Chávez-Castro friendship pumps billions into Cuba

CUBA
Chávez-Castro friendship pumps billions into Cuba
Venezuelan oil shipments to Cuba may be worth $4 billion this year, a
University of Miami report said.
Posted on Thu, Aug. 02, 2007
By FRANCES ROBLES
frobles@MiamiHerald.com

The value of Venezuelan oil subsidies to Cuba climbed past $3 billion in
2006 and could swell to $4 billion this year -- almost double current
estimates, according to a University of Miami report to be released today.

Venezuela is propping up Cuba's troubled economy with shipments of
94,103 barrels of oil a day, experts at UM's Institute for Cuban and
Cuban American Studies (ICCAS) calculated, based on official Havana
figures issued last week. That means Cuba last year got some $3.3
billion in oil products from Venezuela, up from $2.7 billion in 2005.
Caracas has declined to explain the payment system, but experts believe
Havana gets the energy assistance free of charge.

As Cuban leader Fidel Castro begins his second year out of office and in
the hospital, Cuba's reliance on Venezuela to keep the lights on and
vehicles rolling has not waned.

LIKE SOVIET ERA

Experts say the high subsidies are reminiscent of Cuba's dependency on
the Soviet Union, which provided an estimated $4-$6 billion a year in
subsidies until it collapsed in 1992. Cuba's economy fell apart, and
widespread shortages plagued the nation for years.

''Cuba is repeating chapter and verse what it did in the 70s and 80s
with Russia,'' said ICCAS energy expert Jorge Piñón, who prepared the
study. 'If Chávez gets hit by a truck crossing the street tomorrow, the
[Venezuelan oil officials] . . . are going to say to Cuba: `Pay for it,
and pay market price.' ''

Cuba's close relationship with Venezuela grew along with President Hugo
Chávez's hold on power. As Chávez defeated efforts to topple him, he
increased oil shipments to Cuba and solidified his bond with Castro.

The two remain close friends, and Chávez is one of the few people who
visited Castro during the height of his illness last year.

Initially, Cuba was reported to be paying for the oil by sending Cuban
medical personnel to work in poor Venezuelan neighborhoods. But experts
say Venezuela now pays Cuba for the medical services.

The arrangement has been widely criticized by Chávez opponents, who say
the contract with Cuba has never been made public. Piñón argues that the
losses to Venezuela are significant, particularly if the state-owned
PDVSA oil company wanted to sell that oil on the international market
instead.

`SMALL POTATOES'

But for Chávez, the deal helps enhance his international image as
socialist heir apparent to Castro because of continuing high oil prices,
Piñón said.

''Is it hurting Chávez in the pocket?'' Piñón said. ``As long as the
price remains as it is today, he can afford it.''

Julia Sweig, senior fellow at the Council on Foreign Relations in
Washington, agreed: Chávez would rather have the worldwide caché.

''It's small potatoes for Chávez to spend a few billion dollars for
that,'' she said. ``I don't think it hurts him. It enhances his panache.''

If the $4 billion estimate for 2007 proves true, she said it is a
momentous figure.

''Four billion is a psychologically important number -- it's the value
of the Soviet subsidies right before they were cut,'' Sweig said. ``It's
got real resonance. It shows Venezuela is the new partner, the new
insurance policy, the new mac daddy.''

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