MercoPress. South Atlantic News Agency

Chavez incorporates ousted Zelaya to his payroll through Petrocaribe

Manuel Zelaya and Venezuela President Hugo Chavez

Ousted former Honduras President Manuel Zelaya has been appointed Head of a “Political Council” of Venezuelan energy consortium Petrocaribe which allows Caribbean and Central American nations to buy oil at a discount from Venezuela.

The newly-formed “Political Council” came out of talks between Zelaya and Venezuela President Hugo Chavez, one of Zelaya's main supporters and sponsors. Zelaya arrived in Caracas on Thursday from the Dominican Republic, where he lives in self-imposed exile.

Zelaya was removed from office by order of the Honduras Supreme Court and replaced by the country's Congress after he was ruled to have violated the Honduran Constitution by seeking to overturn the country's ban on term limits.

According to Venezuela Foreign Minister Nicolas Maduro, who made the announcement with Zelaya on Saturday, the Political Council is designed for “the defence of the independence and democracy in the PetroCaribe continent”

Maduro, with Zelaya at his side, made the announcement at a governing United Socialist Party of Venezuela (PSUV) meeting in Caracas.

The appointment coincides with the end of a six-country tour of US Secretary of State, Hillay Clinton to the region (Uruguay, Argentina, Chile, Brazil, Costa Rica and Guatemala) and strong pressure from Washington to have the newly elected Honduran government returned to the Organization of American States, OAS, IMF and the World bank among others. Ms. Clinton also said in Central America that the US will soon reinstate foreign aid to Honduras.

Chavez has used his country's oil wealth and anti-US stance to give himself more power within the region.

He began Petrocaribe in June of 2005, and now counts 18 members in the group -- every Caribbean nation other than Trinidad -- a major regional oil producer -- and Barbados.

Under the arrangement, members are allowed to buy up to 185,000 barrels of oil a day from Venezuela at a discount, and only pay 40-80% upfront. The remainder can be paid over 25 years at 1% interest. In addition, members can pay part of the cost with other products “in trade” to Venezuela, such as bananas, rice, and sugar.

Jamaica and the Dominican Republic are two of the largest recipients, while Cuba, separately, has received around 100,000 barrels per day under a more complex arrangement with Caracas, in which they trade a variety of things, including medical assistants, sports help, and other advisers.

The Dominican Republic now owes over 1.23 billion USD up from 448.8 million USD in 2006 and the Venezuelan government projects that over one-third of the Caribbean’s total external debt will be owed to Venezuela by 2015.

After Zelaya was deposed in June 2009, Venezuela halted the delivery of oil to Honduras and suspended the country from membership when the country failed to re-instate him.

After the Dominican Republic recognized the victor in subsequent elections in Honduras -- which Venezuela has still not accepted -- Venezuela state oil company PDVSA pulled out of a deal to purchase a 49% stake in a Dominican refinery.

PDVSA has also halted operations at its Isla refinery in Curacao, but has not formally announced whether it will be closed.

According to the Venezuelan Energy Minister Rafael Ramirez, PDVSA “cannot make commercial calculations that are not linked to the national interest… Our oil industry is not divorced from the internal policy of our government,” he told reporters, after President Chávez accused the US military of using a base on Curaçao to launch spy flights into Venezuelan airspace