INTERNATIONAL RELATIONSOF THE CARIBBEAN

Alternative integration in Latin American and the Caribbean

Dr. Jacqueline LAGUARDIA MARTINEZ

New Regional Integration

ALBACELAC

UNASUR

New kind of regionalism• Globalization and the recent economical crisis attempt against traditional

integration schemes and encourage the search of alternative integration frameworks

• Search for economic growth and national development out of the Washington Consensus formula: no fundamental gains in competitiveness through liberalizing regional markets

• Look for alternative strategies for regional integration, and equitable and sustainable development

• Current regionalism is more than economic liberalization, although influenced by that process. It reflects different socio-economic conditions, values and ideological positions. It emphasis cooperation and complementarity

• Strong institutionalization and proposal of real goals are indispensable

• In the region the integration map tends to become a real “spaghetti bowl” in which bilateral and sub -regional agreements and institutions overlap

Common characteristicsInclusion, cooperation, complementarity, extra economic goals, emphasis on human development, respect of differences, …• Conditioned by four main factors: 1. Dispersion and fragmentation of political interests 2. The role of energy resources 3. The coexistence of new conflicts with more

traditional 4. The wear of the integration processes in Latin

America

Integration’s benefits for the Caribbean

• Possibilities to maximize national capabilities

• Proper diplomatic framework

• Unified regional voice

• Go beyond insularity and mistrust

• Development assistance funds available

• Developmental regionalism

• South-South Cooperation

Bolivarian Alliance for the Peoples of Our America (ALBA)

• 2004, Alternativa Bolivariana para las Américas, transformed in 2009 in Alianza Bolivariana de los Pueblos de Nuestra América - Tratado de Comercio de los Pueblos (ALBA-TCP)

• Membership (9 Members): 2004 Cuba and Venezuela, 2006 Bolivia, 2007 Nicaragua, 2008 Dominica and Honduras, 2009 St. Vincent and Grenadines and Ecuador, Antigua and Barbuda, 2013 Saint Lucia (Multiple membership of its members)

• Integration platform based on the cooperatives advantages of its members, in order to compensate asymmetries and advance in developments goals out of the neoliberal logics and based on endogenous dynamics

• Purpose to join the capacities and strengths of the Member countries, in order to produce structural transformations and the networks needed to achieve an integral development

• It is a political, economic, and social alliance in defense of the independence, self-determination and the identity of its peoples

• ALBA does not harbor commercial criteria or selfish interests related to business profits or national benefit to the detriment of other peoples

• Solidarity, complementarity, justice and cooperation

What is ALBA?

ALBA Model• Explicit ideological component against the Washington

Consensus (counter-hegemonic project)

• Flexibility: special and differential treatment as a fundamental characteristic

• Respect of sovereignty

• South-South Cooperation

• Regionalization of endogenous development

• State participation

• Facing asymmetries using complementarity criteria and cooperative advantages and networks, creation of productive linkages

1. Trade and investment must not be an end in itself, but instruments to reach a just and sustainable development

2. Special and Differential Treatment

3. The economic complementarity and the cooperation between the participating countries and non competition between countries and productions

4. Cooperation and solidarity that are translated into special plans for the least developed countries in the region

5. Creation of the Social Emergency Fund

6. Inclusive development of the communications and the transport between the Latin-American and Caribbean countries

7. Actions to enable the sustainability of the development by means of procedure, and which protect the environment

8. Energy Integration between the countries of the region

9. Promotion of Latin American capital investments within Latin America and the Caribbean

10. Defense of the Latin-American and Caribbean culture and of the identity of the peoples of the region

11. Measures for intellectual property norms

12. Coordination of the positions in the multilateral spheres and in the processes of negotiation of all kinds with countries and blocks of other regions

Basic Principles

ALBA has four dimensionsALBA has four dimensions

SOCIALSOCIAL POLITICALPOLITICALSOCIALMOV.

SOCIALMOV.

