Chavez offers 'oil for food'

Venezuela's president has offered Caribbean and Central American nations the option to pay for oil supplies with local products, such as bananas and sugar.

Speaking in Cuba at a meeting of Petrocaribe, his regional energy alliance, on Friday, Hugo Chavez also lambasted the US and other rich nations for squandering world resources.

"We have begun to create a new geopolitics of oil that is not at the service of the interests of imperialism and big capitalists," Chavez said in his speech.

He dismissed Americans and "Yankees" and pledged Venezuela's oil and gas would "always be at the service" of its "brother nations".

The Petrocaribe alliance, which grew to 17 countries on Friday with the admission of Honduras, has bolstered Chavez's influence in the region since it started in 2005.

But the debt of Petrocaribe members to Venezuela has reached $1.16bn in little more than a year of supplies, and is estimated to rise to $4.6bn by 2010.

Recognising this, Chavez proposed debts be offset with local products and services.

Services for oil

He did not say how local products would be used to pay down debt, but he said it would be the same method used by Cuba, which pays for oil supplies with medical and other services.

"We propose adding to the financed portion of the oil bill a method of payment that includes the supply of a series of local products and services," he said.

The Petrocaribe deal allows members to defer payment on 40 per cent of their Venezuelan oil bill for up to 25 years, with interest of only 1 per cent.

Dan Erikson, from the inter-American dialogue, told Al Jazeera that Petrocaribe had won Chavez friends in the Carribean, but that its impact was relatively small.

"Chavez tends to get much greater defference in the Carribean today than he did in the past, however, the Venezuelan president has various outreached programmes," Erikson said.

Outreach

He added that the Carribean states were still often "charting their own course" on the world stage.

"If you look at most of the states engaged with this - aside from Cuba - they tend to be quite small states that relly on a variety of international partners," he told Al Jazeera.

"The outreach to Venezuela is part of this overall stratergy of trying to globalise relations for Carribean states who need all the friends they can get."

Critics say Petrocaribe is increasing the indebtedness of small Caribbean states still reeling from the loss of preferential markets for bananas and sugar in the EU.

While in Cuba, Chavez is also due to open a revamped Soviet-era refinery that will supply diesel, gasoline and jet fuel to members of Petrocaribe.

Chavez has helped keep Cuba's battered economy afloat with 92,000 barrels per day of oil that Havana pays for with the medical services of thousands of doctors treating Venezuela's poor.

aljazeera.net /FRIDAY, DECEMBER 21, 20071:43 MECCA TIME, 22:43 GMT

India seeks World Bank rupee loan
By Prachi Pinglay BBC News, Mumbai

Friday, 7 December 2007, 16:43 GMT

The World Bank is considering whether to make a huge loan to India in rupees rather than dollars.
The Maharashtra state government is seeking a loan worth some $3.5bn but is concerned about the fluctuations in the value of the dollar.
If approved, it would be the first time the World Bank has agreed to a such a loan in rupees.
The bank says the money would be invested in health, water, energy and irrigation projects.
World Bank approval
The loan represents some 60% of total costs for the development project which come to nearly $6bn.

The idea is that the loan would be sanctioned in dollars, but would be handed over in rupees.
All repayments would be in rupees too.
This would prevent any changes in the amount to be repaid caused by fluctuating exchange rates.
The loan still has to get the approval of the World Bank, India's central government and the Maharashtra state government.
The loan arrangement was discussed at a meeting between World Bank Country Director for India, Isabel Guerrero, and Maharashtra state government officials on Thursday.
In the last few months, the rupee has appreciated sharply against the dollar from 45 rupees to a dollar to 40 rupees to a dollar.
One of the projects Maharashtra wants help with is the Mumbai Metro project, projected to cost $2.5bn. It is hoping to receive loans of $1.5bn.
The project would connect south Mumbai (Bombay) to the suburbs.
Other projects include rural and urban water supplies, power transmission, technical support for a "vision Mumbai" plan and a possible Public Private Partnership (PPP) in irrigation.