Cuba can cope without Chávez






By Stephen Wilkinson

Posted on

Once again the web is abuzz with stories of impending doom for Cuba now that Venezuela’s Hugo Chávez has lost his battle against cancer.   However, as I have argued previously, I do not believe that the death of Chávez is as disastrous for Cuba as some suggest.
Two years ago, when the Venezuela leader’s illness was treated for the first time, I was asked by some friends in Cuba if it would be as serious for the island if Venezuelan support disappeared as it was when the Soviet Union collapsed in the early 90s.
“Stephen, you are a person who has spent a lot of time studying Cuba,” I was asked, “What is your opinion? Have we not transferred our dependency on the Soviet Union now to Venezuela? Will we not find ourselves in the same situation that we were in at the start of the 1990s if Chávez falls?”
As I wrote in the Guardian back then, when the question is put this way, the answer is emphatically no. Even if Venezuela were to completely disappear tomorrow (which is not going to happen), Cuba would have difficulties but it would survive. Here’s why.
First, the dependency on Venezuela today is simply not as great as the dependency that Cuba had with Soviet Union and the former socialist countries. When they collapsed, Cuba lost 85% of its trade practically overnight. While Venezuela is by far the largest trading partner that Cuba has right now, the proportion of the trade exchange between the two countries has never amounted to a half of Cuba’s total. Given that not all of Venezuela’s relations with Cuba would disappear immediately, the initial shock to the Cuban system would therefore not be as great.
Second, unlike in 1989 when almost all of Cuba’s trade was with the Soviet bloc countries, Cuba has diversified its trading partners enormously since then. China, Vietnam, Canada, Brazil, Spain and even the United States (under a food sales exception to the embargo) are now all very significant partners. These would be able to fill the gaps left by Venezuela. Whereas, in 1989, Cuba had to redirect its entire economic relations to face a completely new reality, it has already made that adjustment today. Recovery from the shock of the absence of its major partner would, therefore, be quicker.
This leads on to a related third point: Cuba has also diversified its economy. In 1989, about 90% of its export earnings came from the sale of sugar to the Soviet bloc. Now, Cuba is no longer dependent on one crop for its income and can count on a variety of industries that will remain largely unaffected by the demise of Venezuela. A look at the breakdown of Cuba’s export earnings shows that nickel, biotech products and tourism make up a huge portion of its income. In 1989, Cuba could not count on any of these, so the country is in a better shape to face adversity than it was then.
The main threat from a collapse of Cuba’s relationship with Venezuela is from a fall in cheap oil imports and a drop in earnings from the export of medical services to Venezuela. Venezuela supplies about half of Cuba’s oil needs at a preferential price, and purchase of the services of Cuban doctors accounts for something like 20% of Cuba’s current annual earnings. Losing these deals would be a significant blow to the country, but it would not be catastrophic – and certainly not as a bad as the loss of the partnership with the Soviet bloc in 1989.
Back then, all of Cuba’s oil came from the Soviet Union at preferential prices and the effect of having to buy oil on the world market was to cut Cuba’s oil imports by 75%. The consequence of that was severe rationing of electricity, sudden power cuts and the almost complete cessation of automobile transport. A crisis on that scale would simply not happen now. For one thing, Cuba would be able to buy more oil than it could in 1989 because its hard currency earnings are higher now; and for another, it now supplies half of its own oil needs and is completely self-sufficient in electricity production. While the price of gasoline would inevitably rise as a consequence of the disappearance of Venezuela, a shortage of electricity would not occur because Cuba now generates all its electricity from oil it produces itself.
None of this is to say that Cuba would not face a problem if the opposition won in Venezuela. It surely would. There would be something like 29,000 medical personnel who would be returned to the island, adding to the numbers of professionals there on the state payroll. There would be an oil shortage and there would be inevitable austerity imposed on a population that has suffered decades of hardship. The Cuba of today is vastly changed from the country it was in 1989. To say that it had a friend and ally in Chávez is undoubtedly true, but to say that the Cuban revolution needed him in order to survive is palpably false.