Notes From The Margin

July 29, 2008

Venezuela Presses Its Claim – The Propaganda War Starts

We have tracked two stories on Venezuela’s claim of Barbados’ waters in the Venezuelan media today. The tone of one is actually quite strident.

The first article:

NGO reports Barbados is bidding oil blocks in Venezuelan waters

The government of Barbados has launched an oil and gas bid for 26 offshore blocks, two of which are allegedly located in part in Venezuelan waters, claimed on Monday Aníbal Martínez, head of non-governmental organization Frente Nacional Pro Defensa del Petróleo Venezolano (National Front for the Defense of Venezuelan Oil).

Martínez said that the government of Barbados put 26 oil and gas blocks for tender stretching more than 70,000 square kilometers. He added that there are two blocks in the bid, called Botton Bay and Crane Bay, 70 percent of whose area would be in Venezuelan waters.

“This amounts to an area of 5,200 square kilometers. It is a hostile act on the part of Barbados, and we have to be on alert. Even if it was one square centimeter, we cannot let this to happen,” said the Venezuelan oil expert.

The second article is a follow up

Claims of sale of oil licenses by Barbados

Venezuelan Minister of Energy and Petroleum Rafael Ramírez reported that the Ministry of Foreign Affairs is in possession of the evidence attesting to the sale by Barbados of licenses for oil drilling in Venezuelan maritime areas.

“We took the official letter to the appropriate channels; the Foreign Ministry is working on it. This has been the case in the past, where countries, well, awarded licenses for areas that are beyond their jurisdiction and by talking, directly speaking, things are eventually placed where they should be,” said the official.

What will also be interesting to watch is the reaction of Caracas to Barbados claims to the outer continental shelf. What is legally Barbados’ southernmost waters Venezuela considers to be its exit to the Atlantic (hence the Trinidad/Venezuela treaty) However Venezuela never made a treaty with Barbados, and Barbados has no reason to negotiate one as it is a small slice of their territory. The Venezuela/Trinidad treaty has no impact on Barbados or Guyana, so it will be interesting to see where this goes.

It is unlikely that this will go away.  Further Barbados has little reason to take on Venezuela’s claims other than Venezuela has the means to agressively enforce its claims on the area by force of arms.

Hopefully this will not go that far.

Marginal

How Trinidad Recognised Venezuela’s Claim to Most Of Guyana’s Land

Venezuela and Its Claim of Most of Guyana’s Land

Marginal Picks Up His Pen – Venezuela’s Claim of Barbados’ Waters

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June 16, 2008

Marginal Picks Up His Pen – Venezuelas Claim of Barbados’ Waters


After much thought we’ve decided to come out of retirement to blog on the subject of Venezuela’s claim of Barbados’ waters. This is not a full re-opening of NFTM but we felt that given our history of blogging on Venezuela and it’s territorial claims that we might be able to provide some clarity on this issue. This article is freely reproducible (once the source is attributed). In fact we would ask that given the potential seriousness of the claim that members of the blogosphere and other media propogate this story.


Marginal

Like Barbados Free Press we saw the story today in the Venezuelan publication PetroleumWorld entitled “Barbados’ Troubled Waters”

The new government of Barbados opened the bidding process for rights to offshore blocks for oil & gas exploration on Monday and will close it on September 30. The winner announcement will be made on Nov 20th. More than 20 companies were present this week in the bid kick off, including among others, Exxon, Gazprom, Lukoil Shell, BHP Billiton of Australia, Hess Oil Company, Anadarko Petroleum Corporation, Marathon Oil and Murphy Oil, all of the United States, StatoilHydro, Petro-Canada, and Petrobras from Brazil. However, there is an issue that the IOC’s perhaps have not taken in account, that is that two of the block are in venezuelan waters, the Bottom Bay blocks Ad I and Ad II. We expect that the venezuelan government will issue a diplomatic note to the government of Barbados asking for clarification and the Venezuelan oil company PDVSA will issue a warning to the OIC’s on the issue.

