The Health of Hugo Chávez, Oil & Cuba
Will the Special Period return to Cuba? Who would win if there were new elections in Venezuela?
HAVANA TIMES – The following is a summary of a conversation/interview between Francisco Aruca, director of Radio Progreso Alternativa, and Manuel Alberto Ramy, correspondent in Havana for that outlet and Progreso Semanal/Weekly. The conversation took place in the Cuban capital on Jan. 4.
Francisco Aruca (FA): Are the Cuban people concerned over [Venezuelan] President Hugo Chávez’s health?
Manuel Alberto Ramy (MAR): Yes, they always pay much attention to everything that is reported about his health condition.
FA: Several communications media in the U.S. and Europe believe that the greatest concern involves the economic consequences that [Chávez’s condition] might have for the island. Is that a fact?
MAR: Chávez has made a deep impression in the feelings of most Cubans, who for many years have been attracted by his figure and policies, not only toward Cuba but also toward the entire region. The people are also worried about the impact that his physical disappearance or his separation from active politics might have in a change of the political project he has carried out.
But that concern is not exclusively Cuban. In Santo Domingo, according to Minister of the Economy Temístocles Montas, “President Chávez’s health is of great concern to all of us […] The state of his health could affect the PetroCaribe accord.” PetroCaribe finances 30,000 barrels of oil to [the Dominican Republic] daily.
FA: Specifically, some people say that Cuba would relive the Special Period [the 1990s] and that this is the essential concern of the people.
MAR: I disagree; it is not their essential concern. The concern over the oil is logical, but, in my opinion, it has been magnified and manipulated by some news media. If that ill wish came true, we’d feel the blow, but it would not be comparable to the Special Period. The changes that are taking place here – and I wrote this more than three years ago – resulted from the lack of relations with the United States and a noticeable shift in the Venezuelan picture.
That was the reason for the increase in, and diversification of, [Cuba’s] international trade and the opening steps that have been taken. It even appears that the new law on investments is about to be passed. Cuba is changing cautiously but it is changing; it is changing not its system but its economic and social models. I’ll say it over and again: whatever the Venezuelan scenario turns out to be, there will be no changes. Maduro is continuity. The relations between our two countries are not one-way traffic but closely integrated. To disarm that strategic relationship is not an overnight job.
I could say more on the subject, but this should be enough to make people think a little.
FA: But the oil, the 100,000 barrels a day, the preferential prices, etc. That’s what many international media use as basis for their comments and forecasts.
MAR: That’s peculiar. They fixate on Cuba. Oil and preferential prices. They forget the history that began in 1980, when the San Jose Accord was signed by a pre-Chavez Venezuela and the Mexican government. Those two countries furnished oil to 11 countries in Central America and the Caribbean with preferential prices and ease of payment.
If the memory serves me right, they delivered 80,000 barrels a day of oil and derivatives to each of those 11 countries, from which Cuba was excluded.
Did anyone question that accord at favorable prices and flexible payments? No. The questioning began with the appearance of PetroCaribe, which had a broader outreach, more encompassing and flexible than the San José Accord and now can affect 14 countries in the region. That Venezuelan effort in our area has meant about $7 billion in 2011 – $3.5 billion in Cuba.
FA: That’s the point, Cuba.
MAR: Sure, the first point is the strategic alliance established between our two countries, I repeat, strategic. The alliance is public, not hush-hush like others under a different political sign and geostrategic control.
Cuba repays much of those $3-plus billion by sending [to Venezuela] tens of thousands of medics, by educating scientists and specialists in various fields, by supplying new medications, etc. How much does it cost to train a doctor in a good university in the United States? The specialists trained by the Cubans number in the thousands.
The second point is that, under Chávez’s initiative, came ALBA (Bolivarian Alliance for the People of Our America), an effort to integrate our two nations. It is different from the usual alliances, where economic relations turn on other bases, such as complementariness. Also PetroCaribe, which provides energy to the entire Caribbean area and Central American countries.
Everyone, not just Cuba, buys oil at low prices, preferential and long-deferred. This has never before been seen; it’s the other side of the coin, and comes at a time when power in numerous Latin American countries has been assumed by new leaders, thanks to popular movements. The historical political class has been edged out, neoliberalism has been thrown on the rubbish heap, and the breakup of the economic and political dependence on the United States has become evident.
To a great degree, the axis nations have been Venezuela and Cuba. How could their enemies not take advantage of this delicate moment to play their media cards and perform their underhanded tricks?
FA: Now that we’re dealing with the topic of energy, which affects many countries, I ask again: Does Cuba get preferential treatment?
MAR: The 14 members of PetroCaribe, including Cuba, pay for their oil on a sliding scale: 40 percent when the price of oil exceeds $50 [per barrel]; 50 percent when the price exceeds $80, and 60 percent when it exceeds $100. Financing is provided for 25 years at an interest rate of only 1 percent.
