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Raúl Castro recognizes 'setbacks' in his regime's alliance with Caracas

Raúl Castro during his speech before the National Assembly of Popular Power. Havana, December 29, 2015. (EFE)


On Tuesday Raúl Castro acknowledged "afectaciones" in Cuba's "cooperative" relations with Caracas, and blamed an alleged "economic war to thwart popular support" for the government of his Venezuelan ally Nicolás Maduro.

Supporters of Venezuela's regime and Chávez's legacy advance the same argument to explain the severe crisis affecting the South American country,  Havana's foremost economic partner.

"While the downward trend in oil prices benefits us by reducing the import costs for food, raw materials and manufactured goods, the fact remains that in 2015 there were setbacks in our cooperative and mutually advantageous relationships with several countries, particularly the Bolivarian Republic of Venezuela," stated Raúl Castro at the closing session of the National Assembly of Popular Power.

Havana receives from Caracas over 100,000 barrels of oil daily, enjoying preferential terms, as part of an agreement under which the Cuban government sends doctors and other professionals to Venezuela.

"Trade with Venezuela accounts for 15 percent of Cuba's GDP. This is half of what the Soviet Union represented," noted Cuban economist Pavel Vidal, a professor at a university in Cali, Colombia, quoted by Reuters.

The Venezuelan economy is currently among the worst performers in the world, as the value of its oil exports has dropped up to 70 percent over the last 18 months.

Raúl Castro also announced in his speech that  Cuba's GDP will grow in 2016 "at a lower rate, 2%," compared to the 4% in 2015, "as a result of projected financial constraints associated with falling revenues from traditional export items, like nickel, due to lower prices on the world market."

The prices of other exportable products, such as sugar and oil by-products, have also dropped significantly.

According to Reuters, western diplomats believe that low export prices, the severe drought in recent months, and the economic crisis in Venezuela have resulted in a cash crunch for the Cuban government.

Given the scenario Cuba faces, Castro again proposed austerity.

"There is no room, as Fidel has taught us, for one bit of defeatism, just the opposite. The history of our Revolution is full of glorious pages, the overcoming of challenges, risks and threats," he told the representatives.

"It is time for us to maximize our efficiency reserves, concentrate resources on activities that generate revenue through export, and which replace imports, make the investment process more efficient, and boost investments in the productive sector and infrastructures, prioritizing the sustainability of the generation of electricity and augmented efficiency by energy suppliers," he added.

"At the same time, we must avoid any expenses that are not essential, and take advantage of the resources available to us, in a more sensible way, and with a dedication to the country's development," he said.

Castro issued a positive assessment of the Cuban economy's indicators for 2015. He highlighted the growth in tourism and the agreement reached with the “Club de París,” which will allow his government to stop paying large sums of debt.

"This agreement marks a new stage in our economic, commercial and financial relations with the participating countries, as it facilitates access to financing in the medium and long term, vital to the investments slated in our development plans," the general said.

He also stated his Government is willing "to honor the commitments stemming from this and other agreements reached during the renegotiation of debts with other States and the private sector."