The two blocks in question are the two southernmost blocks that are up for bid (Highlighted in red in the illustration). Venezuela’s claim rests on two pillars

1. It’s claim to approximately half of Guyana’s land area.

Venezuela claims everything west of the Essequibo river, the historical reasons for this can be found in our post. Venezuela and Its Claim of Most of Guyana’s Land

2. Venezuela’s Maritime Treaty with Trinidad.

In 1990 Venezuela and Trinidad agreed a treaty delineating their maritime boundary. This treaty can be found on line HERE.  This treaty allowed the development of Trinidad and Tobago’s offshore oil resources. However this treaty had two unforeseen impacts. First it tacitly recognised Venezuela’s claims on half of Guyana, and secondly it pushed Trinidad’s territorial claims north which is what led to the Maritime border dispute between Barbados and Trinidad. The impact of this can be seen in our post How Much Gas Does Trinidad Have? Indeed the main sticking point in the negotiations was the Trinidadian position that Barbados should recognise the 1990 treaty. The UNLOS council held that two countries could not bind a third without it’s consent and hence the 1990 treaty had no impact on Barbados.

The maritime boundaries are currently as seen in the diagram below. The purple line indicates Trinidad’s initial boundary claim and the brown line indicates the claim they put forward to the UNLOS Council. The green line represents the final decision of the UNLOS Council.

The result of the UNLOS is that the 1990 boundary between Venezuela and Trinidad extends into what is (and always was) legally Barbados’ waters.

Venezuela is now seeking to exercise a claim in an area that it has no right to claim. The waters under discussion can ONLY be Venezuelas if you accept that

1. Half of Guyana is actually Venezuela.

2. That two countries (Venezuela and Trinidad) can commit a third and fourth countries (Barbados and Guyana)  to some form of agreement or treaty without consulting them and without their agreement.

In short, the Venezuelan claim is baseless.

Marginal

Other interesting information on this topic.

International Law Environment by Professor Robert Volterra

Venezuela and Bird Island

Details on Aves Island – How Venezuela Controls the Caribbean Sea

Bird Island Again! – Grenada in Maritime Boundary Dispute With Venezuela.

February 25, 2008

Do We Need A Caribbean FBI?

Faced with rising crime rates, Caribbean governments have struggled to keep pace. However at a time of challenging economic conditions and soaring levels of indebtedness, many Caribbean police forces are overwhelmed, underpaid, and under-equipped. This is particularly the case in the smaller economies of the OECS (you will note that I did not say “smaller islands”) The Caribbean with it’s inadquately equipped security forces, and many islands with inlets and coves make the chain attractive as a route for drug traffickers to move narcotics to the metropolitan markets.

The wealthier economies in the region have attempted to strengthen their security apparatus however, they are often faced with criminals who have more sophisticated equipment than they do.  The problem is compounded by the lack of financial assistance for security ( a mindset that is slowly changing).

It is against this background that Trinidad Prime Minister Patrick Manning recently proposed the development of a Pan Caribbean law enforcement agency.

Patrick Manning said a well-trained, equipped regional force with the power to legally operate in any CARICOM country would be part of the answer to combating the crime situation – one which he insists is being driven by the illegal drug trade.

“Many of us in the Caribbean today are challenged by the unacceptable levels of criminal activity in our country, most of which are now spurred by the global traffic in illegal drugs. The trade in illegal arms and gang warfare lead to an unacceptable level of homicide in our main urban centres,” he said, while delivering the keynote address at the recent University of the West Indies (UWI) Mona Campus Commemoration Dinner in Jamaica….

…..Mr Manning said his country had sought to stem the flow of illegal drugs and arms into the country through initiatives which he believes will eventually rid the country of the drug trade, such as round the clock surveillance of the twin island republic’s largely unprotected coastline. But he also noted that the pattern in the past demonstrated that when the operations of drug lords are interrupted in one country they move to another.

“(That) pattern emphasises the need for multilateral efforts among ourselves and with the wider world. Failure to effectively deal with the issue of crime could stymie the economic and social development of the Caribbean,” he said.

Mr Manning further urged CARICOM heads to spearhead the process of greater cooperation in the sharing of intelligence among police forces to head off migratory drug smugglers.

In theory this sounds like a great idea, and we on the margin support it generally. However would such a “federal” force be allowed to operate? To often in the Caribbean there are rumours (and we  aren’t prepared to say they are only rumours) of “certain people” in certain countries being untouchable, would a CFBI be allowed to go after them?If they were it would open an interesting can of worms.

