How Venezuela’s Collapse Helped Thaw Cuban-American Relations

How Venezuela's Collapse Helped Thaw Cuban-American Relations
Girish Gupta @jammastergirish Dec. 18, 2014

Today a beleaguered Venezuela no longer has the spare cash to fund the
island's beleaguered economy. The Castros likely realized this as
Chávez's presidency was coming to an end and were not keen for a return
to the scarcity of the euphemistically titled Special Period of the
1990s, after the collapse of Cuba's first patron, the Soviet Union. "We
had nothing, no food and no money," one elderly man told me in Havana
not long ago. The Cuban economy contracted 35 percent between 1989 and
1993, and oil imports decreased 90 percent. Cuba was in desperate need
of money.

Chávez, then a nascent politician on the make in Venezuela, saw Castro
as a political mentor, a simpatico ally against the elites and
imperialists who he blamed for the world's ills. Chávez also oversaw
some of the world's largest oil reserves. Venezuela currently sends
almost 100,000 barrels per day of oil to the island—more than half of
Cuba's consumption—as well as aid thought to be worth in total between
$5 billion and $15 billion a year, or some 15% of Cuba's GDP. (More
precise figures are hard to come by given the opacity of both governments.)

But Chávez is dead, and today Venezuela's economy is in tatters,
exacerbated by a fall in the price of oil, which provides 96% of
Venezuela's foreign revenue. The country's local currency on the black
market has fallen 35% in the last month; annual inflation is at more
than 60% and there is serious talk of default on Wall Street. Many
economists are talking of a "perfect storm" brewing for current
Venezuelan President Nicolas Maduro, whose approval ratings have fallen
to the mid-twenties.

The lack of guaranteed support from Caracas would have made Cuban
President Raúl Castro "much more eager to negotiate and given the U.S.
leverage," said Ted Henken, President of the Association for the Study
of the Cuban Economy and author of several books on Cuba.

As Havana makes peace with Washington, Venezuelan authorities are left
increasingly isolated. While Cuba and Venezuela held onto leftist
principles, other countries in the region have in recent years taken
more pragmatic policy decisions. "Obama has pulled the rug out from
under Maduro," said Christopher Sabatini, Senior Director of Policy at
the Council of the Americas. "It's going to be a lot easier for other
U.S. allies in the region to swing away from Venezuela."

In the last couple of weeks, in response to sanctions by Washington on
top Venezuelan officials for alleged human rights abuses, Maduro has
rallied against the U.S. "It shows a lack of respect!" boomed the
mustachioed president to a few thousand supporters in Caracas on Dec.
15. "They can shove their US visas." On Wednesday, though, Maduro
praised Obama's "gesture" towards Cuba. "How sad it is to have a
government who 72 hours ago launched an anti-imperialist diatribe
against Obama and now describes him as 'courageous,'" said Jesús
Torrealba, head of Venezuela's opposition coalition.

Cuba learned its lessons from the Special Period and in recent years
began to diversify. On the ground, rules have been loosened on private
restaurants, guesthouses and the buying and selling of property. Cubans
are even allowed Internet access, though only about 5 percent of the
country can reach the Web. On a more global scale, international
investors have come in; the Scarabeo 9 oil rig sailed into the Florida
Straits in January 2012. It was Chinese-built, Italian-owned, and was to
be used by Spanish, Norwegian and Indian firms, among others.

Cuba was likely well aware those small reforms would not be enough in
the long run. There are a mixture of elements that have come together to
allow this historic moment: from Obama and Cuban President Raúl Castro
themselves to mediators in the Vatican and Canada. Yet, the unwitting
spur for the restoration of relations between the U.S. and Cuba may be
Hugo Chávez himself, and the inability of his successors to manage
Venezuela's economy.

http://time.com/3639939/venezuela-role-cuba-america-relations/