Cuba and Venezuela: If Hugo goes

Cuba and Venezuela
If Hugo goes
Raúl Castro searches for other lifelines
Jul 7th 2011 | HAVANA | from the print edition

The ruling brothers grow anxious

JUST when they were beginning to get used to the daunting prospect of
life without Fidel Castro, Cubans are now being forced to consider
another, even more daunting, possibility: life without Hugo Chávez.
Venezuela's president may well make a full recovery from the cancer for
which he was operated on in Havana last month, but he has been reminded
that he is mortal. And he may not remain in power beyond a presidential
election next year (see article). Venezuela apart, nowhere would his
departure from office be felt more strongly than in Cuba.

Mr Chávez subsidises Cuba to the tune of around $3.5 billion a year, by
sending it an estimated 115,000 barrels of oil a day (around two-thirds
of its consumption). Cuba pays in kind, in the form of 40,000 doctors,
intelligence and security experts and other workers stationed in
Venezuela. In addition, Mr Chávez is putting up money for infrastructure
projects on the island, such as the expansion of an oil refinery at
Cienfuegos. Venezuela is also Cuba's top trading partner.

Venezuelan aid has been the biggest single factor in helping the
communist island emerge from the catastrophic slump that followed the
demise of its previous sponsor, the Soviet Union, in 1991. Adult Cubans
remember the early 1990s as a traumatic time of food and fuel shortages.
Might such penury return?
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Politics in Venezuela: The Bolivarian patientJul 7th 2011

Were Mr Chávez's opponents to take power in Venezuela, they would almost
certainly cut aid to Cuba, not least since they face pressing needs at
home. Cubans could expect widespread shortages. But things would not be
quite as bad as in 1991. Then Cuba had become dependent on selling sugar
to the Soviet Union at an inflated price. Now the economy is more
diversified: the island is producing more oil; and tourism, nickel and
remittances from Cuban-Americans have all become important sources of
foreign exchange.

Raúl Castro, who succeeded his brother as Cuba's president in 2008, has
shown signs of wanting to be less dependent on Venezuela. Whereas Fidel
and Mr Chávez are close friends—the two were photographed talking, both
dressed in convalescent tracksuits, after Mr Chávez's surgery—Raúl, a
quiet and orderly man, seems ill at ease with the boisterous Bolivarian.
In 2009 Raúl sacked Carlos Lage, Fidel's prime minister, who was
particularly close to Mr Chávez (in 2005 Mr Lage had declared that "Cuba
has two presidents, Fidel and Chávez").

Cuba has recently sought investment from visiting delegations from China
(which has offered a multi-billion-dollar credit line), Brazil and
India. Raúl is trying to cut food imports by leasing land to private
farmers. His other reforms, under which at least 221,000 licences for
small businesses have been issued since October, may make the island
more attractive for Cuban-Americans to visit or retire to.

But Cuba's main hope of economic independence is the Scarabeo 9, a $750m
drilling rig built specially in China with no American parts (to avoid
falling foul of the United States' economic embargo against the island).
It is due in Cuban waters by the end of the year, contracted by Spain's
Repsol to drill an exploratory well.

The United States Geological Survey, a government scientific body,
reckons that the seas around Cuba hold 4.6 billion barrels of oil. But
they lie under very deep waters. Repsol struck oil there in 2004, but
decided extraction would not be profitable. Any new discovery would take
years to exploit. If Raúl's reforms gather force, by then Cuba may be a
rather different place.

http://www.economist.com/node/18928494?story_id=18928494&fsrc=rss