ALBA and India

by Abdul Nafey - 3 January, 2020, 12:00 3098 Views 0 Comment

Alliance for the Peoples of our America – Trade Treaty of the Peoples (ALBA-TCP) is an inter-governmental organization. A ‘third generation’ regional integration scheme, ALBA-TCP goes beyond the goals of industrialisation or trade liberalisation; instead, it is a political project of social transformation, political unity, economic development, physical and digital connectivity, and a common defence – all in defence of the unity, freedom and identity of Latin America and its peoples.

ALBA-TCP has waxed and waned over the past 15 years in consequence of domestic developments and regional/international events. It is disintegrating and is a pale reflection of what it was for a decade, 2004-2014. Presidents Hugo Chavez of Venezuela and Fidel Castro of Cuba had signed ALBA into law on 14 December 2004 to facilitate initially the ‘doctors-for-oil’ exchange programme between their two countries. In 2006, Evo Morales brought in Bolivia with the concept of Trade Treaty of the Peoples (TCP) – thus completing the acronym ALBA-TCP.

The acronym was also understood as the ‘Bolivarian Alternative for the Americas’ until 2009. In 2005, the Bolivarian ‘alternative’ rose in direct ideological confrontation to defeat the US-sponsored Free Trade Agreement of the Americas (FTAA). Riding the region-wide rejection of neoliberalism, ALBA-TCP transformed into a flexible political grouping committed to the elusive ‘Twenty-first Century Socialism’ and a multipolar world. ALBA’s ideological underpinnings are insightful: it emphasises on the role of the public sector in the context of economic liberalization and globalization. The primary objective of ALBA is to defend the freedom of Latin America and eliminate the social exclusion of its people. The TCP does not suggest a state-centric model of development. Trade and investment barriers can be lifted, for example, in return for technology transfer and, interestingly, compliance with international human rights obligations. TCP guarantees intellectual property rights.

ALBA-TCP has several initiatives and mechanisms to realize its goals. The idea of financial autonomy is central to the philosophy of 21st Century socialism. ALBA’s monetary union, SUCRE showcases the autonomy of South-South Cooperation (SSC). “Enough with the dictatorship of the dollar, long live SUCRE”, said Chavez. The acronym stands after General Antonio Sucre – a military genius during the wars of independence whom the Libertador treated as his son. Sistema Unico de Compensacion Regional (SUCRE) is a unit of account that facilitates regional trade without dependence on the US dollar. In 2015, one SUCRE was pegged to US$1.25. The 14th ALBA summit, held in Caracas in March 2017, reported the increase in the use of SUCRE at $1 billion. The monetary union did help small economies stabilize their current account transactions and save themselves from foreign currency manipulation. SUCRE continues to facilitate some limited trade exchanges between Venezuela and rest of the ALBA countries. However, SUCRE is very small to help Venezuela balance its current trade deficit or check the fall of ‘Bolivar’.

The Bolivarian vision of creating a ‘grand homeland’ is at the heart of ALBA-TCP. A political initiative, PetroCaribe was launched to resolve the asymmetries in access to energy resources through new favourable, equitable and fair exchange schemes between the Caribbean-Central American countries. The scheme has met the energy needs of the energy-scarce small states at a fair and reasonable rate. The state oil monopoly PDVSA provides 100 percent of energy needs at market price with nearly 50 percent of consumption loans payable over 25 years at an interest rate of 2 percent. PetroCaribe has provided discounted oil to millions. The 17 beneficiary countries include even ideological opponents. With the oil sector in decline, petroCaribe has struggled for more than a year now to meet the requirements of the member-countries.

The world will never know how much the windfall oil profits Hugo Chavez ploughed into ALBA-TCP projects. Some US$20 billion were reportedly spent under PetroCaribe alone between 2005 and 2010. Chavez spent another estimated over US$30 billion in ALBA’s grand national projects. Some of these initiatives included famously Cuba’s ‘Si, Se Puede’; Nicaragua’s ‘ProgramaHambre Cero’ beside the PetroCaribe. The grand national projects are social projects implemented between two or more member-countries by state-to-state grand national companies – as against transnational corporations. As of February 2019, the Si, Se Puede literacy programme had taught reading and writing to more than 10 million across 32 countries. Under Mission Miracle, some six million in 37 countries have been cured of visual ailments. PetroCaribe’s vast network of energy pipelines and terminals link the ALBA countries. Fibre optics connects Cuba, Venezuela, Jamaica, Nicaragua and others. The Bank of ALBA, which was set up with an initial capital of $1billion funds the grand national projects.

