This is an archived version of the PW Sources newsletter from Saturday, March 23, 2024. Sign up to receive PW Sources directly to your inbox here.

PETROCARIBE

In January, Haiti paid Venezuela $500 million to settle $2.3 billion in arrears from PetroCaribe loans. Between 2005 and 2014, PetroCaribe became the largest single source of concessional finance to Caribbean countries, more than doubling US foreign assistance to the region.

In a 2019 article, GUSTAV CEDERLÖF and DONALD V. KINGSBURY examine the mechanics of PetroCaribe trade agreements:

“The agreement defined two payment procedures for oil shipments, working to undermine the structural inequality existing between importing and exporting states. The first was a pricing mechanism where, depending on the current 8 market price, a fraction of the cost would be paid over an extended term. This fraction ranged from 5 percent with prices below 20 US dollars per barrel to 50 percent with prices exceeding 100 dollars. The deferred payments would be placed in the ALBA Caribe Fund to be used for regional development projects. The second option was a ‘commercial offset mechanism,’ which allowed members to countertrade oil for goods to completely counteract any structural economic inequality. Cuba offered medical services while Nicaragua, the Dominican Republic, Guyana, and Jamaica reportedly had offset 2.73 billion US dollars by early 2014, sending 2.2 million tons of rice, coffee, beans, vegetable oils, sugar, meat, milk, pasta, animal fodder, and clinker to Venezuela in lieu of money, as well as 111,931 cows, calves, and bulls. Key here was a view of oil, medical services, and agricultural products as complementary use-values: dependence on Venezuela for oil signified interdependence and ‘mutual control’ while dependency under market-regulated exchange constituted a relation of Caribbean subjugation.”

+   “An estimated $4.2 billion borrowed for development and not one completed project.” The Anakawona Collective on the 2019 protests around the PetroCaribe embezzlement scandal in Haiti. Link. And Henry Mace interviews Robert Fatton on the current crisis. Link. 

+  “After 2003, the Chávez energy team crafted new international trade and energy alliances with non-traditional partners such as China, Russia and Iran. These were intended to guarantee new markets for Venezuelan oil products and lift the international oil price through output agreements.” By Julia Buxton. Link. And see a new PW essay on disputes between Venezuela, ExxonMobil, and Guyana over newfound oil reserves. Link.

+  “By 2014 PDVSA debt had reached US$40 billion. Much of the borrowed money has been used to shore up the overvalued bolivar and to sustain the company’s role in social and economic programs.” Daniel Hellinger on “landlord states” and Hugo Chavez’s fiscal regime. Link.

NEW RESEARCHERS

Personal Forecasts 

MUHAMMED BULUTAY is a PhD candidate in economics at the Technical University of Berlin and the Berlin School of Economics. His working paper studies household perceptions of the European Central Bank’s forecasting performance. 

From the paper:

“Central banks publish their macroeconomic forecasts not only to inform the public about the future of the economy, but also to manage expectations. However, disagreements about the future persist between central banks and private agents. For central banks, disagreement is particularly troubling when it comes to future inflation, because inflation expectations can translate into inflation and deanchoring can hinder the transmission of monetary policy. For private agents, it is inefficient not to adopt the central bank’s inflation forecast because forming personal forecasts is costly in terms of time and resources. Information about the accuracy of past forecasts lowers inflation expectations, reduces uncertainty about future inflation, promotes trust in the ECB, and discourages the consumption of certain goods, such as major items (e.g., cars, furniture) and clothing. Using instrumental variable estimation to account for endogeneity, I identify the causal relationship between trust in the ECB and inflation expectations. This analysis shows that the information shifts inflation expectations through its effect on trust in the ECB. In terms of marginal effects, a one standard deviation increase in trust in the ECB reduces inflation expectations by 5.3% to 8.5% and inflation uncertainty by 2.4% to 7.1%.”

+ + +

+  “Guyana has again become a battleground for geopolitical ambitions.” New on PW, Raphael Padula, Matheus de Freitas Cecílio, Igor Candido de Oliveira, and Caio Jorge Prado on ExxonMobil-led oil discoveries in Guyana. Link.

+  “Why Milei opted to provoke both governors and political factions that had supported him in the runoff election remains unclear. The possibility that the decision was simply a consequence of Milei’s political ineptitude in building alliances should not be underestimated.” Also new on PW, Sara Cufré and Gustavo Robles review the Argentine president’s first hundred days in office. Read in English or Spanish. 

+  “In the make-or-break phase of the energy transition, the market structure and regulatory setting of the utility industry will be all-important.” A new post from the Center for Active Stewardship, by Nolan Lindquist. Link.

+  Dani Rodrik examines shifting perspectives on free trade between the nineteenth and twentieth centuries. Link.

+  “The data disclosed so far provides ample grounds for suspecting malfeasance.” Prasenjit Bose’s preliminary analysis of newly released data from India’s electoral bonds scheme. Link. 

+  “Tel Aviv serves as a coordinating point in a globally-integrated imperial project with dizzying financial and demographic porousness.” By Kaleem Hawa. Link.

+  Rodrigo Oliveira, Alei Santos, and Edson Severnini find that evidence from Brazil contests common criticisms of affirmative action. Link.

+  “The Gaitanistas’ prominence in Colombian crime and conflict both makes their participation essential for the success of ‘total peace’ and confounds efforts to include them.” A new report from the International Crisis Group. Link. Also see Jerónimo Ríos Sierra’s PW essay on Gustavo Petro’s negotiations with the ELN. Link. 

+   “The island of Haiti, both on the Spanish and French side, still grows about every plant described by Oviedo when he first informed the Europeans of the crops of the Indies. In the Dominican Republic these provide abundance; on Haiti they make possible survival. Cuba, largely resettled only in late years, knows and uses the fewest root crops. The food potential of the traditional conuco planting, or provision ground, is hardly appreciated by ourselves, be we agricultural scientists, economists, or planners, because its tradition as well as content are so different from what we know and practice. Yields are much higher than from grains, production is continuous the year around, storage is hardly needed, [and] individual kinds are not grown separately in fields but are assembled together in one planted ground to which our habits of order would apply neither the name of field nor garden. And so we are likely to miss the merits of this system. The conuco system can make intensive use of steep slopes and thereby may encounter erosion hazards that should not be blamed on the system itself, as commonly they have been.” By Carl O. Sauer. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org