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Posted April 30, 2005 by publisher in Castro's Cuba

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Havana and Caracas launched a series of cooperation agreements expected to provide both economic and political benefits to the two leaders.

Venezuelan President Hugo Chávez strutted through Havana with Fidel Castro Thursday as they opened branch offices of Venezuela’s state-owned oil company and a state-controlled bank and bolstered his political and economic alliance with the communist nation.

Before flashing cameras and enthusiastic applause from state workers, Castro and Chávez launched new Havana branch offices for Petroleos de Venezuela, S.A. (PDVSA) and Banco Industrial de Venezuela (BIV).

The two leaders also signed pacts that covered everything from energy to culture and also promoted a hemispheric trade pact—Boliviarian Alternative for the Americas—which is intended to rival the U.S.-backed Free Trade Area of the Americas.

But even as the public alliance continues to be a nuisance to the United States, experts said there is no economic bonanza at work—at least not in the short-term.

‘‘The merging will be, politically, much more important than economically,’’ said Jorge Sanguinetty, a Miami economist and Cuba expert.


Reflecting long-term plans for expanding its oil market in the region, PDVSA said Thursday that it would begin exploration for oil fields off Cuba’s coast and would pump and refine oil. Plans to reopen an oil refinery and terminal in Cienfuegos, on Cuba’s south-central coast, are under way, Agence France-Presse reported.

‘‘The expansion or retrofitting of the Cienfuegos refinery would be a very good investment,’’ said Jorge Piñon Cervera, a retired Latin America Amoco executive. “One of the reasons the price of crude is so high is because of the lack of refinery capacity.’‘

Over the past five years, Cuba has been receiving 53,000 barrels of crude a day from Venezuela under preferential terms, providing the island with a much-needed reprieve from an economic crisis that began with the loss of subsidies from the former Soviet Union after its collapse in 1991.

Venezuelan officials told The Associated Press Thursday that oil shipments to Cuba have risen to 80,000 to 90,000 barrels a day.

‘‘Venezuela is becoming the new Soviet Union for Cuba,’’ said Carmelo Mesa-Lago, one of the top U.S. experts on Cuba’s economy. “For Cuba, this is terrific. It allows them to continue to make wrong economic policies and have Venezuela pay for it.’‘


Havana has reciprocated by providing Caracas with assistance in healthcare, as well as literacy and sports programs. More than 13,000 Cuban doctors have been dispatched to state-run clinics in some of Venezuela’s poorest neighborhoods to provide free care.

‘‘Venezuela is long on capital and can use more talent. Cuba is short on capital and long on talent,’’ said Washington-based economist Oscar A. Echevarria, who has written about both Venezuela’s and Cuba’s economy. “This arrangement benefits both governments.”

Officials said Thursday a Cuban bank branch also would open in Caracas, as well as a chain of government-run stores to sell goods at subsidized prices. And the leaders signed agreements to set up an experimental seed bank and a joint venture to produce solar panels, according to AFP.

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