If you look at the objectives proclaimed by PetroCaribe and validated by the beneficiaries at various Summit conferences, you’ll see that they stress a supply of energy on financial terms that increase the availability of resources for development; an expansion of power generation and the facilities for the refinement and storage of petroleum; the development of the petrochemical sector; the transference of technology, etc.
This is not just for Cuba, I repeat, but for everyone. Oh, and the member countries can settle part of their financial commitments through the exportation of goods and services.
FA: So, how would a change of course affect the Cuban government?
MAR: I insist that I don’t envision any change, but let me answer you. It might accelerate some of the projected changes but not their direction. The international picture affects the formulation and execution of the policies, but does not determine them. Nor will it change the overall project of the economic model being conceived. The Cubans would likely be the least affected, although we will be affected.
In general, the Caribbean and Central American regions would be hurt the most. And that’s precisely the zone that, according to the U.S. National Intelligence Council, is the most fragile and likely to become unstable. We’re talking about millions of people who benefit from a humanistic and integrationist policy. I don’t agree with the soothsayers of chaos.
FA: On Jan. 10, Chávez is scheduled to take the oath of office. Will he? If not, what alternatives do you see?
MAR: Let me theorize. One: Chávez is convalescing and cannot travel. The conditions for “absolute absence” contained in the [Venezuelan] Constitution are not applicable, because he is in Cuba by permission of the Assembly, which will be called to order tomorrow, Saturday the 5th. That’s the opinion of Constitutional jurist Herman Escarrá, given that Chávez continues to perform his duties.
Two: It has been suggested that he could be sworn in before the Supreme Court, which would travel to the Venezuelan Embassy in Cuba. The embassies are territories of the countries they represent.
Three: Chávez decides not to take office. Parliament meets tomorrow and elects its new leaders. All signs indicate that Diosdado Cabello will be reelected chairman, because the PSUV [Socialist United Party of Venezuela] and its allies form a majority. Then, Cabello would assume power temporarily and would have to call for new elections within 30 days.
FA: Let’s suppose that Chávez decides not to resume office. What do you think would be the electoral scenario? What predictions would you make?
MAR: The candidate for the PSUV and its allies will be Nicolás Maduro, whom Chávez asked everyone to support. For the opposition, I expect it will be Capriles Radonsky, who so far has been Chávez’s toughest opponent. He is currently governor of Miranda state.
But we must bear in mind that Chávez topped Capriles by almost 11 percent of the votes in last October’s election. The PSUV and its allies won the governorships in 20 of the 23 states, plus a significant number of municipal mayoralties. In terms of electoral momentum, these triumphs have great significance in a contest that would take place a few months after Chávez’s victory.
Add to this the figure of Chávez, a leader much loved by the popular majorities, whom he has greatly benefited. His image and the emotions he evokes would hover over the election. It would be like El Cid Campeador winning a battle.
You are partly correct in your comparison to the post-war era of British socialism, but the errors of Chavismo go much further than that. Nobody in Britain held anything like the personal charisma that Chavez does in Venezuela. The violence in Venezuela today has no parallel in the quiet grey years of Britain in the 1950’s.
Chavez’s era will prove to have been a disaster for Venezuela. The subsidies paid out to buy the support of the poor will take years to pay off while the economic disaster of the massive debt, growing inflation and entrenched corruption will take a generation to repair. Chavez ran up the credit card and soon the bill will be due.
Furthermore, the rise of the bolibourgeoisie under Chavez is not an accident, but part and parcel of his ruling style. He may claim to be a Marxist or a Socialist or at times even a Trotskyite, but in his actions and style, Chavez is a classic fascist. The regime he built is anti-capitalist, with an emphasis on State controlled monopolies, with the army taking a dominating role. The ruling party extends its power through trade unions. Brute force is favoured over consensus and the rule of law. Corruption is rampant as cronies of the powerful get rich. The judiciary is cowed and directed by the regime. Over it all strides the personality of a larger than life figure, hectoring the nation with long speeches larded with mystical nationalism and xenophobia.
Look through history. We’ve seen this kind before.
Griffin, I think the major problem with the Venezuelan experiment in national sovereignty is the fact that Hugo is trying to do what Britain did after WWII; that is, trying to run a lot of key industry as state property. This may come from the mistaken concept on the Left that socialism means government ownership of the means of production.
To Hugo, I think, 21st century socialism means pre-Thatcher-type socialism, which is not socialism, at all. It is European-style social-democracy, which is maintaining capitalism by providing many social benefits to the working people, with financing in good part by extremely high taxes.
Even so, I wish Hugo and the Venezuelan people the best; and I sincerely hope that cancer does not take the leader of the Bolivarian resistance to imperialism from us. You ought to join me in these sentiments.
