The Debt Cuba Will Never Repay to Moscow

Fernando Ravsberg*

HAVANA TIMES — With a new accord that includes pardoning a portion of Cuba’s debt to the former Soviet Union, Havana and Moscow removed the main obstacle to further developing relations between those two nations – though the agreement seems to have required a fair amount of compromise by each side.

President Raul Castro has worked extensively to normalize those relations. His ties with the USSR were very close and his repeated visits to Russia evidence a clear commitment to strengthen those bonds.

Having reached this agreement, lines of credit were reopened for Cuba. Indeed with these came the immediate announcement of purchases of commercial aircraft worth $650 million (USD) as well as collaboration in a range of fields – from education and medicine to space exploration.

The two countries are now working on other agreements in the areas of defense and oil, though apparently neither want more publicity around these (probably to steer clear of alarming Washington).

Complex debt

The debt accord involves the write-off of part of the 30 billion convertible rubles owed by Cuba, though the island must repay the new balance over a 10-year term. The deal means that both parties made concessions to reach the agreement.

The Cuban debt problem — which Russia estimated at around $30 billion USD — was complex firstly because it was acquired in convertible rubles, a currency that no longer exists; therefore defining their current value couldn’t have been an easy task for the negotiators.

What’s more, Cuba argued that Russia hadn’t fulfilled its commitments, thereby causing serious losses to the Cuban economy. An example of this is the nuclear power plant in Cienfuegos Province, which the Russians refused to complete despite everything Cuba had invested in it.

This debt issue kept relations stagnant for two decades, however the two countries never broke off contact or ceased trading (though trade was minimal during this period, mainly due to a lack of credit).

Agreements

Part of the discussion revolved around one agreement that would increase the use of Cuban airports by Russian aircraft.

Among other agreements reached were those involving cooperation in the exploration and use of outer space, cooperation in nuclear medicine, and the production of radioactive materials for medical uses.

However, even before the visit of Prime Minister Dmitri Medvedev to Havana, Russian companies were exploring for oil in Cuba’s Exclusive Economic Zone in the Gulf of Mexico.

In addition, Cuban and Russian sources have confirmed that Russian naval ships will refuel in Cuban ports, though they make it clear there will be no military presence on the island like that of the USSR’s during the Cold War years.

Also discussed was an agreement whereby Russian airlines could use Cuba as their regional hub, which would dramatically increase traffic at Havana’s Jose Marti Airport.

Old friends

Relations between Havana and Moscow came closer with the triumph of the Cuban Revolution in 1959.

After that victory the Soviet Union supplied the island with oil to keep the economy going and with arms that allowed Cuba’s guerrillas to turn into a professional army. Russia also paid preferential prices for sugar (that the US refused to buy) and opened an unlimited line of credit.

Military relations were key because of the island’s proximity to the US, and current president Raul Castro (in his previous role as the Minister of the Armed Forces) was the leader most closely linked to the Kremlin. No other leader made as many trips to the country of the soviets.

Since assuming the presidency, he has returned there several times, both publicly and privately. Government sources say that during the president’s last trip to China, he made a private stopover in Russia to see “old friends,” and later returned to Moscow for an official visit.

(*) A translation by Havana Times (from the Spanish original) published by Cartas Desde Cuba.