Posted December 10, 2013 by publisher in Cuba Business.
Reuters news article with commentary by Havana Journal publisher IN CAPS BELOW
MERRY CHRISTMAS CUBA.
Russia and Cuba have quietly signed an agreement to write off 90 percent of Cuba’s $32 billion debt to the defunct Soviet Union, a deal that ends a 20-year squabble and opens the way for more investment and trade, Russian and European diplomats said.
THE SOVIET UNION “LOANED” CUBA BILLIONS OF DOLLARS FOR MANY DECADES AND BOUGHT SUGAR AT INFLATED PRICES. FIDEL SAID RUSSIA BROKE TRADE AGREEMENTS AFTER THE COLLAPSE OF THE USSR SO FIDEL DECIDED TO STOP PAYING ALL RUSSIAN DEBTS.
The two sides announced an agreement to settle the debt dispute earlier this year and finalized the deal in Moscow in October. It would have Cuba pay $3.2 billion over 10 years in exchange for Russia forgiving the rest of a $32 billion debt – $20 billion plus service and interest, the diplomats said.
It must still be approved by the Duma, Russia’s lower house of parliament.
Negotiations on the form in which Cuba will pay the remaining debt are ongoing MEANING THAT DEBT TOO WILL BE FORGIVEN AT SOME POINT IN THE FUTURE, the diplomats said, as even $320 million per year represents a large sum for the cash-strapped country, which has labored under a U.S. economic embargo AND CASTRO’S COMMUNISM for decades.
Cuba’s total export earnings are around $18 billion, including tourism and medical and educational services. CUBA USES ITS OWN ACCOUNTING PRINCIPLES SO $18 BILLION IS PROBABLY VERY HIGH.
Neither Cuba nor Russia has made any official comment on the debt agreement. Cuban officials were not immediately available for comment.
Cuba defaulted on its debt in the late 1980s but recently has been trying to restructure MEANING TO GET FORGIVEN the old debts to improve its international credibility. NOT PAYING DEBT AND LOCKING UP FOREIGN BUSINESSMEN? NOT SURE CUBA IS A VERY SAFE PLACE FOR MONEY OR INVESTMENTS.
Russian Prime Minister Dmitry Medvedev, during a visit to Cuba in February, signed a general agreement to work out a formula and settle FORGIVE 90% OF the old debt by next year. The decision rankled other countries grouped in the Paris Club of creditor nations because it broke ranks with the collective approach of the organization.
Paris Club Contacts
The Paris Club is an informal group of creditor governments including Canada, France, Germany, Japan, Russia, the United Kingdom and the United States as well as a number of smaller European nations.
The Paris Club reported that Cuba owed its members $35 billion at the close of 2012, now estimated at around $37 billion, which would leave the island owing $5 billion to $6 billion of non-Soviet debt to the club’s members. “OWING” THAT IS JUST A WORD TO THE CASTROS. MEANS NOTHING.
The organization has a Cuba working group, which does not include the United States.
Russia pledged to work with Cuba UNILATERALLY AGREE TO FORGIVE DEBT towards reaching an agreement with the Paris Club as part of the October settlement, one Russian diplomat said.
“The Paris Club should be grateful as it removes a huge amount of money from the table and makes an eventual agreement FORGIVING ALL CUBAN DEBT more likely,” he said.
While some Paris Club members clearly preferred a united front, one European diplomat said Russia’s help in settling Paris Club debt could prove important and that a reduced debt would indeed be more easily negotiable TO FORGIVE ALL CUBAN DEBT.
Since the Medvedev visit, the Paris Club has put out feelers to the Cubans and a few months ago two representatives traveled to the Caribbean island to meet with the central bank, the first such visit in over a decade. WHY IS RUSSIA KISSING CUBA’S ASS? IT ALWAYS AMAZES ME HOW A LITTLE COUNTRY LIKE CUBA GETS SO SO SO MUCH MONEY, GOODS AND SERVICES FOR CHEAP OR FREE FROM SO SO SO MANY COUNTRIES AND CUBA IS STILL A BANKRUPT, DEADBEAT COUNTRY.
Unlike the International Monetary Fund and World Bank, from which Cuba is excluded under the longstanding U.S. trade embargo EH, REALLY?, the Paris Club does not issue multilateral loans.
