Russia to Pay to Cuba for Debt Settlement

July 17, 2006

Russia to Pay to Cuba for Debt Settlement

After nearly a decade of urging Cuba to pay off $22-billion debt to the
former Soviet Union, Russia shelves the issue for indefinite time,
Deputy Finance Minister Sergey Storchak made clear. Instead, PM Mikhail
Fradkov will offer a new loan of $350 million during his visit to Cuba.
In time of September tour to Cuba, Russia's PM Mikhail Fradkov will
suggest restructuring Cuba's debt to Russia and to the former Soviet
Union, fix the settlement schedule for the debt to Russia and offer a
new loan worth $350 million, according to Storchak.

Cuba's debt to the USSR is around $22 billion, the deputy finance
minister said, other estimate vary from from $16 billion to $25 billion.
In Cuba, however, they don't think they owe anything to the USSR. To the
contrary, Fidel Castro vowed some time ago Cuba may claim damages of $30
billion due to the abrupt break of relations.

But the debt of Cuba to Russia is of no dispute. It amounted to $161.123
million as of late 2005 (with regard to arrears) and amassed when Russia
was funding completing construction of Huragua nuclear plant there. Cuba
services neither this debt nor the debt to the former USSR.

The issue of Soviet debt settlement won't be raised at all during
Fradkov's tour, according to Storchak. "Russia has no desire to abandon
the assets but may wait till the time when the debt is being discussed
without continuous references to Soviet-Cuban friendship," explained
representatives of Finance Ministry.

Moreover, in an effort to revive the mutual trade, Fradkov will offer to
Cuba a new tied loan of up to $350 million, which the latter should
spend to pay for deliveries of Russian machinery and power equipment.

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