Venezuelan President Hugo Chavez has extended a preferential oil trade deal to 13 Caribbean countries in what he says is part of a plan to challenge US economic domination of the region.

Under his plan, called PetroCaribe, Venezuela will soon sell up to 190,000 barrels of fuel a day to countries from Jamaica to St. Lucia, offering favorable financing while shipping fuel directly to reduce costs. It is expected to help those countries save millions of dollars.

Chavez, a close ally of Cuban leader Fidel Castro, says the new plan is part of a vision of a "multi-polar" world no longer controlled by "US imperialism." He sees it as part of an alternative for international trade based more on regional solidarity than US-style free trade.

The plan includes a US$50 million fund to pay for social programmes across the Caribbean, similar to those Chavez has started at home with rising oil profits.

Chavez has emerged as a leading critic of the US Government and its proposal for a Free Trade Area of the Americas, saying that plan would simply help big US companies at the expense of Latin countries by drawing away their natural resources while doing nothing to confront systematic poverty.

Relations between Chavez and Washington have become increasingly strained, though the United States remains the top buyer of Venezuelan oil. Chavez has repeatedly accused the US Government of backing plots against him, and recently alleged Washington was preparing an invasion of his country.

US officials strongly deny his claims but have expressed concerns about the situation in Venezuela since Chavez was first elected in 1998 pledging a social "revolution" for the country's poor majority.

Still, the PetroCaribe plan is a welcome message for cash-strapped Caribbean nations that traditionally have looked to the United States for aid.

"PetroCaribe is good for a country like Jamaica," Jamaican Commerce Minister Phillip Paulwell said on Tuesday during a trip to Trinidad. He said his island's deal will help free up vital funds for social projects at a time of high oil prices.

Grenada expects to save up to US$14 million a year through the Venezuelan initiative, Energy Minister Gregory Bowen said on Tuesday.

He said at that rate, after a decade the island "will have at its disposal over US$140 million" to be used for public projects.

Venezuela and the 13 Caribbean countries signed on to PetroCaribe during talks in June. Under more specific deals signed by nine countries last week, the Caribbean nations will be required to pay only a portion up front and can finance the rest over 25 years at low interest rates.

The South American country, the world's fifth largest oil exporter, plans to allow Caribbean nations to pay some debts with goods such as rice, bananas or sugar. Venezuela also plans to expand its tanker fleet for direct shipping while helping to upgrade Caribbean refineries.

"It's a modest contribution," Chavez said recently. Caribbean oil deals, such as similar ones with Brazil, Argentina and Uruguay, had shown "we can do a lot among ourselves as governments," he added.
 
Some Venezuelan opposition politicians argue the only reason Chavez is providing Caribbean nations such a bargain is to shore up support for diplomatic clashes with Washington.

But Chavez has rebuffed suggestions Venezuela is giving away its oil for political motives, saying the Caribbean agreement will support integration and benefit both Venezuela and the region.

(China Daily September 15, 2005)