentially important financial ally for quite a few Central American and Caribbean states.
Hugo Chavez became an "enormously influential actor in the region, with a claim to supremacy in Latin America," Bettina Schorr of Berlin's Free University told Deutsche Welle. "That is something he actively promoted by granting oil shipments at reduced prices to Cuba and other Central American states," the expert said.
Cuba alone receives 100,000 barrels of cheaper oil per year from Venezuela – enough to cover two-thirds of its needs. It would be "dramatic" for Cuba should Venezuela have to halt oil shipments due to economic problems of its own, says Cuban economist and opposition activist Oscar Espinosa Chepe. "The situation would be even worse than it was after the collapse of the Soviet Union in the early 1990s," he told DW.
Then, Cuba lost 85 percent of its foreign trade in one blow. The lack of gasoline and raw materials practically brought agriculture and traffic to a standstill in Cuba. Fidel Castro proclaimed a "Special Period in Time of Peace" to prepare the population for harsh economic cuts. By the end of that decade, the Cuban economy had revived - and has been dependent on Venezuela ever since.
At the same time, 30,000 Cuban doctors and 15,000 teachers and other academics work in Venezuela's health and education sectors in the slums. Venezuela transferred five billion dollars (3.8 billion euros) to Havana in 2011 alone to fund this friendly gesture - more than foreign bank transfers from Cubans in exile, revenue from tourism and nickel exports combined.
Cuba is one of 18 member states in the Petrocaribe oil alliance, launched by Chavez in 2005. It allows for Caribbean and Central American states to purchase oil from Venezuela on conditions of preferential payment. "By creating regional groups, Chavez tried to counterbalance the US predominance in the western hemisphere," Bettina Schorr said.
The regional groups include the Union of South American Nations (UNASUR), the Community of Latin American and Caribbean States (CELAC) and ALBA, the Bolivarian Alliance for the Americas created as an alternative to the Free Trade Zone of the Americas (ALCA) envisioned by the US. Neither alliance has diminished the USA's direct influence on its southern neighbors, nor has it blocked bilateral free trade agreements. The groups have, however, resulted in the emergence of an independent political dialogue in Latin America that has liberated itself from the US-dominated Organization of American States (OAS). This development is bound to continue without Hugo Chavez.
In 30 days, Venezuela will elect a new president. It is doubtful whether his successor can fill the gap that Chavez's death left for Latin American leftists. The presidents of Nicaragua, Ecuador and Bolivia have neither the charisma nor the billions of petrodollars Chavez used to finance his visions of socialism for Venezuela in the 21st century and beyond.
Business as usual
Following the 9/11, 2001 attacks on the United States, Washington neglected its commitment to Latin America in favor of the wars against Iraq and Afghanistan. The southern neighbors took advantage of this development to expand their own foreign policy scope of action and to strengthen ties with China and Russia.
In this context, Hugo Chavez and his verbal attacks on the "Yankee Empire" should not be overestimated, Schorr believes, adding the remarks were "symbolic maneuvers" to keep his followers in line. Despite the diplomatic frostiness, "economic relations between Venezuela and the US have always been close." Not only was that the case under Hugo Chavez, too, Schorr explained: "Business ties even intensified."
The US is Venezuela's most important trade partner. In 2012, the exchange of goods amounted to a total value of almost 20 billion dollars. Half of Venezuela's oil exports go to the US, where they represent five percent of total imports. "Venezuela's oil industry has a massive problem because there were no investments these past years and production has dwindled," Schorr said. It would be "awkward should the country take its chances and anger a major client like the US."
After Chavez's death, President Obama has indicated an interest in improving ties with Venezuela. But as long as business runs smoothly, the South American country is not likely to assume top priority in US foreign policies.