US policy, energy and a new approach
Leaders at Caribbean Energy Summit
Biden: The time to get energy right
 
 

 By David Jessop

 
                                       
 
A few days ago, the Vice President of the United States, Joe Biden, met with Caribbean leaders in Washington to discuss the region’s long term approach to energy security.
 
The meeting, displaced from Miami by the Miss Universe pageant, which had made 26 January a no- go date for hotel rooms there, was unusual because it set out clearly for the first time in many years what now leads US policy towards the Caribbean.
 
Speaking about this, the US Vice President said that two issues motivated the US in the Caribbean region.
 
“President Obama has made it absolutely clear that (in) both the Caribbean and Central America energy and security are primary issues for us,” he said.
 
“This is extremely important to us. 
 
“It’s overwhelmingly in the interest of the United States of America that we get it right, and that this relationship changes for the better across the board.  So I want you to know that the combination of those two issues are paramount issues with us, equal to anything else we are doing around the world.”
 
Oil not a coercion tool 
 
Speaking to a mix of Caribbean Prime Ministers and foreign ministers he made clear that falling oil prices and the plummeting cost of alternative energy offered an opportunity for both the US and the Caribbean to develop a new approach to energy security.
 
Placing energy in a broader strategic context and in language that appeared to be aimed at the Caribbean’s PetroCaribe relationship with Venezuela, he suggested that “whether it’s the Ukraine or the Caribbean, no country should be able to use natural resources as a tool of coercion against any other country”
 
“ Economies squeezed by the high cost, making companies less competitive, crowding out other investments in the future of your countries; citizens in your countries demanding more affordable supply; expressing their discontent when they hear about investments they don't seem to see any results in; governments dependent on a single, increasingly unreliable, external supplier.”
 
In outline, the Vice President suggested that now was the time for the Caribbean to act on the basis that
  • the cost of energy from renewables like wind and solar had fallen;
  • natural gas technologies are advancing, providing new options for delivery from small barge shipments of LNG, to floating receiving terminals;
  • Trinidad was exporting;
  • there were US companies holding licences to export gas;
  • and the Americas, he said, had become the epicentre of energy production in the world. 
 
Oil as integrator
 
In short the Vice President’s vision was of energy within the Americas becoming a part of the process of integration and that it was in the US’s own self interest to see “Caribbean countries succeed as prosperous, secure, energy-independent neighbours” and as “an integral part of the hemisphere, where every nation is middle class, democratic and secure”.
 
This is a very different approach to US policies of the past which, when set side by side with the other principal planks of US policy towards the region, the US Caribbean Basin Security Initiative and detente with Cuba, makes clear how far US thinking about the region has moved.
 
Right investment climate
 
Strikingly, it is also a policy when it comes to energy that does not seek to throw US money at the region but to suggest that by ensuring the right investment climate and an enabling environment the Caribbean can attract private sector investment to change its energy profile.
 
It is an approach that steps back and suggests that it is for the Caribbean alone to make the best long term decisions on its future and about the long term strategic aspects of energy supply; while offering US support with improving co-ordination with other governments and the active encouragement of international financial institutions in a more joined up role.
 
Whether it will work is, however, another question.
 
The new US approach requires governments presently wedded to PetroCaribe and Venezuela’s increasingly shaky economic and social structures to accept that they have to turn away from an arrangement that in some cases underwrites recurrent expenditure, has built up indebtedness, and is now probably unsustainable.
 
It requires too an acceptance of the need to restructure economies that are over oriented towards the state, and adopt models that are more private sector-led.
 
Limited relationship
 
Oddly much of this has been missed by the media and the focus instead has been on the Vice President’s remarks, largely taken out of context, on the need to deal with corruption, so that projects are selected because they are the most competitive; comments linked to the need modernise physical infrastructure, institutions and regulations, and to take on entrenched interests.
 
This is a very different and significantly more limited model of a relationship to that on offer from China or at present from Venezuela.
 
It makes clear indirectly that the US is now interested only in bilateral relations and limited regional interventions based on models that liberalise and modernise the role of the state.
 
Whether the region is ready for this is far from clear as the absence of some regional leaders from the Washington meeting would seem to suggest.
 
Structural changes of this kind take time and above all their success or otherwise will depend on governments and oppositions identifying on a national interest basis long term needs, and having an environment that makes economic sense for private sector led investment in newer technologies.
 
Next step
 
It also requires nations like Trinidad to take forward across possible future political change, proposals like that made by Prime Minister Persad-Bissessar for a Caribbean Energy Thematic Fund for Caricom member states. 
 
This suggestion, made at the energy summit in Washington, affirmed Trinidad’s  commitment to working with the US to support energy resilience by doing more with the Caribbean Development Bank, the World Bank, the IMF and others  to transform the energy matrix in the Caribbean so that there is greater reliance on renewable sources and liquefied natural gas (LNG).
 
There is, of course, a legitimate political choice between what the US now proposes and other offers based on alternative economic and political models.
 
However, the recent strategically important oil price fall ought to give pause for thought across the region about long term energy stability and future requirements.
 
As this column has suggested previously, energy security requires a high degree of national consensus, practicality, and a willingness to think not in terms of what works now or offers immediate political advantage, but what is in the long term national interest of every nation within the region.
 

David Jessop is the Director of the Caribbean Council and can be contacted at
Previous columns can be found at www.caribbean-council.org
1 February, 2015
 
 
 
 

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