Cuba signs Economic Deal with Russia

Posted on Friday, 11th October 2019 @ 02:04 PM by Text Size A | A | A

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With Russia’s Prime Minister Dmitry Medvedev’s visit to Cuba amid growing tensions between the hegemon and the small island nation, an energy cooperation plan has been announced, aimed at developing Cuba’s oil and natural gas resources. The Russian Federation will make investments in Cuba’s energy sector to reduce her import dependence and foster energy security. President Miguel Diaz-Canel listed energy, transportation, agriculture, and biotechnology as part of the joint agreement for the country’s socio-economic development. Civilian nuclear technologies were also offered to Cuba.

Faced with tougher commercial and financial sanctions [outright criminal thievery] by the West, Venezuela is still making oil deliveries to Cuba, albeit in lesser quantity. Venezuela’s predicament is compounded by the years of neglect, incompetent economic policy, and corruption under Maduro’s regime – so much so that with the largest proven oil reserves in the world, the country suffers fuel shortages. Even with Russian and Chinese investment, it’s all for naught if the Government simply channels funds into consumption and stupid subsidies and currency peg schemes, while ignoring major problems such as uncaptured economic rent, idle land, idle labor, and capital decay – not to mention widespread corruption.

Two years ago, the former Cold War allies renewed ties in wake of Trump’s commitment to maintain the embargo on its little, but defiant neighbor which remains sovereign to this day against overwhelming odds. All efforts to restore political and economic ties between the US and Cuba were brusquely suspended in June 2017, when Donald Trump put in place more restrictions on commerce and travel, and in September cutting US embassy staff on the island.

In a bid to cover unfulfilled demand, as well as for geostrategic reasons, Russian firms have expanded business activity there, with Rosneft restarting fuel deliveries to Cuba and retooling the Cienfuegos oil refinery, RZD working to improve over a thousand kilometers of railroads and starting construction of a high speed rail line between Havana and Varadero, Sinara Transport Machines shipping 75 locomotives, with more to arrive, while KAMAZ and AvtoVaz brought in thousands of vehicles, including trucks, trailers, and Lada cars.

Just five years ago, Rosneft helped Cupet explore the country’s offshore oil reserves, both companies owned by their respective states. One of the most significant agreements then, signed by Raul Castro and Vladimir Putin, was for exploration and drilling on Cuba’s northeastern coast. The area contains around 20 billion barrels of oil, according to Cupet’s estimations.

In 2011, the island nation restructured 6 billion dollars owed to China, and in 2012 Japan forgave around 1.4 billion. Two years later Putin wrote off 90 percent of Cuba’s Soviet era debt [valued at 32 billion dollars]. The remaining 10 percent was considered a reinvestment via Vnesheconombank, which opened an account at Cuba’s Central Bank – while Russian Inter RAO Export and Cuban Union Electrica signed a contract for the construction of four generator units, 200 megawatts each, for the Maximo Gomez thermoelectric plant, with an estimated completion date 2023… A friend in need is a friend indeed. Let’s hope for peace and prosperity. Long live Cuba!

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