The New York Times
December 13, 2008
CARACAS, Venezuela — President Raúl Castro of Cuba arrived here on Saturday on his first official foreign visit since assuming power two years ago from his ailing brother, Fidel. The decision to visit Caracas first highlights Cuba’s continuing reliance on subsidized oil and other forms of aid from Venezuela.
The visit is an opportunity for President Hugo Chávez of Venezuela to burnish his revolutionary credentials. He has vowed to strengthen ties with Cuba’s new leadership despite cultivating a much warmer relationship with Fidel, who is 82 and living in seclusion.
“I bring a salute to all the Venezuelan people, an embrace from the Cuban people and the chief of the revolution, Fidel Castro,” Raúl Castro said after arriving here.
Mr. Castro, 77,and Mr. Chávez discussed a range of cooperation projects in areas like agriculture, education, medicine and athletic training that are supported by thousands of Cuban advisers operating in Venezuela. The two leaders signed an agreement opening the way for Venezuela to continue assisting Cuba inincreasing its oil-refining capacity and to eventually build a plant in Cubato import liquid natural gas.
Cuba is by far the largest beneficiary of Venezuela’s foreign aid, receiving, for instance, more than $150 million to build a petrochemical complex in Cienfuegos on Cuba’s southern coast. But with oil prices plunging recently, the financing for some of Venezuela’s foreign aid projects has come into question. Cuba’s government may also be worried about possible disruptions in subsidized oil exports, which were cut early in the this decade during an oil strike here.
Given that uncertainty, Mr. Castro has also been trying to deepen ties with other trading partners like China and Brazil.
Indeed, before Mr. Castro’s visit to Caracas was announced this month, Cuba’s government had said that he was planning to go to Brazil for a meeting of Latin American and Caribbean countries convened by President Luiz Inácio Lula da Silva of Brazil.
After stopping in Caracas, Mr. Castro is still expected to travel to Brazil in the coming days, raising the prospect of stronger relations with Brazil and, perhaps, even of a potential option for back-channel dialogue with the coming Obama administration.
The government of Mr. da Silva, a former leftist labor organizer, has expressed a strong desire to strengthen relations with both Havana, which Mr. da Silva has visited twice in the past year, and Washington.
“The U.S. approach to Cuba will unfreeze with Obama,” said Christopher Sabatini, senior director of policy at the Americas Society, a policy organization in New York focusing on Latin America. “Lula has both the international cred and the ideological cred to be an interlocutor in this process.”
Cuba’s potential in developing alternative forms of energy also figures high on Brazil’s efforts to cultivate warmer ties with Cuba, with Brazilian sugar and ethanol producers seeking to interest Cuba in Brazilian ethanol technology and investment, possibly as a way to circumvent an American tariff on imports of Brazilian ethanol if Washington’s embargo is altered.
“The Brazilians are taking a long-term view on Cuba as an entry point into the Caribbean and even the United States,” said Jorge R. Piñón, an energy fellow at the University of Miami. “As for the Cubans, they are still recovering from the shock of losing the Soviet lifeline, so they want an insurance policy in case of changes in relations with Venezuela,” he said. “The Cubans are getting their ducks in a row.”
But while Brazil has emerged as Cuba’s second-largest trading partner in Latin America, its influence in Cuba is still dwarfed by that of Venezuela, whose subsidized oil exports to Cuba were valued at $3.01 billion this year through November, according to a new study by the Center for Hemispheric Policy at the University of Miami.
Moreover, Venezuela is also financing another refinery expansion in Santiago in eastern Cuba, a project that, combined with the upgrade of the oil and petrochemical complex in Cienfuegos, could put Cuba on the road to becoming a potential regional oil-refining center.
Cuba’s recent announcement that its offshore oil reserves could hold as much as 20 billion barrels has also set off fierce speculation in energy markets over whether the estimate was accurate and, if so, how that petroleum would eventually be commercially explored.
For now, the American embargo on trade with Cuba has limited the ability of American oil companies and foreign oil companies with large operations in the United States from striking deals to produce oil in Cuban waters or offer the Cuban government energy services in the form of drilling or geological work.
But that framework for dealing with Cuba could change, explaining why Mr. Castro has welcomed the Venezuelan investments in Cuba’s refineries and has reached out to oil-exporting countries like Russia, Angola and Brazil, which is increasing its own oil production after a series of huge offshore oil discoveries.
“We already have extensive oil dealings with a monarchy in Saudi Arabia, a failed state in Nigeria and Venezuela, which is Cuba’s top patron,” said Jonathan Benjamin-Alvarado, an expert on Cuba’s energy industry at the University of Nebraska-Omaha. “Why should Cuba, which is relatively stable and close to our major ports and refineries, be an exception?”
Correction: An earlier version of this article misstated the size of Cuba’s offshore oil reserves. The reserves have been estimated to hold as much as 20 billion barrels of oil, not 20 million.