ECONOMICALECONOMICAL

ACHIEVEMENTSACHIEVEMENTS NOT MAJOR RESULTSNOT MAJOR RESULTS

ALBA Mechanisms

• Grannational Projects: trade, finances, tourism, health, telecommunications, industry, mining, transportation, energy

• Petroamérica: Petroandina, Petrosur and Petrocaribe

• Banco del ALBA

• ALBA Cultural: Casas del ALBA, Fondo Cultural del ALBA, Premios ALBA Cultural and ALBA narrativa, TELESUR

Conditionalities of ALBA membership

1. Support for its general principles

2. Use of ALBA funding exclusively for the public sector (government and state enterprises)

3. Orientation of projects and social cooperation to disadvantaged socio-economic sectors of the population

2007, Bank of ALBA• Credit policy: To finance cultural, healthcare, food

security and education projects, reconstruction funding (50 millions USD in Haiti)

• Monetary policy: SUCRE (Sistema Unitario de Compensación Regional de Pagos), while “sucre” identifies the system Common Currency Unit (Unidad de Cuenta Común)

• Development promotion policy• XI ALBA Summit (2011): Each member will place the

1% of international financial reserves in the Bank of ALBA (it represented 500 million USD in 2012)

ALBA TRADE RELATIONS• Non-reciprocity - Cuba agreed to grant duty-free access to

Venezuelan imports and to remove non-tariff barriers; while in return Venezuela has agreed to eliminate only non-tariff barriers on Cuban imports

• Compensated trade - through direct product exchanges – Dominica is allowed to pay for 40% of its Petrocaribe oil imports with exports of bananas

• Trade agreements negotiated on a case-by-case basis, allowing for flexibility of commitment according to country circumstances

• Reciprocal Credit Arrangements Venezuela-Cuba Agreement

Trade using the “sucre” (millions)Sistema Unitario de Compensación Regional

Source: Centro de Investigación de la Economía Mundial (CIEM), Cuba

2010 2011 2012

Operations 6 431 2.135

Value 12.6 216.0 700.0

In March 2013, Uruguay began using the sucre. It is the first non ALBA member country to use the system

GRANNATIONALS• It is an essentially political concept. Has several components:

1. Historical and Geopolitical Basis: Focused on the Bolivarian vision of the union of the Latin-American and Caribbean republics for the shaping of the great nation

2. Socio – Economic Basis: Based on the fact that the strategy for the development of the economies of our countries in order to meet the social needs of the great majorities cannot only be restricted to the local sphere

3. Ideological Basis: It is determined by the conceptual affinity regarding the critical conception of the neoliberal globalization and the need to break the world trade patterns based on the free market fiction

• Grannational Project: Program of action intended to comply with the principles and objectives of ALBA.It s implementation involves two or more countries, for the benefit of the social majorities

• Grannational Enterprise: Enterprises from the ALBA countries, whose productions will be fundamentally destined for the INTRA-ALBA market to shape up a fair trade area, and its operation will be carried out efficiently

PETROCARIBE• Created in June, 2005• Energy Cooperation Agreement to coordinate and articulate

energetic policies, including oil and oil-products, gas, electricity and technological cooperation

• Membership (18, 12 Members of CARICOM): Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Dominican Republic, St. Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia, Suriname and Venezuela

• ALBA-Caribe Fund: It has been allocated 179 millions USD to 85 projects in 11 countries; 29 millions USD to 3 energy projects

• Trinidad and Tobago and Barbados do not belong• April 3-4, 2014: Meeting in Caracas regarding Plan de Acción

para la Erradicación del Hambre y la Pobreza en la Zona Económica de Petrocaribe (more than 60 millions USD)

Petrocaribe pros and cons• Oil supply in advantage conditions to the Members: lower

prices and facilities of payment (even more important in the current global economic crisis)

• To pay the oil bill with products and services stimulate domestic production and trade

• ALBA/Petrocaribe provides public sector financing that, compared with conventional sources, is (i) low-conditionality and host-country determined, (ii) low-interest and (iii) quick-disbursing

• However, the rising debts to PetroCaribe have generated debate about the long term sustainability of this strategy and the imperative to balance it with other solutions to energy security, such as increased investment in renewable energy sources in the region

http://www.youtube.com/watch?v=IATI7rCTZvk

Operación Milagro: 1,6 millions of persons recover eyesight (until June 2009)

Literacy Program Yo sí puedo (Yes I can): 3,8 millions new literate persons (until June 2009)

15,000 young people of low incomes study medicine in Cuba and Venezuela (June 2009)

4,000 graduates in Cuba (Until August 2008)

ALBA Social Achievements: some figures

• While traditional regional groupings experience evident stagnation, most Caribbean countries joined the Petrocaribe initiative to combat difficulties of energy cost and availability. Likewise, six countries joined ALBA. Both organizations easily fit the labels of “developmental regionalism” and “South-South cooperation”

• Cuba-CARICOM cooperation, ALBA and Petrocaribe have considerably narrowed the gaps that existed between Latin American and Caribbean understandings of regional spaces and identities

• ALBA and Petrocaribe have had a positive impact as providers of development assistance and social programs

• Its funds have helped to alleviate the effects of economic crisis and provide some protection for vulnerable populations

In favor

ALBA economic sustainability

• Favorable international prices for energy, minerals and agricultural products since 2003

• Natural resources and agricultural sector (water and biodiversity)

• Major State control over national natural resources and its exploitation

• Financial mechanisms within ALBA

But…• “Extractivism” has evident limits!!!!!

