Goodbye Venezuela, hello Russia. Can Vladimir Putin save Cuba?
Nora Gámez Torres & Antonio María Delgado, El Nuevo Herald
When Cuban ruler Raúl Castro met recently with Igor Sechin, head of Russia's state-owned Rosneft oil company, it was an intimate gathering, held in the same office from where Castro announced the death of his brother Fidel last year.
No details of the Dec. 16 meeting have emerged so far, but it is now expected that Rosneft will take over Venezuela's stake in the Cuban-Venezuelan refinery in Cienfuegos, in Central Cuba, under an agreement that will favor the island.
Just a few hours before his meeting with Castro, Sechin had met with Venezuelan President Nicolás Maduro, who awarded two gas exploration contracts to the Russian company.
Castro later announced that he was delaying his retirement from February to April, which would give him enough time to sign an agreement with Rosneft that would help the Cuban economy.
Venezuela's political and economic crisis, plus Cuba's need for foreign investment, have opened the door to a stronger Russian presence in Latin America, a shift that has become part of a geopolitical game reminiscent of the Cold War.
“Russia is a much less important economic player in the hemisphere than China. Russia has fewer interests in the Americas, but likes to meddle in what they perceive as our backyard,” said Mark Feierstein, director of Latin American policy under President Barack Obama’s administration.
President Donald Trump publicly warned in his recent national security strategy document that rival powers are finding “room to operate” in the hemisphere.
“Russia continues its failed politics of the Cold War by bolstering its radical Cuban allies as Cuba continues to repress its citizens,” the document noted. Both China and Russia “support the dictatorship in Venezuela and are seeking to expand military linkages and arms sales across the region.”
But in private, the Trump White House faces more urgent problems and believes that Russian spending to prop up two nearly bankrupt economies is not necessarily bad news for Washington, experts said. The Russian economy itself has been hit hard by U.S. and European Union sanctions, and Sechin is on a U.S. Treasury Department black list. The White House also faces more important problems with Russia, such as the FBI investigation of Moscow’s efforts to meddle in last year's presidential election.
At the same time, the Trump administration has put added economic pressure on the Castro government and made it more difficult for U.S. companies to do business in Cuba.
“Trump's steps to limit U.S. commercial engagement with Cuba creates an opportunity for other countries. One of them is Russia,” said Feierstein.
For Cuba, the gradual warming of relations with Moscow was almost natural, experts said. They have decades of history as allies and Raúl Castro “has always been pro-Russia,” said Andy Gómez, former interim director of the Institute for Cuban and Cuban American Studies at the University of Miami.
But Castro is also viewed as a pragmatist, and his renewed flirting with Moscow is likely more driven by Cuba's need for oil and its economic troubles than by ideology.
The Cuban and Venezuelan governments renewed their alliance during Maduro's visit to Havana in December. Even though the island's government officially claims its economy grew by about 1.6 percent in 2017 (independent estimates point to negative growth), Castro knows his situation is not sustainable.
The Minister of the Economy told the Cuban parliament during its last meeting of 2017 that fuel imports “have been very tight, and by the end of November deliveries fell short by 431,000 tons.” Cuba's own production also fell by 38,000 tons.
Most of the imports came from Venezuela under an agreement to exchange oil for medical services that at its peak in 2012 sent 125,000 barrels per day to the island, said Horacio Medina, former administrator of Venezuela's state-owned PDVSA oil company. But Caracas has been unable to keep up the deliveries, and Cuba has been withdrawing its medical personnel from Venezuela.
Cuba's official Granma newspaper quoted Venezuelan Foreign Minister Jorge Arreaza as saying that newly trained Venezuelans “are preparing to assume the vanguard jobs that Cuban collaborators performed at the beginning in the fields of health, sports and culture.”
The drop in Venezuelan subsidies has dealt a devastating blow to the island's economy.
“In the short run, Cuba does not have a way to replace the revenues from its medical services in Venezuela,” said Cuban economist Pavel Vidal.
“The collapse of the ties to Venezuela was predicted for years,” added Vidal, a professor at Javeriana University in Colombia. “Those agreements were clearly unsustainable once oil prices fell and the Venezuelan economy sank into a depression, but not enough was ever done [in Cuba] to reduce the risks of that scenario.”
Cuba has taken some steps to diversify the number of countries from where it buys oil and sells its medical services. And Castro has used his influence over Maduro to protect Cuba's interests.
Cuba's official news media reported that the Castro government took total control of CuvenPetrol, the Cuban-Venezuelan venture that operated the Cienfuegos refinery, in August. The refinery already cut its production by half in 2016, to about 9 million barrels, because of the drop in Venezuelan crude deliveries.
Venezuela received little or nothing from the ownership change, and PDVSA already owes $6 billion to Rosneft.
“Over the past three years, Russia and Rosneft have provided Caracas with $10 billion in financial assistance, joining China as Venezuela's main lenders,” said Jorge Piñón, director of the Center for International Energy and Environmental Policy at the University of Texas at Austin.
Venezuela's decision to update the Soviet-era Cienfuegos refinery “made no sense,” said Medina. Technical studies recommended against it, but the late President Hugo Chávez insisted in investing $1.2 billion for a 49 percent stake in a facility that was planned to process 65,000 barrels per day.
Surrendering that 49 percent now “reflects an agreement to open the door to Russia,” said Medina. “Venezuela gets nothing. … Cuba now has 100 percent of the shares of a refinery for which it did not pay one single dollar.”
“What is Maduro getting? Protection, in exchange for handing over the refinery,” he added.
Piñón said any energy agreement between Russia and Cuba “is the result of a financial triangulation between Rosneft and the Venezuelan PDVSA.”
Rosneft announced plans in October to step up its oil deliveries to the island. It had already signed an agreement in March to ship 250,000 tons of crude and diesel to Cuba to compensate for the loss of Venezuelan deliveries — part of an agreement that Piñón believes requires PDVSA to foot the bill.
Some experts caution that Russia's increased interest in the region, especially an island only 90 miles from U.S. shores, represents a danger for U.S. national security.
“Under Democrats and Republicans, U.S. policy towards Latin America has been week,” Gómez said. “A Russian presence in Latin America, particularly Cuba, has to be seen as a national security threat to the United States.”
Feierstein said Russia's influence in the region is limited, however, even though its assistance to Venezuela could weaken the impact of U.S. economic and other sanctions on the Maduro government.
“I wouldn't exaggerate the role of Russia, but it is something to watch,” he said.
EL NUEVO HERALD CORRESPONDENT MARIO J. PENTÓN CONTRIBUTED TO THIS REPORT.
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