Cuba on the Road to Development, With or Without Oil
Erasmo Calzadilla
HAVANA TIMES — September is passing us by and there have been different news reports going around relating to the energy situation in Cuba. It’s a shame that they’re all fake or superficial.
First of all, we’ve had the disappointment that is Motembo. The alleged light crude discovery of the century within the central region was going to be the country’s salvation but it turns out that it was just media garbage. At least it gave us Cubans the opportunity to rediscover this town in Villa Clara whose indigenous name means Land of Fire. Natives used rock oil in a respectful and moderate manner, leaving a lot for the future; it wasn’t a commodity meant for exploiting. Instead of oil, we should take a valuable lesson away from Motembo.
Secondly, we saw a BBC report about the drop in Venezuela’s oil production. The multinational media corporation gave a nod to delve deeply into the root causes of the problem and look what they’ve found:
“At the root of the oil industry’s problem is the profound and widespread crisis that the country is currently experiencing [and] the sharp fall in global oil prices. The opposition argues that the government’s poor administration of resources has made matters worse.”
Great! Now we know that among the fundamental causes for a decline in production, the “natural” exhaustion of this resource doesn’t appear as the result of irrational exploitation. I’m trying to figure out a connection between the two: The oil that remains is heavier while the articles from the BBC on energy get lighter.
However, the most resounding recent news was that Algeria is sending about 500,000 barrels of black gold to Cuba. Our Venezuelan supply fell by 40% in the first semester of 2016 and we have to quickly find a substitute as soon as possible, so as not to interrupt the government’s development plans. The oil situation is so grave right now in the Americas that we have had to resort to a supplier on the other side of the Atlantic.
As I’ve already mentioned Algeria, let’s take a moment to learn a little bit about this country’s energy situation.
According to an article published by the Elcano Royal Institute,
“…Algeria’s net income in oil exports fell in 2014 by approximately 8 billion dollars […] Such a drain has left the country’s economy in an already compromised state because of the increases made in public expenditure which was carried out in order to pacify the population and prevent replications of the revolutions that have taken place in other Arab countries since 2011. […] Argelia could enter a vicious cycle which would take it back to the economic difficulties it suffered in the second half of the 1980s.”
Like most African nations, Algeria has already reached Peak Oil (2007). And just like almost every other poor country, it hasn’t managed to diversify its economy: 40% of its GDP, 70% of national revenues and 97% of exports depend on the sale of oil. The “natural” fall in oil production will result in a systemic crisis with unpredictable consequences sooner rather than later; which will be made worse by the fatal combination of terrorism and foreign military intervention.
If the current trend continues, at the end of this decade, Algeria will no longer have any crude oil left to export. Its social, economic and political situation will dangerously reflect that of Syria and Yemen just before their respective conflicts broke out.
The “nicest” thing about this story is that the entire world is on its way to the same slaughterhouse; when Algeria can no longer provide us with more oil, it will be difficult to find another substitute. However, Cuban economists and politicians continue to bet on exponential economic growth; if it’s not with oil, it’ll be by burning sugar cane pulp, sickle bushes or whatever they have in front of them. This is the Party’s top priority.
An article on renewables would be interesting. Just before we left Cuba we spent a night at a government hotel near Matanzas. There were some very old solar units there, some of them discarded and replaced by very new looking solar installations. Cuba may not have oil–but does have sun, wind and tides. Prices for all of these are dropping world wide, some north African nations and China (and Canada, maybe especially wind and tidal) are doing research, developing large installations and could possibly support Cuban renewables. Ideal industry for cooperatives, or private companies.
Canadians have a far better standard of living than Cubans. At that minimum wage, a Canadian worker can buy a beer on 20 minutes of work. Compare that to a Cuban salary of $20 per month & a bottle of beer going for $1, a full day’s work.
And go ahead and ask a Cuban when’s the last time he ever saw a T-bone steak!
Canadians have all of the above but our pensions are in big time trouble – a house in Vancouver plus $ 3 million – T bone steak $ 18 a pound – small glass beer Barkley Hotel $ 2.95. Min. wage in B.C. $ 10.85 an hour.
I
Cuba is already a pirate theme park, where Captain Long Beard of the Pirate Ship Castro rules. Everywhere you go, you see posters of their revolutionary Mickey Mouse, Che Guevara.
