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03/05/13 - Miami Herald - How will the Venezuela-Cuba link fare after Chávez's death? 

The death of Venezuelan President Hugo Chávez has given free rein to fears
that Cuba will plunge into an economic abyss again if Caracas halts its
subsidies, estimated at well above the massive aid that the Soviet Union
once provided to Havana.

"The impact of a cutoff will be that the crisis we now have will turn into
chaos, because the Cuban government has no other source of financing," said
Miriam Leiva, a Havana dissident and former Cuban diplomat.

Havana now gets two-thirds of its domestic oil consumption from Caracas -
about 96,000 barrels per day - and pays part of the bill with the vastly
overpriced labor of 35,000 Cuban medical personnel, teachers and others
working in Venezuela.

The rest of the bill is chalked up as a debt, mostly to Venezuela's PDVSA
oil monopoly, which now stands at more than $8 billion, said Jorge Piñon, a
Cuba-born oil expert at the University of Texas in Austin.

"If Cuba had to pay $96 to $98 per barrel, that would mean a gigantic
negative impact on its cash register," said Piñon.

A July report by the London-based Economist Intelligence Unit noted that an
oil cutoff could plunge the island's import-export balance into the red and
lead to "the possible imposition of restrictions on energy consumption
outside key industries."

Venezuela also is now by far the island's single largest commercial
partner, with bilateral trade officially pegged at $6 billion in 2010 -
more than Cuba's trade with the next five countries together - and likely
one of its largest sources of hard currency.

Carmelo Mesa-Lago, an economist and professor emeritus at the University of
Pittsburgh, has estimated that Venezuela in fact accounted for more than 20
percent of the country's overall economic activity in 2010.

Cuban officials have not commented on a post-Chavez future, but highlighted
his importance to the island when they interrupted TV programs Dec. 8 to
announce that the president would return to Havana for another surgery of
his battle with cancer.

Some analysts argue that a cut in Venezuelan aid might prove beneficial to
Cuba in the long run by forcing ruler Raúl Castro to drastically broaden
and speed up the reforms toward a market economy that he has been pushing
since 2007.

Castro's reforms so far have done little to resolve the massive problems in
the economy, from bottom-of-the barrel industrial productivity and salaries
to a stalled rural sector that forced Havana to import $1.6 billion worth
of agricultural products in 2011.

"It's imperative to have a truly deep opening that would allow Cubans to
import and export, professionals to be productive and enterprising citizens
to become the motor for the economy," wrote Emilio Morales, head of the
Havana consulting Group in Miami.

Havana also might not feel an aid cutoff as sharply as it felt the end of
the Soviet subsidies because its good relations with China and Brazil could
attract some additional support from them, according to the Economist
Intelligence Unit report.

And Venezuela may only trim and not totally cut off its assistance because
it benefits from the relationship through the Cuban doctors, who treat poor
families that tend to vote for Chávez's party, as well as security,
military and other advisers.


Original Source / Fuente Original:
http://www.miamiherald.com/2013/03/05/3268483/how-will-the-venezuela-cuba-link.html