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Posted May 01, 2004 by publisher in Business In Cuba

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By Eliza Barclay | UPI

Speculation on what the Venezuela-Cuba axis means for Cuba’s future is a favorite topic among the Miami-based Cuban-American exile community and Washington foreign policy experts alike.

A new report from the Institute for Cuban and Cuban-American Studies at the University of Miami says that the economic stability of the Cuban government depends to a great extent on the fate of President Hugo Chavez’s rule in Venezuela.

But some Washington experts counter that while a termination of Cuba’s preferential trade relationship with Venezuela would be difficult for the small Caribbean nation, it would not completely destabilize the country, economically or politically.

Chavez may face a recall referendum in August organized by a virulent opposition movement. The National Election Council, or CNE, has stalled the process, however, for two more months. The CNE says it needs more time to substantiate signatures on the referendum petition and to organize the recall vote if the required 2.4 million names or more are verified.

Chavez’s opponents say his populism has morphed into authoritarianism as Chavez has stacked military, police, judicial and civil service posts with his supporters.

Since an agreement was fashioned between Cuba’s President Fidel Castro and Chavez in 2000 to permit the sale to Cuba of up to 53,000 barrels per day of crude oil and fuel derivatives, Cuba and Venezuela have cultivated a relationship of steady trade. But instead of compensating the Venezuelan government for the oil it has imported with cash, the Cuban government has exported a less commonly traded commodity: human capital in the form of 12,000 doctors, sports instructors, literacy experts and others.

The report, entitled “Castro’s Venezuelan Bonanza,” states that Cuba’s total oil debt to Venezuela, in monetary terms, is estimated at $1 billion. But some experts on the Cuban economy have acknowledged that much of the accounting in the relationship is unknown given that the two countries are trading under unusual terms with unknown accounting measures.

Institutions critical of the Castro government, including the Institute for Cuban and Cuban-American Studies, which acts as an educational link between the University of Miami and the Cuban exile community, say that political advisers are also among the Cubans now residing in Venezuela and that they have helped to clinch Chavez’s power behind the scenes.

According to Hans Desalas, research associate for the institute who helped to craft the recently released report, Castro has installed several political advisers at the top levels of the Chavez government and they have helped the Chavez government to prepare for future coups or the aftermath of a successful referendum.

The report also argues that the presence of the Cubans in Venezuela engaged in medical and social services in low-income urban and rural areas has influenced the Venezuelan poor through radical means, consolidating their loyalty to Venezuela’s President Hugo Chavez.

The Chicago Tribune, however, reported April 2 that poor Venezuelans in the Nueva Tacagua slum in western Caracas who received medical care from a Cuban doctor were simply grateful for the doctor’s free and expedient attention.

But Desalas says that Castro has orchestrated a political plot via Cubans in Venezuela because it acts as a lifeline to the Cuban economy and an amputation of the lifeline would be disastrous for Cuba.

“The loss of Venezuela’s economic support of the Cuban government would throw the Cuban economy and the feasibility of Castro’s succession plan into disarray,” Desalas told United Press International.

But some experts strongly disagree with linking these two issues: a hypothetical termination of the Cuba-Venezuela trade alliance and the hypothetical activation of the succession plan of Raul Castro’s takeover of the presidency upon Fidel Castro’s death, decreed in the Cuban Constitution.

“These are two completely separate subjects,” said Philip Peters, vice president of the Lexington Institute, a conservative research institute. “There is a certain recklessness of thinking about Cuba in Miami; it always looks to them as though it is all going to fall apart next month.”

Julia Sweig, senior fellow of the Latin America program at the Council on Foreign Relations, also did not concur that either Cuba’s economic stability or presidential succession plans hinge on the country’s relationship with Venezuela.

“The succession plan was in place long before Cuba began importing large amounts of Venezuelan oil,” Sweig said. “Furthermore, under almost any circumstances, anyone ruling the country is going to have a really tough time if there is no oil coming in.”

Sweig noted that remittances sent from Cuban-Americans and other members of the exile community represent a stream of income for Cuba at least as large as the resources from Venezuela. The remittances are estimated at $100 million and up per year.

Analysts say remittances and tourism are the two biggest sources of revenue for the Cuban economy.

Sweig and Peters also both remarked that Cuba is not the only country with which Venezuela trades oil at a reduced rate.

In 2000, Chavez forged the Caracas Energy Accord, an agreement allowing the South American nation to supply 10 Caribbean and Central American countries with 80,000 barrels per day of oil at reduced rates. The pact recipients include Haiti, Costa Rica, Panama, Nicaragua, the Dominican Republic, Jamaica, Barbados, Honduras, Guatemala and Belize.

As with its relationship with Cuba, Venezuela accepts goods and services as part of the payment from the 10 countries.

Still, the Institute for Cuban and Cuban-American Studies claims that the “quasi-barter exchange” between Venezuela and Cuba is the sustenance that is keeping Havana afloat. The loss of it, the study asserts, would be unbearable.

But experts like Sweig and Peters are quick to prompt that Cuba already survived the removal of the Soviet Union’s economic support in 1989, and that if Venezuela becomes unable to lend Cuba’s shaky economy a hand, the resilient island nation would find a way to adapt.

“Oil is important and Cuba will be hurt if it no longer could get it from Venezuela, but it would not be an earth-shattering event,” said Sweig. “Cuba has some economic smarts.”

  1. Follow up post #1 added on May 01, 2004 by publisher with 3905 total posts

    The Cuban economy is already fragile. Any disruption in the oil supply would be a major factor in daily operations of the country.

    Cuba consulting services

  2. Follow up post #2 added on June 05, 2004 by Andy Goodall

    The reason why Cuba has survived the US illegal blockade is the committment and co-operation of the Cuban people to better their lives AS A WHOLE. This is a significant strength which Milionaires cannot understand. Leave Venezuela & Cuba alone.

  3. Follow up post #3 added on July 27, 2004 by Olga

    We will survive no matter whats happens in Venezuela or in any part of the world, because our strength is the union of our people. We know what we have and what we want, and the most important, how to defend ourselves.

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