Would the criminals arrested by this federal force be prosecuted in local or regional courts? For example we have many cases of witnesses in Trinidad being murdered before they can testify, we also have rumours of corrupt judiciaries in some countries, would people arrested by the “Federales” have a likely chance of getting convicted in a local court?

When you look at the implications of a Caribbean Law Enforcement agency, it’s not as simple as it might appear at first blush. For it to be really effective it would have to be part of a Pan Caribbean judicial system.

Marginal

January 29, 2008

The State Of Shipping In The Caribbean

We on the margin have for a long time been supporters of the idea of ferries in the Caribbean. In our view one of the most serious barriers to regional integration and the creation of a single market and economy, is the sheer difficulty faced by an individual attempting to move around the Caribbean. Moving people and goods from island to island is hugely difficult, and that has several knock on effects in the economies of the region.

In Europe it is possible to drive on to a ferry in Scotland and be in Ireland a couple of hours later driving YOUR car on Irish roads, all for the price of a ferry fare. It is possible to ship container loads of merchandise/products/food/whatever on the same ferry without even taking them off of the truck! When you contrast this ease of movement with the situation in the Caribbean it’s pathetic.

Move a car? Sorry you only have one seat on LIAT (world’s most expensive low cost carrier) and 50lbs of baggage, and when we get to our destination we are greeted by Immigration officers and Customs Officer who seem to have difficulty with the concept of people wanting to travel to another island. There was a brief moment of hope during the Cricket World Cup when we had the single space, but that seems to have separated back into the default position of fragmentation.

President of the CDB Prof. Compton Bourne, touched on these issues recently in a speech where he highlighted the difficulty in moving goods from areas with excess productive capacity to areas with demand for those goods.

“There are countries in the region that have considerable food production capacity, but their arrangements for trade in the region are far
from adequate.”

This made it very difficult to supply the markets that are experiencing shortages or to provide a cheaper source of commodities to those markets with the existing arrangements, he argued.

“First of all, shipping is very poor within the region,” he charged. “Our shipping arrangements are largely geared towards bringing commodities from outside the region to the region, rather than moving commodities between the various islands and countries in the Caribbean.

“Secondly, our port facilities in the main for CARICOM trade are atrocious, often under-staffed, often not provided with the requisite phyto-sanitary inspection facilities and sometimes characterised
by a bit of hostility towards the trade. . . .”

For the single market and economy to become a reality, there needs to be ease of trade, and ease of travel, at the moment it is easier to get items out of a furniture store in Miami than it is to get it from a furniture manufacturer in Guyana. To speak of a single economic space is a farce unless this situation is rectified.

Marginal

December 11, 2007

BNOC GM Points Out The Obvious – Petro Caribe Is A Debt Trap!

We are applauding a statement by the current General Manager of the Barbados National Petroleum Company on the “gift with strings” that is Petro Caribe.

 Ron Hewitt, Barbados National Oil Company General Manager said on Monday, that Chavez’s Petrocaribe is not helping Caribbean countries, but making their finances worst. ” Petrocaribe is not helping at all to coup with the high oil prices, Caribbean countries are just running a large debt with Venezuela. “

 

Petrocaribe is just a scheme to create an oil dependency from Venezuela, added Hewitt at the two-day Caribbean Energy conference at the Hilton Trinidad in Port Spain.

 

“It doesn’t’t represent what we are looking for in Barbados. You have to pay part of the cost now and get a credit. That credit then goes onto your national debt. It’s not an asset….” Hewitt said.

 It is scary that the other Caribbean countries could not see this from the outset.  What is remarkable is that Barbados has been pilloried in all sorts of regional fora for not signing on. The truth of the matter is that Petro Caribe does NOT help the Caribbean, it is NOT in the Caribbean’s best interest. It simply gives Venezuela power over a key sector of our economies and increases our debt. Further the condition of accessing the “concessions” mean that Venezuela will have power over the supply chain so that it will be difficult for those in the Net to escape it.

