Venezuela's Chávez Fills $9.4 Billion Yearly Post-Soviet Gap in Cuba's Accounts

Venezuela's Chávez Fills $9.4 Billion Yearly Post-Soviet Gap in Cuba's
Accounts

"In nominal terms, the Venezuelan subsidy is higher than whatever
subsidy the Soviet Union gave to Cuba," says Carmelo Mesa, a Cuban
economist who's a visiting professor at Tulane University.

By Jeremy Morgan
Latin American Herald Tribune staff

CARACAS – Time was when the Castro regime in Cuba looked to the Soviet
Union to keep its economic head above water. That was until the USSR
fell apart two decades ago and the well of subsidies dried up.

Hard times were had by most people in Havana and elsewhere on the sugar
cane island. A new rich friend was needed, and around a decade ago, duly
appeared. Venezuela's President Hugo Chávez came to the much-needed
rescue, and continues to do so to this day, even if Chávez's favored
mentor, the ailing Fidel, has made way for his brother, Raúl.

In nominal terms, at least, Caracas looks to be as open-handed towards
Havana as Moscow ever was. According to Carmelo Mesa, a Cuban economist
who's a visiting professor at Tulane University in the United States,
Venezuela bankrolled Cuba to the tune of $9.4 billion last year.

This includes $2 billion to take account of the cost of subsidizing
Venezuelan oil exports to Cuba. Venezuela sends oil to Cuba at a
"preferential" price of just $27 a barrel.

That price is below even the low point of a little over $34 a barrel
that the price of Venezuela's mix of medium-grade and heavy crude oil
hit at the end of last year. At present, Venezuela's oil basket is
wobbling up and down at around $60 a barrel.

Venezuela is also calculated to have footed the bill for $1.37 billion
for 76 bilateral projects last year. More of these are said to be
waiting in the wings, and in addition, there's the (perhaps theoretical)
cost of servicing Cuba's burgeoning debts to Venezuela.

However, the biggest ticket item on last year's account is said to have
been Barrio Adentro, the flagship project launched by Chávez in 2003 to
bring basic medical services to poor barrios across Venezuela.

Chávez adjudged the existing state health service to have fallen down on
the job; he lambasted the medical profession for turning their backs on
the poor; he set up Barrio Adentro; and he staffed it largely with
doctors, nurses and other medical staff brought in from Cuba.

To some extent, this made sense. For all the shortcomings of the Castro
regime, presumed or actual, Cuba trains many medical professionals, even
if the courses are much shorter in years. experience and technology than
Western countries would expect from their doctors.

This, it would seem, has not come cheaply. According to Mesa's
breakdown, which was published Monday by the conservative (and quite
openly anti-Chávez) newspaper, El Universal, the payroll for Cuban
medical and ancillary staff at Barrio Adentro reached $5.6 billion in 2008.

News of this came after a string of reports to the effect that Barrio
Adentro began to come apart at the seams quite some time ago. One reason
for this, it was said, that Cubans had used Barrio Adentro to leave
Cuba, and then piggie-backed on Chávez's parallel public health program
to make their way into private practice, not least of all in the highly
lucrative health market in the United States.

There are some problems with this. If so many Cubans had used Barrio
Adentro for their own purposes, how come the payroll costs remained so high?

Mesa puzzled about this, evidently convinced that a lot of Cubans had
flown the coop. "What happened with all these Cuban doctors that there
were, and for whom Venezuela paid this sum last year?" he asked. "Where
are these doctors?" To him, the situation was "inexplicable."

In this context, it's now being remembered that none other than Chávez
himself finally rang an alarm bell about what was going on (or not) at
Barrio Adentro last month.

On September 20, Chavez reported that 2,000 centers in the Barrio
Adentro network didn't actually have any medical staff. By then, the
evidence of one's own eyes indicated that he'd got a point, in that at
least some of the centers had acquired a distinctly abandoned air about
them.

Declaring an "emergency" in the health sector, Chávez announced that he
would bring in a whole lot more Cubans, or Venezuelans who'd been
trained in Cuba, all over again. They would arrive on October 8, he
added, 1,111 Cubans and 213 Cuban-trained Venezuelans in all, and they
would include specialists in a range of medical skills.

However, by this week, all talk of a rescue job had evidently been
consigned to the past. On Monday, Chávez rang up the state channel VTV
to extol the virtues of the health sector, claiming that Venezuela was
"one of the countries which offer the best and most ample health systems."

Chávez was in Bolívar state, opening a new "integral diagnosis" center
boasting 24 doctors, six nurses and other personnel. As to Barrio
Adentro, he said, at present it had "more than 13,165" doctors working
for it, the majority of them Cubans with "some" Venezuelans.

The president urged everybody to give Barrio Adentro a new impulse,
regardless of whether he was around to make it happen, and then he
denied that it was being "relaunched" because it had never gotten
behind. Instead, it was being strengthened by "rectification" and by
giving it impulse anew.

But while Barrio Adentro hogs the limelight in the Cuban-Venezuelan
relationship, it's by no means the only important element in the
bilateral equation. Mesa cited statistics from the University of Miami
showing that the Cuban government's debts to Venezuela had reached $11.4
billion, of which $4.6 billion had accumulated on the oil account alone.

This implied that even as the Cubans were benefiting from the low-cost
oil, they weren't actually keeping up payments on the bill. And in the
process, Venezuela has become Cuba's biggest single trading partner in
what to all intents in purposes looks rather like a one-way street, amid
signs that Venezuela might well be paying the bill in both directions.

Cuba's total foreign trade was worth $17.9 billion, according to Cuban
statistics quoted by Mesa. Out of this overall total, Cuban exports to
Venezuela came out at just $415 million, Venezuela's exports to Cuba at
$4.47 billion.

Cuba's overall trade deficit totalled $10.56 billion last year. Of this,
Mesa continued, $4.06 billion corresponded to Venezuela, or 38 percent
of the total shortfall on all trade.

Mesa asked how a bilateral trade deficit of over $4 billion last year
alone was being covered. At this juncture, he pointed to the bill for
Barrio Adentro, suggesting that this was how the gap was being filled.

Mesa concluded that Venezuela was the biggest provider of subsidy to
Cuba, and perhaps ever. "In nominal terms, the Venezuelan subsidy is
higher than whatever subsidy the Soviet Union gave to Cuba," he claimed.

Latin American Herald Tribune - Venezuela's Chávez Fills $9.4 Billion
Yearly Post-Soviet Gap in Cuba's Accounts (6 October 2009)
http://www.laht.com/article.asp?ArticleId=345051&CategoryId=10717