Cuba Business

Cuba watches recall vote as Venezuela decides how the oil will flow

Posted August 12, 2004 by publisher in Cuba Business.

By ANTHONY BOADLE | Reuters News Service

Cuba’s economically strapped government is closely watching Sunday’s recall referendum in Venezuela, which could deprive it of vital oil supplies and its staunchest ally in Latin America.

But Cuban officials are confident Venezuelan voters will back their populist President Hugo Chavez, who has forged a strategic alliance with Havana and a close friendship with Cuban leader Fidel Castro.

The two leaders’ anti-American rhetoric and left-wing policies have been denounced by the Bush administration as a Cuban-style communist takeover in the making in oil-rich Venezuela, a major U.S. supplier.

Experts on Cuba say the loss of oil shipments on preferential terms with deferred payment would worsen Cuba’s cash crunch and halt its recovery from the economic meltdown suffered a decade ago after the demise of the Soviet Union.

“Defeat of Chavez in Caracas and the loss of Venezuela oil will not mean the collapse of the Cuban government. Castro has shown that he can survive,” said Hans de Salas, a researcher at the University of Miami’s Institute for Cuban-American studies.

“But conditions in Cuba would become very precarious.”

Amid concerns a close result, especially a defeat for Chavez, could trigger instability in the world’s fifth-largest oil exporter, the Venezuelan government has said it will guarantee oil exports and prevent unrest no matter who wins Sunday.

Since Chavez was elected in 1998, Venezuela has become Cuba’s main benefactor. Under an agreement signed in 2000, Venezuela supplies Cuba with 53,000 barrels a day of crude oil and refined products, including gasoline, diesel and jet fuel.

That covers much of Cuba’s $1 billion a year oil bill, which could rise steeply if the island is obliged to buy oil on the spot market, experts said.

Member Comments

On August 13, 2004, aprilsauce wrote:

Where ever there is oil, look for the Bush Dynasty/Adminstration.  They want oil.  They have money.  They buy whatever they want w/o thought to the lives they destroy.