Relaunching Relations between Cuba and Russia
Economy and Geopolitics are part in the new attempt
Experts believe that, if the rapprochement persists, the EU may adopt measures that would harm the Island
HAVANA TIMES – Cuba and Russia have announced plans to strengthen their economic and trade relations, but experts doubt that they can achieve a new bilateral golden age, and they glimpse geopolitical interests in difficult times for both countries.
This week the Cuban Prime Minister, Manuel Marrero, is in Russia for the Eurasian Intergovernmental Council and the International Economic Forum in St. Petersburg, while the opposition warns of a new “Russification.”
The visit, the last after those of several ministers and President Miguel Díaz-Canel himself last November, comes shortly after Havana announced preferential treatment for Russian investors, from transfers of agricultural land in usufruct for 30 years to tax exemptions.
These measures complete a flood of announcements – including the entry of three Russian ruble banks on the Island – and the presentation of a package of reforms of the Stolypin Institute to liberalize the Cuban economy.
Experts consulted by EFE believe that this movement can be understood to some extent by necessity, due to the serious economic crisis that Cuba has been facing for more than two years.
“After the pandemic, the tightening of sanctions and the failure of reforms, Cuba has been economically and financially isolated. Russia can be an alternative to achieve some kind of international reintegration,” says Cuban economist Pavel Vidal, a professor at the Javeriana University of Cali (Colombia).
Cuban economist Tamarys Bahamonde, a PhD candidate in Public Policy and Public Administration at the University of Delaware, also alludes to the “preferential treatment” of the past and the lack of indications that Washington will change its policy towards the Island: “Cuba has no alternative but to look at Russia and Asian partners.”
However, Vidal emphasizes that, for this approach to prosper, “it is necessary to find mutually beneficial economic interests,” something that “is not yet clear.” The great Cuban bet is tourism, he adds, although the sector has not taken off after COVID-19, and Russia is far away.
“For greater integration between the two economies, it is necessary to look for something that is of value to the market and to Russian entrepreneurs,” explains Vidal, who recalls that Russian capitalists seek to “maximize their profits and minimize risk” and must “perceive” that they can achieve this.
It’s not easy. Due in part to negative experiences in “the recent past,” the Cuban government now has “to do much more to convince investors” that “they’re going to find a market with opportunities, institutions and a regulatory framework that guarantees and allows capital to be profitable.”
Regarding the specific announcements, Bahamonde indicates that the use of the ruble on the Island could have some impact if this currency were used “massively” in international transactions, but it is not. Vidal believes that its application in Cuba will not go beyond being something “marginal.”
“It remains to be seen if the Russians can convince the Cuban government to give more space to the private sector and move forward in a deeper transition from the Soviet-style economic model. The Russians know the shortcomings of this model and have experience in a transition that did not go well and from which they also had to learn things. If they succeed, even coming from the Russians, it would be an important contribution,” says Vidal.
Bahamonde believes that Russia is the “wrong” partner as a model of economic transformation and says that Cuba does not need economic policy recommendations from foreign experts, because its own national experts have already made them decades ago. The problem, he says, is that in the Cuban government there is a lot of “resistance to change.”
“What is needed are not new recommendations, but the political will to do what has to be done” to “implement the transformations that have been recommended for many years,” says this economist, who emphasizes that the transformations have to include “political institutions.”
In this attempt to relaunch bilateral relations, Bahamonde perceives geopolitical interests beyond merely economic ones. “All empires have their interests” and Russia is no exception, he observes.
In this same sense, university professor Michael Bustamente, a specialist in Cuban and Cuban-American studies at the University of Miami, has said: “In the absence of other options, of other partners, and, above all, in the absence of a different policy on the part of the United States, Cuba is opting for a new intensification of its relations with Russia and is trying to obtain whatever benefit it can.
For Moscow, he continues, “Cuba is, as it has been since the 1960s, a chip on the geopolitical board.” He speculates that in the Kremlin, the relationship with Havana could be seen as a kind of “counterweight” to Washington’s “intrusion” into Eastern Europe in the middle of the war in Ukraine.
Havana, for its part, could be seeking to “indirectly put pressure” on the United States to change its policy towards the Island, says Bustamante, although he warns that such a movement would be counterproductive.
“I know that Washington is worried,” says Bustamante, but he doubts that there will be a change of policy from the United States towards Cuba, because he senses in the Democratic administration a “lack of disposition.”
Bustamante is struck by the fact that these movements by Cuba have not had a response from the European Union, which in addition to being the Island’s first trading partner, is in one of its biggest political crises with Moscow due to the Russian invasion of Ukraine.
“I’m surprised that Cuba isn’t taking care of its relationship with Europe a little more. It will be interesting to see to what extent Cuba can balance this new intensification of its relationship with Russia with a relationship with Europe that continues to be crucial and strategic for the Cuban economy. There is a lot of tension and contradiction, and there are risks for Cuba,” he says.
Translated by Regina Anavy for Translating Cuba
“the great Cuban bet is tourism”. Thus spake professor Vidal. Canadians have traditionally provided over 40% of Cuba’s tourists. Due to lack of bookings, Canada’s Westjet has cancelled all flights until October 30th. Sunwing is no longer, having been purchased and then absorbed by Westjet. Air Canada has ceased flights to Havana, but is making a few from Montreal to Varadero. Transat has ceased flights. Clearly market demand in Canada for visits to Cuba, has sunk drastically. In its enthusiasm to fill its begging bowl with rubles, the Cuban dictatorship has failed to calculate the disgust with which potential tourists from the Western world view Putin’s despicable actions in Ukraine. All that investment made by Cuba in new hotels is for naught as it is seen to have become a puppet to Russia and China.
Russian oligarchs will have the ability to launder ill-gotten Russian rubles through the Cuban banking system. Put another way, a Russian “businessman” can invest tens of millions of otherwise worthless rubles in a Cuban manufacturing business or through leasing Cuban land for Cubanagriculture. Then, with this Cuban purchase, sell a Cuban-produced product to a foreign buyer and receive Euros or USD as payment. Voila!