Caribbean & Central America - July 2008 (ISSN 1741-4458)

Costa Rica is the latest country in Central America to show an interest in joining Petrocaribe, the Venezuelan initiative which provides Caribbean and Central American countries with cheap oil. The Costa Rican government announced that it had applied for membership after a high-level delegation including energy and foreign ministers, Roberto Dobles and Bruno Stagno respectively, as well as president of the state refinery Recope, José León Desanti, attended the fifth Petrocaribe summit on 13 July in Venezuela.

Although Costa Rica already imports the bulk of its oil from Venezuela under the San José pact of 1980, its membership of Petrocaribe would constitute a coup for Venezuela's President Hugo Chávez . Not only would it extend Venezuela's influence in the region but it would incorporate a nation whose government has been highly critical of his diplomatic tactics in the recent past.

The renewed interest in the scheme in Central America (with Guatemala having become its most recent member) comes as international fuel prices are soaring, prompting Chávez to improve the terms of the initiative. At the recent summit, which was attended by delegations from 15 countries, he offered to revise its original terms to allow Petrocaribe members to finance up to 65% of their oil imports from Venezuela over 25 years at a 1% interest rate when oil prices are over US$100 a barrel.

Chávez also promised that if oil prices hit US$200 a barrel he would raise the percentage of the oil bill eligible for credit to 70%. The original terms, offered when oil was around US$70 a barrel, allowed up to 50% of a country's oil bill to be financed by credit. During the meeting, Chávez claimed that Petrocaribe had saved its members US$920m since it was formed in 2005. He said the scheme had made sales of US$4.69bn and that US$2bn of that bill had been financed. 

• Corruption in Costa Rica

President Oscar Arias is facing the first corruption scandal since he took office in May 2006. Housing minister Fernando Zumbado stepped down “temporarily" on 9 July after allegations regarding the misuse of a US$2.5m donation from Taiwan which, while earmarked for social housing, allegedly went on consultancy fees for public officials. Zumbado maintains he received only US$1.5m. Investigations are also being carried out into the similar misuse of a US$2m loan from the Central American Bank for Economic Integration (BCEI)