ALBA was a political heavyweight which punched above its weight – at its peak during 2004-14. It was a wealthy, energy-rich group that could disrupt the regional balance and set agenda. Venezuela bank-rolled its agenda while Cuba provided expertise and technical know-how. Member-countries defined the common position and voted as a bloc. Its purposeful lobbying and financial resources allowed it to occasionally drive the political agenda of the Organization of American States (OAS) and the Union of South American Nations (UNASUR). The 7th summit in 2009 explored the idea of an ALBA defence pact. Nothing was ratified, but Evo Morales went ahead to set up ALBA’s Regional Defence School in Santa Cruz to develop the ‘common defence doctrine’ of ALBA.

Bolivarian Alliance is in crisis. There is a perceptible ideological disarticulation and political backtracking. Venezuela and Cuba – the linchpin of the Bolivarian Alliance – are under intense US hostility. The Venezuelan economy is half the size of what it was in 2013. Cuba has significant liquidity problems worsened by new US sanctions and Daniel Ortega of Nicaragua has responded popular protests with brutal repression. Ecuador has left ALBA; Saint Lucia did not attend the last summit. Bolivia is reaching out to the newly-formed ‘ideology-free’ Forum for the Progress of South America (Prosur). Some of the Caribbean island-nations – all beneficiaries of PetroCaribe – have criticized Venezuela in OAS and the UN. Venezuela stands expelled from OAS, suspended from Mercosur; and UNASUR, the second leg of the Bolivarian Alliance, stands gutted. The 16th Summit of Heads of State and Government, held in Havana on 14 December 2018, was attended 11 member-countries: Antigua and Barbuda, Bolivia, Cuba, Dominica, Grenada, Nicaragua, Saint Kitts & Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Venezuela. Amidst cries of “vivas” to the ALBA, the leaders noted the return of the right in the region and open US hostility towards Venezuela and Cuba. It described the situation as ‘neocolonial’ offensive. Venezuelan President Nicolas Maduro admitted that ALBA has social achievements to its credit but has failed in economic integration.

Simon Bolivar had the dream to establish a grand nation-state in South America which would act as an independent paradigm in international affairs. Well, the dream has receded once again into the future.

What about India and its engagements with ALBA-TCP? India’s emphasis has been on building close bilateral relations with individual countries in the ALBA group, with a focus on economic and trade exchanges. Indian business firms remain engaged in the markets in Bolivia, Cuba, Ecuador, Venezuela and others for lithium, oil and gas, bio-fuels, iron-ore, pharmaceuticals, information technology, etc. Of all the ALBA countries, trade relations with Venezuela have been strongest. In 2006, Hugo Chavez visited India and in a spirit of South-South Cooperation had invited India to join in the economic and social transformation his country was going through. A political nod from the UPA government of PM Manmohan Singh encouraged the public sector ONGC-Videsh Ltd. (OVL) which became the first Indian oil firm to bid for E&P in San Cristobal oilfield. It is worth recalling that it was only after the nationalization of oil that doors for Indian firms opened in a market which always tightly controlled by American and European oil giants. Footprints of Indian oil and other firms expanded further into Cuba, Ecuador and Bolivia – all state-owned economies. Make no mistake: the ‘pink-tide’ that swept ALBA countries in the previous decade proved a boon for the Indian business. Venezuela became the third largest supplier of crude to India; at $7.38 billion, it was still the largest oil exporter to India from LAC in 2018. Nearly 200 Indian firms present in the LAC region are all guided by business logic in their operations. New US sanctions and the domestic churning in Venezuela and adverse economic scenario in Bolivia, Cuba and Nicaragua does not make ALBA an attractive proposition for the Indian business – at least for now.

Abdul Nafey
Abdul Nafey ,Author is Professor (retd.) of Latin American Studies Jawaharlal Nehru University, New Delhi

Leave a Reply

Your email address will not be published. Required fields are marked *