Marginal

November 29, 2007

Magnitude 7.3 Earthquake Hits the Caribbean

We all bolted for the door this afternoon as we felt and saw the ground shake beneath our feet. Outside other persons were rushing from buildings and car alarms were going off. By the time we realised what was going on it was beginning to subside. Everyone is asking what’s going on and no one appears to know. Calls on cell phones are met with “Network Busy”, calls on landlines are met with busy tones. No one is hurt but everyone is calling their loved ones to see that they are okay. People are sounding strained on the phone not because they are scared for themselves but because they fear for those dear to them. “My husband is on a construction site”, “My parents are on a plane coming in, will the airport be okay?” “I can’t get through to my children’s school I wonder if they are okay?”  a jumbled montage of thoughts and of concern.

It now appears that there has been a major earthquake just north of Martinique magnitude 7.3 (some sites are reporting 7.4)  it was strong enough to knock a house down in St. George, reports from friends in St. Lucia, Grenada and Trinidad have all reported feeling it and have all reported that they are fine. (thank goodness)

No word yet from Martinique or Dominica. As we get word we’ll post.

It’s a time to hug your family and count your blessings, it could have been much much worse.

Marginal

November 20, 2007

Venezuela Attacks Guyana – Is This A First Strike?

We’ve been monitoring reports of Venezuelan soldiers blowing up mining barges in the Guyana interior.

Venezuela has denied destroying two gold-mining dredges on Guyanese territory following a strong protest from Guyana’s government.Guyana says 36 Venezuelan soldiers used helicopters and Compostion-4 (C-4), a type of plastic explosive, to blow up the two dredging machines on Thursday. It has summoned Venezuela’s ambassador to explain the incident.Venezuela denies using force and said the army was removing illegal miners inside its own territory.

 

Now for those of you who haven’t been following, Venezuela claims about two thirds of Guyana’s territory. Now usually this has been a very quiet border dispute, but there have been incidents in the past.

 

The thing to remember about Venezuela’s statement is that as far as they are concerned Venezuela stops at the Essiquibo, not the internationally recognised border, so their statement does not mean that the miners were actually in Venezuela. (at least as far as the rest of the world is concerned). Venezuela has a vastly superior military (which is being enhanced by recent purchases from Russia) so Guyana has little hope of defending its claim. However most of Guyana’s mineral wealth is to be found west of the Essequibo in the disputed area (or “Zona De Reclamacion” as the Venezuelans call it). Typically in a situation like this Guyana should be able to rely on the global public opinion, and the loudest voices should be the territories of Caricom however that help is unlikely to come. The Petro Caribe agreements will force many of the Caricom territories to toe the Caracas line, otherwise they face the possibility of having debts being called for their presumption to call a spade a spade.

 

 

This blog has asked the question many times “What does Chavez get out of Petro Caribe?” it is our deepest fear that we are about to find out.

Marginal

 

Further Reading:

Venezuela and Its Claim of Most of Guyana’s Land
Details on Aves Island – How Venezuela Controls the Caribbean Sea
Venezuela and Bird Island
How Trinidad Recognised Venezuela’s Claim to Most Of Guyana’s Land
Third Petro Caribe Summit

October 16, 2007

Maybe We Should Look Up The Meaning of “Binding Arbitration”

Filed under: Capitalism,Caribbean,Caricom,Guyana,Law Of The Sea,Petroleum,Suriname,United Nations — notesfromthemargin @ 9:52 pm

Having read the judgement handed down by the United Nations Law of The Sea Council in the Suriname Guyana border dispute it now appears that some parties in Suriname are seeking to find flaws in the ruling.

 

 

According to Naarendorp, the award is not fair and equitable, since Guyana has been awarded 65 percent of the 31,600 square kilometers wide former area of dispute while Suriname received the remaining 35 percent….

…The Surinamese experts, in recalculating the equidistance line, more then doubled that number using 45 points for their computations. As a result a new line emerged situated west of the boundary determined by the UN Arbitration panel.

 

If this line is accepted said Naarendorp, the award will be more equitable and fair, since the area will be partitioned 49 percent for Guyana and 51 percent for Suriname.

Granted the comment comes from a former cabinet minister with a political axe to grind, but one would think that the function of the UNLOS council as a FINAL court of appeal would be self explanatory.