• Presence of the US as main investor and trade partner in ALBA countries

• Insufficient integration among the national economies (still compete more than complete)

• Asymmetries among the ALBA Members

• Rentist model (oil and natural resources, remittances)

POTENTIAL NEGATIVES OF ALBA• Donor dependency

• Energy dependency

• Economic vulnerability

• Political vulnerability

• State-centric, as opposed to ‘grassroots’ or community-based development

• Capital intensive, potentially environmentally damaging projects

• Transparency/accountability issues

• Potential for corruption

ALBA vs. FTA in Latin America and the Caribbean

ALBA FTA

SUCRE

Banco del ALBA

GrannationalsTransnationals

DOLAR

IMF, World Bank

PRENSA LATINA, TELESURCNN, ABC, NBC

ComplementarityCompetition

UNASUR / CELAC OAS

Interesting…

• 11 of the 18 Caribbean countries that benefit from Petrocaribe credits are non-members of ALBA

• Non-members access loans from the ALBA Caribe Fund, from the ALBA Bank and from the ALBA Food Security Fund; all three are financed by PetroCaribe

• CARICOM non-ALBA beneficiaries of these programmes includes Bahamas, Belize, Grenada, Guyana, Haiti, Jamaica, Suriname and St Kitts and Nevis

Community of Latin American and Caribbean States (CLACS/CELAC)

• December, 2011: Foundational Summit in Caracas• January, 2013: I CELAC Summit in Santiago de Chile • January, 2014: II CELAC Summit in Havana

• It is a forum that brings together 33 sovereign States of the region, which looks for the deepening of political, economic, social and cultural integration of Latin America and the Caribbean, based on full respect for democracy and human rights

http://www.youtube.com/watch?v=Jn0CAMBWRjo

II Summit CELAC: highlights• Recognition of the “Unity in the Diversity” principle and the

construction of an space of dialogue and political coordination• Support of regional integration, sustainable development (climate

change adaptation), indigenous and afrodescents rights, nuclear dismantling

• Latin America and the Caribbean as a Peace Zone• Special mentions to Haiti and Puerto Rico• Support Argentina’s claim over Malvinas• Condemnation of the USA blockade against Cuba• Support the Colombian peace negotiations• Establishment of a China-CELAC Forum and a Dialogue Mechanism

with the Russian Federation • Special Declaration on Small Island Developing States (SIDS)

CELAC PLAN OF ACTION 2014 • Food security and nutrition and eradication of hunger and poverty• Family farming• Education• Culture and dialogue between cultures• Science, technology and innovation• Productive and industrial development• Infrastructure• Finance• Latin American and Caribbean preferential tariff• Energy• Environment• Post-2015 Development Agenda• International humanitarian assistance in case of disaster situations• Migration• World illicit drug problem and addictions• Struggle against corruption and its prevention • Citizen participation • Security of citizens • Cooperation • Regional and sub-regional integration mechanisms• International policy

• Created in 2008• Members (12): Argentina, Brasil, Uruguay, Paraguay,

Venezuela, Bolivia, Colombia, Ecuador, Perú, Chile, Surinam, Guyana

• CAN: Bolivia, Colombia, Ecuador and Perú• MERCOSUR: Argentina, Brasil, Paraguay, Uruguay, Venezuela

and Bolivia• Goal: To encourage the regional integration in energy,

education, health, environment, infrastructure, security and democracy

• To promote the development of an integrated political, social, cultural, economic, financial, environmental and infrastructure space, recognizing the different ideological conceptions, corresponding to the plurality of its Members

Union of South American Nations (UNASUR)

Bank of the South (Banco del Sur)• Established in 2009 by Argentina, Brazil, Paraguay, Uruguay,

Ecuador, Bolivia and Venezuela

• Goal: to lend money to nations in the Americas for the construction of social programs and infrastructure

• Main functions: Financing basic infrastructure projects, support investments that strengthen the integration and combat asymmetries. To provide technical advisory services and training

• An alternative to borrowing from the IMF and the World Bank

• Equal representation of its Members

• Decisions are taken by consensus