Cuba releases very little information about its foreign debt. BECAUSE THE WORLD WOULD BE SHOCKED TO KNOW THE TRUE NUMBERS.
Last month the government reported its “active” foreign debt MEANING LOANS ARE NOT IN DEFAULT YET, accumulated after it declared a default in the late 1980s, as $13.6 billion in 2010. The government no longer reports its “passive” debt from before the default and estimated at around $8 billion.
The Communist-run island has never included debt to the Soviet Union in its figures, claiming the amount was in overvalued convertible rubles and that the country sustained massive damage from broken contracts when its former benefactor collapsed.
Cuba has post-1980s default debt of hundreds of millions of dollars to Russia.
“The final deal recognizes some of the Soviet debt, and that’s politically important for Russia AND FINANCIALLY IMPORTANT TO CUBA. It also opens the way for more credit MEANING FREE MONEY which is important for Cuba,” a Russian diplomat said, like others requesting anonymity.
Search for Credibility
Three years ago Cuba restructured its active government and commercial debt with China CHINA FORGIVE BILLIONS OF LOANS TO CUBA. SURPRISE, estimated at around $6 billion. Last year Cuba settled a dispute JAPAN FORGAVE THE DEBT with Japanese commercial creditors dating back to the 1980s. THIS IS HOW CUBA SETTLES ITS DEBT, BY GETTING THE LENDER TO FORGIVE THE DEBT. WHAT A GREAT SYSTEM.
Under the Japanese agreement, 80 percent of the 130 billion yen debt (about $1.4 billion) was forgiven THERE’S THAT WORD AGAIN, with the remainder to be paid over 20 years TO BE FORGIVEN AT SOME POINT WITHIN 20 YEARS.
Mexico recently forgave 70 percent of a $478 million debt Cuba accumulated in the late 1990s, in exchange for the remaining $146 million being paid FORGIVEN over 10 years.
“The agreements with China, Japan, Mexico and Russia ease some outside financial restrictions on the Cuban economy YOU THINK? HAVING BILLIONS OF DOLLARS OF DEBT FORGIVEN IS GOOD FOR ANY COUNTRY and should facilitate trade ties with these countries MORE LOANS,” said Pavel Vidal, a former Cuban Central Bank economist now teaching at Colombia’s Javeriana University.
“The austerity measures adopted by the government in 2009 BECAUSE NO COUNTRY WAS LOANING CUBA MONEY DUE TO THE GLOBAL FINANCIAL CRISIS, and these accords to lower FORGIVE the foreign debt, help stabilize the island’s finances at a very important moment when a significant monetary reform over three years (devaluation and elimination of the dual currency system) has begun,” he said.
Raul Castro, who replaced his ailing brother Fidel as president in 2008, has drastically reined in imports and cut state payrolls and subsidies while insisting the near-bankrupt government get its financial house in order AKA GET MORE DEBT RELIEF.
In 2011, the Communist Party approved a five-year economic plan that called for efforts to “enhance Cuba’s credibility in its international economic relations by strictly observing RECOGNIZING BUT NOT PAYING OR JUST ASKING THAT DEBTS BE FORGIVEN all the commitments that have been entered into,” before and after the default.
The plan also called for expediting the rescheduling FORGIVING of Cuba’s foreign debts and implementing “flexible restructuring FORGIVING strategies for debt repayment FORGIVENESS” as soon as it is practical AS SOON AS THE LENDER AGREES TO FORGIVE THE DEBT.
IF YOU WERE A COUNTRY, WHY WOULD YOU LOAN MONEY TO CUBA? BECAUSE CUBA’S STRUGGLES UNDER THE US EMBARGO? I THINK CUBA CAN BUY CRAP FROM CHINA, I MEAN GET FREE STUFF FROM CHINA. ALSO, CUBA GETS ALL THIS FREE MONEY AND CHEAP OIL FROM VENEZUELA, $600+ MILLION TO DEVELOP THE PORT OF MARIEL ETC ETC AND CUBA IS STILL A BANKRUPT COUNTRY PRETTY MUCH SINCE FIDEL TOOK OVER AND INTENTIONALLY KILLED THE ECONOMY TO MAKE EVERYONE EQUAL, EQUALLY POOR.
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