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Jamaica is paying its oil debts to Venezuela with food instead of cash

rtsh0h8 venezuela empty shelves foodBy Alan Hernández, VICE News From Business Insider

Jamaica has announced it is going to pay off oil debts it has with Venezuela with food, medication, and fertilizers, instead of cash.

The barter agreement comes at a time when Venezuela is suffering from acute shortages of basic products amid a major economic and political crisis.

Jamaica’s government announced the deal last Friday, saying that the transfers will take place in the last quarter of this year and amount to $4 million.

The oil-for-basic products exchange is taking place within a regional agreement known as PetroCaribe that was signed in 2005 by Venezuela and 12 Caribbean States.

The deal requires the Caribbean nations to pay for half of the oil at market prices immediately. The remaining 50 percent can be paid up to 25 years later. A special “compensation mechanism” within the agreement allows for cash substitutes to be used to settle that delayed payment.

“Jamaica has been accumulating a debt with Venezuela since 2006, and it is perfectly legitimate to pay that debt with products” said Rolín Iguarán, an oil expert from the University of Zulia in Venezuela. “In this period of economic recession, Venezuela is returning to practices that were used in the 1940s.”

Shortages of food and other basics are at the heart of Venezuela’s current crisis, with few signs that things would get any better in the near or medium term.

This year clashes between security forces and angry crowds demanding food have killed several people. Last month over 120,000 Venezuelans flooded into neighboring Colombia to buy supplies, during a weekend in which border controls were temporarily relaxed.

Last week the human rights group Amnesty International accused President Nicolás Maduro’s government of promoting forced labor with a decree that obliges all Venezuelan workers to be available to work in food production if required.

Iguarán, the energy expert, stressed Venezuela’s long-running dependence on oil revenue to pay for importing basic goods. In the current context of falling oil prices, and falling production, he said barter deals like the kind just announced with Jamaica may soon spread around the Caribbean.

“They need oil and may also be producing something that Venezuela needs,” he said.

Many details of the deal — which the Jamaican prime minister’s office announced with a statement while Venezuela’s presidential office kept silent — remain unclear. These include what food products will be involved and where the medication will come from, given that Jamaica does not have a significant pharmaceutical industry.

Read the original article on VICE News. Check them out on YouTube, Facebook, and Instagram. Copyright 2016. Follow VICE News on Twitter.

Venezuela empty shelves food
A woman walks past empty refrigerator shelves at a Makro supermarket in Caracas, August 4, 2015. Venezuelan supermarkets are increasingly being targeted by looters, as swollen lines and prolonged food shortages spark frustration in the OPEC nation struggling with an economic crisis. Shoppers routinely spend hours in lines to buy consumer staples ranging from corn flour to laundry soap, turning lines into venues for shoving matches and now more frequent attempts to plunder shops. The word on the shelf reads “Cheeses.” REUTERS/Carlos Garcia Rawlins

RTSH0H8 An empty refrigerator is seen inside a supermarket in Caracas Ivan Alvarado/Getty Images

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