Cuba's leaders may have been taken aback by the recent surge in opposition to Nicolás Maduro's government in Venezuela. But the Cuban public, torn between amazement and delight, has watched the political crisis unfold in Caracas on the Venezuelan Telesur channel, traditionally loyal to the regime. The Cuban press, on the other hand, says as little as possible about the unrest. With good reason, for the downfall of Venezuela's socialist government would be a disaster for Cuba's communist regime which has ruled the island for the past 55 years.
Over and above the political fallout that would be caused by the overthrow of a friendly government, the Cuban economy is heavily dependent on Venezuelan oil. (Caracas supplies about 80,000 barrels a day, though deliveries fell by 20% to 30% last year.) The terms for this supply are particularly advantageous, most of it being "paid" by the provision of thousands of Cuban medical aid workers, mainly doctors and nurses. Trade with Venezuela accounts for almost 20% of Cuba's gross domestic product.
Cuban dissidents have followed the protests in Venezuela closely on social networks. Events suggest things might finally start changing at home, so they send frequent messages of support to their Venezuelan fellows. "Anything might happen," says the independent lawyer Wilfredo Vallin Almeida.
The possibility that the Venezuelan regime founded by Hugo Chávez might collapse is a nasty reminder for Cuban leaders of what happened when the Soviet Union fell apart in 1991. The disappearance of the eastern bloc, on which Cuba was largely dependent, was a near-fatal blow. "GDP suddenly dropped by a third," says Joaquín Infante Ugarte, deputy head of Cuba's National Association of Economists and Accountants. The 1990s were a very difficult time, with the local economy almost completely failing to produce necessities, particularly food.
Cuba's president, Raúl Castro, is determined to prevent a similar occurrence and is doing all he can to support Maduro. But he is also trying to work out a plan B in case Caracas changes direction.
Cuba has already made considerable progress rebuilding wider diplomatic ties. In January Havana hosted a meeting of the Community of Latin American and Caribbean States (Celac), showing that although the American embargo is still in force, Cuba has restored normal relations with the rest of the continent. Normalising trade is more challenging. The prime objective of the Castro government is to attract more overseas investors to boost the economy. "We need at least $2.5bn a year to develop," Ugarte claims. Setting aside the problem of energy, Cuba spends about $2bn a year importing food. Yet part of the island lies fallow.
The dual currency system of Cuban pesos (left hand) and their convertible equivalent, pegged to the dollar, poses problems for foreign companies looking to invest in the country. Photograph: Yamil Lage/Getty
Foreign companies wishing to invest face many difficulties. The first problem is that there are still two separate currencies, operating in parallel. The wages of ordinary Cubans are paid in pesos, which can be used to buy basic necessities. The convertible peso, or CUC, is worth roughly 25 pesos and pegged to the US dollar. It is used for purchasing imported goods but also any necessities not covered by subsidies. The government has announced plans to scrap the CUC, without giving any details or explaining how this would be achieved, a source of concern for much of the population, which fears inflation. "Monetary reunification is essential," says Cesário Melantonio Neto, the Brazilian ambassador to Cuba. "If things stay the way they are, it will dissuade firms from moving to Cuba."
This warning carries quite a lot of weight in view of the amount Brazil has invested in Cuba. The Brazilian firm Odebrecht is building the Mariel deep-water port, slated to become a key hub for Caribbean trade when work enlarging the Panama canal is complete. Brazil's president Dilma Rousseff officially opened the first part of the project in January, closely followed by her predecessor, Luiz Inácio Lula da Silva, who visited Havana in February.
Brazil is counting on the port "to enable its companies to develop into the Caribbean and Central America", Neto explains. It is also encouraging its business leaders to invest in the special economic zone being built around the port. "If we weren't optimistic about modernisation of the Cuban business model, we wouldn't have become involved to this extent. We reckon it's worth it," the ambassador adds. "They are now really determined to modernise," says Fabien Buhler, CEO of Devexport, a French company that has been trading in Cuba for years and represents several other firms here.
Part of the "actualisation" process, as the regime puts it, is a recent law on foreign investments. Long awaited by foreign business, it seeks to reduce the constraints on potential investors. All sectors will be open to foreign capital, apart from the military, healthcare and education. Overseas companies will pay less tax and the administration has promised to be more responsive. But they will still not be able to choose their workforce, which will go on being supplied by the state.
This article appeared in Guardian Weekly, which incorporates material from Le Monde
