As some Venezuelans mourn the death of populist President Hugo Chávez, their northern neighbors in the Caribbean Basin shouldn’t shed a tear.
In 2005, members of the Caribbean Community (CARICOM) sold out on free markets for the price of Chávez’s oil diplomacy by signing up for PetroCaribe, a financing agreement for Venezuelan oil. Since then, commitments to the free market have collapsed among Caribbean nations, while corruption and public finances have eroded. Jamaica, a PetroCaribe member, has seen its debt explode in recent years, forcing it to go hat in hand to the International Monetary Fund for loans. Furthermore, the once promising prospects of the Caribbean single market, CSME, have been dashed in recent years because of pressure from Venezuela.
Now that President Chávez has died and internal budgetary pressures within Venezuela are calling into question future PetroCaribe funding, Caribbean leaders should seize this opportunity and break from Venezuela’s grip. By re-engaging in a CSME-like process and rejecting the petroleum bribery of PetroCaribe, Caribbean economies can loose the animal spirits of economic freedom. Most importantly, the U.S. needs to lead the way. According to research by The Heritage Foundation:
For CARICOM to grow, it needs to embrace open trade and free markets, not a policy throwback to the protectionism and failed import substitution policies of a bygone era. By supporting sound economic policy initiatives such as the CSME, the U.S. can lead the way for the nations of CARICOM to claim a better seat at the global economic table.
The passing of Hugo Chávez gives CARICOM members the opportunity for a fresh start—out from under the thumb of Venezuela. The U.S. can help the nations of CARICOM achieve such goals by supporting economic freedom and market reforms in the Caribbean.
Ashlee Smith, an intern in Heritage’s Center for International Trade and Economics, assisted in preparing this report.