Marginal

 

October 9, 2007

More Sage Advice From The IMF – “Cut Your Tax Incentives!”

We had a bit of a laugh in hearing the most recent advice from the IMF, in their latest Public Information Notice the IMF covers a seminar that was held t0 address selected cross border issues affecting the Caribbean and the three issues selected are financial integration, tax incentives and investment, and trade preference erosion.

On two of the three issues the IMF’s position isn’t that bad.

On Financial Integration:

 

... Directors considered that closer integration of the Caribbean’s still largely segmented financial markets can be expected to help generate higher economic growth by improving access to credit and lowering interest rate spreads. However, more integrated financial markets will also allow shocks to spread across borders more rapidly and pose greater regulatory challenges, especially with large financial conglomerates operating across different industry segments and in several countries.

 

On Trade Preference Erosion:

 

Directors recognized that the erosion of preferential access to European markets for bananas and sugar entails significant losses for several Caribbean countries….

… the strategy to address this difficult challenge will need to involve carefully targeted social safety nets to alleviate the impact on affected vulnerable groups; efforts to raise the efficiency of existing banana and sugar industries, where viable; and transition away to new economic activities, in countries where production is unlikely to be competitive even after significant efforts and investments.

Now we come to the fly in this ointment…..

Directors noted that, while the Caribbean countries’ heavy reliance on tax incentives may help attract investors, they are costly in terms of foregone revenues…..

… In light of this, and recognizing the intense competition for global investment funds which the region faces, Directors encouraged Caribbean policy-makers to weigh carefully the costs and benefits of tax exemptions and consider reducing them if possible; to step up efforts to improve other determinants of investment; and to make remaining tax incentives more cost-effective.

So if I’ve got this right, the incentive to get the revenue is costing you too much revenue, so you should cut the incentive to reduce your losses. But….. if you cut the incentive you may not get the revenue so you will end up foregoing even more revenue.

Hmmm so after some thinking we in the margin came up with this economic theory.

“While tax incentives may be expensive and may have costs associated with foregone revenue, not having the incentives is even more expensive” In short it’s better to have 75% of something rather than 100% of nothing. (And we aren’t even trained economists!)

This advice comes from the same people who managed the Jamaica’s and Guyana’s structural adjustment programs!

Marginal

 

September 22, 2007

UN Law Of The Sea Announces Decision on Guyana Suriname Dispute

Given our general level of interests in Maritime boundaries on this blog, We thought we would let our readers know that the UNLOS council has handed down a decision on the Maritime boundary between Guyana and Suriname.

 The dispute has been the source of considerable friction between the two countries with a Suriname gunboat chasing off an oil exploration bid authorised by the Guyana Government. It would seem that the tribunal sided with Guyana over Suriname’s claims.


In a unanimous vote, the five-judge panel from the Arbitral Tribunal under the Law of the Sea Convention decided to split thousands of square kilometres of offshore blocs largely on the principle of “equidistance”, but in doing so, it took away a large tract of water that Suriname had claimed as its own for decades from neighbouring Guyana…..

 

…..In June 2000, Suriname’s Ronald Venetiaan administration sent gunboats to expel a rig that was drilling in the disputed area. The rig was leased by Toronto-based CGX Energy Inc, one of the world’s tiniest oil companies, on a concession award granted by Guyana.

The incident brought the two finance-starved former European colonies very close to war, with both massing troops on their borders and allowing military aircraft to over-fly each other’s airspace in a near farcical show of force by two armies with a combined total of no more than 5,000 troops and with less than a dozen planes and vessels under their command.

 We’ve downloaded the judgement (If you are interested its available here)

and we are taking our time going through it.  This border dispute has been the focus of bi-lateral and multilateral efforts under Caricom to resolve it.  Due to the UN it has now been settled once and for all. This clears the way for Oil exploration on both sides of the line. Hopefully this will lead to significant oil finds as few would disagree with me that both Guyana and Suriname are in desperate need of cash.

 

The news story did have one rather thought provoking point to close on….

 

Critics, Caricom experts especially, had noted that the intransigence displayed by Suriname and the failure of the two to reach a bilateral deal have cost them billions in revenues as oil prices continue to soar.

Food for thought there….

 

Marginal

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