What Cuba really needs is freedom, democracy & human rights.
China is already carrying a lot of Cuban debt and Chinese exporters have already threatened various times to stop exporting as Cuba doesn’t pay. The Chinese national export insurer has indeed stepped in again and a again to take over the debts. The Chinese have already done a lot and have found in Cuba a dumping ground for the worst of their production. That doesn’t mean that China is willing to carry the Castros forever. They want to see some returns on their investments and are also pushing for change. There is no “unconditional” Chinese help (as soviet was) and even with China’s help all that is happening does still not truly improves the lives of the average Cuban. The Castros grow rich, travel the Mediterranean in yachts of 53 meters, party with celebrities, …
Cuba must have a theme park with a pirate theme. Orlando has 11 theme parks and is the most visited city in the Americas. This merger could be very good news for the Cuban economy as Marriot has theme parks.
http://www.ottawasun.com/2016/09/23/worlds-largest-hotel-chain-forms-after-marriott-buys-starwood
As I have previously written both in these pages and in ‘Cuba Lifting the Veil’ Gordon there is potential for a power struggle between the Raul Castro direct family of General Rodriguez Callejas,the son-in-law who controls 80%+ of Cuba’s economy through GAESA along with Raul’s son General Alejandro Castro Espin who controls all Cuba’s security (and operates the notorious Villa Marista) of MININT on one hand and the political ‘Troika’ of Diaz-Canel Bermudez, Bruno Rodrigez Carrilles and Marino Murillo on the other hand.
One of the problems of communism, demonstrated historically is that it always descends into dictatorship and only one man can hold that position. The lust for power lurks within the breast of more than one of the five I have given.
Much depends upon the military and whom they would support – with their finance coming from GAESA and as far as I can find, Raul although saying that he will resign in 2018 as President, has not said that he will forego heading the military – and at then aged 87, his mortality may be in question – Fidel will be gone.
There could well be an ‘orange revolution’ of the kind seen in Eastern Europe when the USSR was in the process of rotting from within.
Without affordable energy the Cuban economy is going no where. It needs a diversified energy strategy. China is not going to provide Cuba a free ride. The Chinese are some of the sharpest business people in the world. Nothing for free.
Machado and the Castros will be gone in 2018 but who will take their place ?
Why?….is there a profit motive for this? China only does what’s in their own interests…[email protected] what is this “going on behind the scenes you speak of?
Let’s face the truth Gordon, the Castro regime intends to hold out its begging bowl to China yet again.There will be a so-called “trade-agreement” with China supplying yet more products on credit. So what’s new?
The Cuban communist regime of the Castros has always required a ‘sugar daddy’. First it was the USSR – which imploded, then it was Venezuela – now bordering on being a failed state, so now the Castros look to China and to a lesser degree to Putin’s Russia.
You ask how “you” would improve the economy of Cuba? Well this “you” would commence by having open free elections with opposition parties and a free media having a preparatory period to allow free organization by both. That would mean Gordon that for the first time in well over sixty years (the combined period of the Batista and Castro dictatorships) the people of Cuba would have opportunity to freely express their views and wishes. The Castros and their cohorts – Diaz-Canel, Machado Venturo et al would be gone.
While 500,000 barrels of crude seems substantial, it is only 3 days supply at current consumption and about 6 days supply after reduction for domestic production. Algeria’s production is about 1.4 million barrels currently. You are mixing trends – production and revenue. Production in Algeria has remained relatively constant but the revenue has fallen with the collapse in oil prices worldwide. The Algerian reserves (proven) will last for about 24 years at the current rate of production. Additional discoveries will, of course, expand the reserves. There will be oil revenues for Algeria well into the future with the amount determined by world prices.
Cuba’s lack of oil will continue as few countries are willing to extend Cuba credit for buying oil. The country needs at least 75-80,000 barrels per day in addition to domestic production.
I believe that China will help Cuba get out of these problems. There is a great deal going on behind the scenes. How would you improve the economy of Cuba ? I will add my ideas after the Premier of China leaves Cuba.
Gordon Robinson Port Alberni B.C. Canada
Without oil and slae lobor Cuba isn’t going anywhere. Under the current Stalinist system the economic potential of Cuban can never be realized.v