Saturday, August 06, 2016

Cuba admits Venezuelan recession is hitting hard: Chavist oil shipments down 20%

Cuba admits Venezuelan recession is hitting hard: Chavist oil shipments
down 20%

Venezuela's grim situation is impacting not only millions of households
around the country: it is also sending panic waves across the Caribbean
all the way to Cuba, a solid ally that for decades now has relied
heavily on Chavismo's generosity.

Cuba, a totalitarian country with a weak economy, has alienated itself
from the rest of the world and has largely relied on Venezuela to stay
financially afloat. But Venezuela's falling oil prices is causing Cuba
to distance itself from the South American country.
So far this year Venezuelan oil shipments to the island have declined by
19.5%, forcing an energy rationing that is reminding people of the early
90s, when the Soviet Union dissolved and Cuba lost its top provider
almost overnight.
Now with Venezuela's wealth slowly fading away, the geopolitical
chessboard may change in a way that some say will inevitably drive
Havana closer to the U.S.
"Venezuela's inability to help Cuba creates a void that will very likely
be filled by the U.S.," said foreign policy expert Giovanna De Michelle.
"Cuba's opening to foreign investment has been slow, but now they don't
have another option if you consider Venezuela's grim situation," said
Felix Arellano, also an internationalist.
Venezuela and Cuba started strengthening ties soon after Hugo Chavez, a
socialist and open admirer of Fidel Castro, came to power in 1999. The
alliance, fueled by a close personal friendship, helped the Castro
brothers keep the island afloat amid the Soviet Union domino collapse.
Currently – and for more than a decade now – Venezuela supplies more
than 50% of the island's intake of oil at very preferential terms. In
exchange, in 2003 Cuba started providing human resources to Venezuela,
mostly teachers and medical doctors to support Chavez's various social
programs, like Barrio Adentro and Misión Robinson, which focused on
reducing analphabetism.
According to the most recent information available, in 2013 Venezuela
provided Cuba with 99,000 barrels of crude oil a day. To date, Cuba has
sent approximately 200,000 workers to Venezuela.
This oil-for-workers deal greatly benefited both Castro's and Chavez's
agendas: while Cuba kept running on cheap oil, Venezuela found a way to
secure and preserve the social programs that are the backbone of Chavismo.
After Chavez died in 2013, his handpicked successor Nicolas Maduro has
kept the close relationship with Fidel and Raul Castro — according to an
FNL count, Maduro has visited Cuba 15 times since becoming president
three years ago.
Raúl Castro has acknowledged the repercussions that Venezuela's
deepening crisis is having on Cuba. He said Cuba's economy grew just 1%
in the first part of the year, half of what the government had planned
for, due in part to "a certain contraction in the fuel supplies agreed
upon with Venezuela, despite the firm will of President Maduro and his
government to fulfill them."
"Logically that has caused additional tensions in the functioning of the
Cuban economy," Castro told the National Assembly.
Analysts say the severity of the financial and political crisis in
Venezuela may force Cuba to change course sooner rather than later.
"Havana needs to also start drawing investments from Europe, Brazil,
Canada and China," Arellano told FNL. "The down part for the Castro
brothers is that this might require political changes in the near future."
As for the U.S., it is very likely Washington will keep pushing to
increase its influence in Cuba regardless of November's election
outcome. "American investors are betting big on Cuba, which will
probably result in the ease of the U.S. embargo [over the island] in the
near future," De Michelle said.

Source: Cuba admits Venezuelan recession is hitting hard: Chavist oil
shipments down 20% — MercoPress -
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