Grady,
Their debt is 35% of GDP and most of that is owed at very high rates. Their inflation is running at 18%. If growth is 5%, that means their’s been a net decline of -13%. In Venezuela’s favour is a huge store of oil. Against that is a decaying oil infrastructure. No foreign oil company will invest in new technology if they face expropriation from the Chavistas. The Venezuelan economy has been so poorly managed, the rise in living standards for the poor cannot be sustained in the long run. That which cannot be sustained, won’t.
It’s my understanding that Venezuela has done well under Hugo, and that this is the basis of his continued popularity and political power. Venezuela is not in a “freefall in the economic situation,” as one person above has mendaciously said, and is in fact growing at a rate of over 5% per year. I think there are many people commenting in HT who always try to spin things in the direction of falsehood, for whatever reason.
Heroic, socialist Cuba will be able to maintain its sovereignty and independence, regardless of what many critics might say, regardless of what happens with Venezuelan oil. In the end it will be capitalism that expires, and socialism that survives.
VENEZUELA is entirely manipulated by Cuba, by the Castro brothers. Where is the national pride in the Venezuelan people, not one Venezuelan person has stood up for their country. Ever since Chavez took power he has been under Cuban / Castro influence or mandate. Even Chavez presidential guard are Cuban. Venezuela, when will you open your eyes and take back your country?
The post-Chavez power elite in Venezuela will maintain control by force if necessary since they couldn’t poosibly let it go lest they be out of a job, so I expect a continuation of the same freefall in the economic situation in Venezuela as described in previous postings and the same absolute Cuban reliance on Venezuelan largesse for their survival. Were it not for Venezuelan oil and the hard currency it generatres both countries would see a basic change,by necessity and for the better, in their governance, and millions of people in both countries would likely taste a much greater level of of true democracy. The truly free countries of the world would welcome both as partners and they would prosper, but that would mean Fidel, Chavez’ and their cronies would be out and they will never permit that., dictators and autocrats never do..
MAR’s comments simply do not add up. Business with Venezuela consists of 40 percent of all Cuban trade, and Cuba receives as much as 60 percent of its energy needs on preferential terms from Venezuela. According to Juan Carlos Hidalgo of the independent and well-respected CATO Institute ” the Cuban economy would probably implode without the massive Venezuelan oil subsidy.” In the short term there will likely be little change. Nearly all experts believe that Chavez’s pro-Cuba vice president, Maduro would prevail in a presidential election. It would be impractical to assume supplies that Venezuela would easily replace the 30,000-50,000 Cuban technical personnel working as physicians, teachers, and other instructors, many in impoverished areas that depend upon the social services and training they provide.” However in the long term, an essentially bankrupt Venezuela can ill afford to continue to subsidize Cuba in exchange for taking skilled workers who can’t find jobs in Cuba off of Castro’s hands. The future of Venezuela’s domestic policy is in considerable doubt.The crisis includes a fiscal deficit approaching 20 percent of the economy (in the cliff-panicking US it is 7 percent), a black market where a U.S. dollar costs four times more than the government-determined exchange rate, one of the world’s highest inflation rates, a swollen number of public sector jobs, debt 10 times larger than it was in 2003, a fragile banking system and the free fall of the state-controlled oil industry, the country’s main source of revenue. Likewise, Cuba has not established a sufficient number of sustaining international business ties to validate MAR’s assertion that “The Cubans would likely be the least affected, although we will be affected.” Should Cuba have to replace subsidized oil with market rate purchases, the increased outlay from the Cuban treasury would bankrupt the economy. More likely, the Cuban people would be asked to suffer outages, reminiscent of the Special Period. Once again, like the recent cholera outbreak, the dengue virus outbreak, and the devastation caused by Hurricane Sandy, the Castro regime and its sympathizers continue to choose to lie and mislead the Cuban people and the world regarding the real problems Cubans must face. Their sinister desire to put a happy face on these struggles as a means maintain their ill-gotten control over the Cuban people results in unnecessary suffering.
Cuba is not facing a repeat of the Special Period, even in the worst scenario of a total loss of Venezuelan oil. That alone would not approach the loss of the sponsorship of the USSR 20 years ago. If the worst case happened, their would be pain and a contraction of the Cuban economy, but Cuba is better positioned to cope with it, given the larger number of trading relationships already in place.
That said, I don’t see the worst case scenario happening. I do not expect Chavez will be able to assume office. Another election will have to be held and the PSUV candidate, most likely Maduro, will be most likely to win in a campaign in which Chavez is portrayed as a martyr to the cause. I’m not fan of Chavez, but that role is hard to beat in an election.
But even supposing an opposition candidate does win the election, he will still have to work with a legislature and with state governments controlled by the PSUV. He will not be able to pull the country too far off the track Chavez set it on. As for the issue of oil for Cuba, the most that could happen is a renegotiation of the reciprocal deal.
The larger issue of how a post -Chavez Venezuela deals with the decaying economic situation will remain, for whoever is the net leader, as it does for Cuba to deal with theirs.