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Surging Oil Prices Threaten Caribbean Economies

December 7, 2007

MIAMI – The rise in the price of crude oil threatens to strangle the fragile economies of Central America and the Caribbean, and the region must design strategies to avoid a recession, according to remarks made by participants in the inaugural session of the 31st Miami Conference on the CaribbeanBasin held here Dec. 3.

Organized by Washington-based business advocacy group Caribbean-Central American Action (CCAA), the gathering brought together more than 600 politicians, business executives and exports for a threeday conference at Miami’s InterContinental Hotel.

Manuel Rosales, CCAA’s Nicaraguan-born chief, said the soaring price of oil had sharpened the energy crisis in some countries in the region.

“There have been blackouts of up to 14 hours in countries such as Nicaragua. Under these circumstances, the productive sector is being seriously hit, especially small and medium businesses,” he said. “It’s a very serious thing.”

“This matter is of the highest importance. If we have a free-trade treaty like CAFTA-DR, how can the countries take advantage of the benefits of the U.S. market and compete in the world if we don’t have energy?” Rosales said, referring to the Central American Free-Trade Agreement with the United States and the Dominican Republic, or CAFTA-DR.

In Honduras, the government last month implemented a drastic energy saving measures and the business sector called the rising petroleum price trend a “tax from abroad” that could pummel the economy.

Honduras gets most of its electricity from petroleum-burning plants.

Meanwhile, in Nicaragua a hike in electric rates has already been announced (NT, Nov. 9).

“That is one of the issues we’re going to discuss. We have to give alternatives to the governments which they can put into effect as soon as possible that will help break that energy cycle,” the CCAA’s Rosales said.

“How are we going to be able to compete in a world of globalized trade if we can’t have efficient energy and access to it? We’ve invited experts to give us their opinions and suggestions about how that problem can be combated,” he said.

In addition to the topic of energy problems, other topics on the meeting’s agenda included ways that small and medium-sized firms can benefit from CAFTA-DR and free trade in general.

 

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