Cuba Transition Project
Contrary to conventional wisdom, Venezuela and China alone do not
account for the well being of the Castro regime in recent years. Before
the rise of Hugo Chavez and at a time when Chinese aid to Cuba amounted
to little more than shipments of poor-quality rice and bicycles,
European financiers began playing a leading role in resuscitating a
near-bankrupt Castro regime.
From processing Havana's secretive international business transactions
to providing lucrative high-interest loans to the Cuban government,
European Union-based institutions have collectively bankrolled the
Castro regime since the fall of the Soviet Union.
Today, quietly and behind the scenes, more hard currency flows in and
out Cuba via European financial capitals than through Beijing or
Caracas. While Venezuela's  and China's  multi-billion dollar
credit lines for Cuba have done much to offset the loss of Soviet-era
subsidies, such politically-driven deals are largely in the form of
in-kind aid (oil and refined fuels from Venezuela and "soft" trade
credits from China for the purchase of Chinese-made goods) rather than
in convertible currency.
With more than US$1.6 billion in hard credit lines (see Table I) from
European lenders, Cuban authorities have been able to conduct strategic
international transactions ranging from policy-motivated imports of
agricultural products from U.S. Congressional farm districts to
financing the expansion of the island's nickel industry, in turn a major
source of foreign revenue for the regime.
European capital also sustains foreign direct investment. Of 185
foreign-financed joint ventures with the Cuban government (see Table
II), two-thirds originate in Europe. The strong correlation between
foreign financing and foreign investment is best exemplified by Spain's
leading role in the Cuban economy. Home to nearly 40 percent of all
joint ventures currently operating in the island, Spanish lenders are
also the largest source of private capital -- upwards of US$581 million
-- for the Castro regime.
Table I. Foreign Private Financing to Cuba, 2007*
Lenders (by country) Amount (in U.S. dollars)
France 440 million
Spain 326 million
Basque Country (Spain)  255 million
Germany 216 million
Netherlands 182 million
Italy 79 million
Japan 79 million
United Kingdom 22 million
Sweden 14 million
Switzerland 9 million
Belgium 6 million
Portugal 4 million
Total European Financing 1.632 billion
Financing of Undisclosed Origin 728 million
Total Foreign Private Financing 2.360 billion
*Source: Unless otherwise noted, claims represent short-term loans
(typically one-year repayment terms) from private lenders (banks and
supplier financing) to Cuba-based borrowers (e.g., Cuban state-owned
enterprises or joint ventures) as of March 2007. The data do not include
bilateral state-backed loans or trade credits from political allies such
as Venezuela and China. Cf. Bank for International Settlements (BIS),
Consolidated Banking Statistics, BIS Quarterly Review, September 2007.
All debts are expressed in U.S. dollars and rounded to the nearest
Table II. Foreign Direct Investment, 2007
Top Foreign Investors
Joint Ventures with Cuban State-Owned Enterprises
United Kingdom 9
Source: Cuban government data. Cf. Marta Veloz, "España quiere recuperar
sus negocios con la Isla," Opciones (Cuba), Sept. 30, 2007. Data
encompass only formal joint ventures ("asociaciones económicas" or
"empresas mixtas") with foreign investors as of June 2007.
1. Cf. Jorge Piñon, "Venezuelan Oil Subsidies to Cuba Surpassed $3
Billion in 2006," University of Miami, Cuba Transition Project, Cuba
Facts, August 2007,
See also "Cuba's economy: Raul's talking cure," The Economist, October
25, 2007, valuing Venezuelan trade with Cuba at $3 to $4 billion per year.
2. Cf. Marc Frank, "Cuba, China pledge to build on growing trade,"
Reuters, Havana, March 27, 2007. In 2006, Sino-Cuban bilateral economic
relations reached a record US$1.8 billion, largely Chinese industrial
and consumer goods imported by Cuba with "soft" (non-cash) Chinese
government-financed trade credits.
3. Cf. EFE, "Empresas españolas negocian contratos [con] Cuba por 180
millones [de] euros," Havana, 5 May 2006,
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