The government of Russia has expressed skepticism that the communist regime controlling Cuba would be able to afford oil shipments from its former patron to replace the free shipments from Venezuela that have largely ended as that nation descends into socialism-driven poverty and chaos.
While Cuba has turned to Russia to purchase oil following an end to the copious free shipments of Venezuelan fuel, a report in Russia’s TASS news agency quotes the nation’s Minister of Energy as confirming the demand for Russian oil, but not the ability to pay for it.
Russian Energy Minister Alexander Novak told reporters Russia is willing to sell the oil if they are properly compensated for it. “Cuba really wants more supplies, but the question is in financial sources. If financial resources are found – the companies will deliver,” he said.
“It’s not charity,” he added.
For decades following the Cuban Revolution, the island nation depended on the Soviet Union for much of the stability of its meager communist economy, particularly for oil. As the Soviet Union approached collapse, its ability to maintain colonies like Cuba began collapsing, ushering in what Cubans know as the “special period,” when the government could no longer rely on the Soviet Union for its necessary goods and basic food supplies became hard to come by. Cuba was economically devastated, with the “special period” rivaled only by its North Korean analog, the famine known as the “arduous march.”
The “Bolivarian revolution” of late dictator Hugo Chávez in Venezuela largely contributed to the Castro regime’s survival at the tail end of the decade. Venezuela, which boasts the world’s largest known oil reserves, began buying allies throughout the continent, from the socialist leaders in Argentina and Bolivia to the smaller Anglophone Caribbean island states. Few nations benefitted from Venezuelan crude oil the way Cuba did, however, trading diplomatic support on the international stage and its alleged medical expertise for oil. Cuba also refined the Venezuelan oil, reselling it at a profit.
While the strict price controls, food rations, and oil giveaways to fellow “Bolivarian” nations had sealed the fate of the Venezuelan economy long before Chávez’s death, the result of these destructive policies began to snowball under successor Nicolás Maduro.
According to a recent Forbes piece, Petróleos de Venezuela (PSVSA), the state oil company, has seen its revenue drop $55 billion between 2014 and 2017. Maduro has largely blamed the United States for Venezuela’s economic woes, accusing the Obama administration of waging an “economic war” against socialism.
Venezuela has had to rely on the United States in part, however, as Maduro was forced to import American oil last year due to PDVSA’s inability to harness Venezuela’s oil reserves at a speed to satisfy demand.
The result has been a steep decline in the amount of oil Venezuela can ship to Cuba and a sharp decrease in the profit Cuba could previously generate from refining it. In May, Miami’s El Nuevo Herald reported that Cuba had experienced a 97 percent decline in exports of refined oil, representing hundreds of millions of dollars. A particularly important oil refinery in Cienfuegos, Cuba, was forced to cut its production in half in October 2016 after Venezuela failed to ship oil to the communist country for eight months.
The Cuban government filled the void by returning to its original patron state: Russia. Cuba received its first shipment of Russian oil in the post-Soviet era in May 2017, part of a larger deal with the Russian oil company Rosneft to purchase $105 million worth of oil. Rosneft has also filled a void in Venezuela, buying PDVSA assets and offering Venezuela loans to maintain its facilities open.
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