Magdalena Morales / Reuters – 2005-07-02 23:31:24

Oil exporter Venezuela signed an energy cooperation pact on Wednesday with 13 Caribbean states, including Cuba, in a move that strengthened Venezuelan President Hugo Chavez’s political challenge to U.S. influence in the region.

The Petrocaribe alliance, under which Venezuela will directly supply cheaper oil to its partners, will cut the energy bills of Caribbean states whose small island economies are struggling to cope with soaring world oil prices.

But in a disappointment for Chavez, two Caribbean states, fellow oil and gas producer Trinidad and Tobago and Barbados, did not initial the Petrocaribe accord. Trinidad expressed reservations the deal could undercut its own oil shipments.

Nationalist Chavez and other Caribbean leaders hailed the energy pact as a move that will increase their collective sovereignty and economic independence in a region long dominated by U.S. political and commercial power.

“For the countries of the Caribbean, Petrocaribe represents a welcome lifeline,” Jamaican Prime Minister P.J. Patterson told the meeting of Caribbean leaders, including Cuban President Fidel Castro.

Venezuela is the world’s fifth largest oil exporter and a leading oil supplier to the United States, but Chavez is seeking to diversify energy ties.

“Venezuela wants to share its energy potential with South America and the Caribbean,” Chavez said earlier as he outlined the Petrocaribe initiative, which will create a regional oil shipment, storage and refining network promoted by Venezuela.

Chavez said this would eliminate intermediary private oil traders and offer improved preferential terms for payment.

Anti-US Outburst
In a verbal broadside against the United States, Chavez accused Washington of meddling in his efforts to create the Petrocaribe alliance and said he may one day have to break off relations.

He made the warning after reading a letter critical of his rule, which he said was sent by the State Department to some of the Caribbean nations attending the meeting.

“We would have reasons to break relations with this (U.S.) government, out of dignity,” Chavez said angrily.

He said the U.S. letter sent to Caribbean leaders spelled out Washington’s concern over “threats to Venezuela’s democracy” under his rule. It also accused him of using Venezuela’s oil to try to destabilize countries like Bolivia and Ecuador by supporting radical groups, he added.

U.S. officials have portrayed Chavez and Castro as troublemakers bent on stirring up left-wing revolution and anti-U.S. sentiment in Latin America and the world.

Chavez said Venezuelan state oil company PDVSA had created an affiliate, PDV Caribe, to coordinate the Petrocaribe plan.

The initiative is part of Chavez’s effort to bolster Caribbean and Latin American economic unity to counter what he calls “imperialist” U.S. free-trade policies.

“It gets Venezuela more votes in the Organization of American States and consolidates Chavez politically,” said Michael Shifter of Inter-American Dialogue, a Washington-based think tank.

Venezuela also signed Wednesday a fresh bilateral oil supply contract with the Dominican Republic and a memorandum of understanding to possibly invest in a Jamaican refinery.

The nations which attended the Venezuela summit were Antigua and Barbuda, Barbados, Bahamas, Belize, Cuba, Dominican Republic, Grenada, Guyana, Jamaica, Dominica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago.

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