Chávez death spells uncertainty for Cuba

Thu, Mar 7, 2013, 00:00

While the death of Hugo Chávez has plunged Venezuela into political uncertainty, it spells potential disaster for his communist ally Cuba.

The Caribbean island’s decrepit economy has become heavily dependent on subsidies worth billions of dollars that Mr Chávez sent it each year as part of his efforts to build a regional left-wing alliance to oppose US influence in Latin America.

But Mr Chávez’s Cuba policy was always far less popular back home than his redistribution of the country’s oil wealth to Venezuela’s poor.

Cuba as model

Even when he was winning, elections polls showed three-quarters of Venezuelans rejected Cuba as a model for their president’s Bolivarian Revolution. Now the billions of dollars that flow to Havana could come under threat once Mr Chávez’s political heirs turn to cleaning up the economic mess they have inherited. If spending cuts have to be made – and a recent devaluation of the currency indicates that they do – it will be politically less painful to reduce or shut off aid to Cuba and other socialist allies such as Nicaragua than force austerity on Venezuelan voters.

Because of the opaqueness that surrounds the financial dealings of the Chávez government, it is difficult to know how much aid he sent to Cuba each year. It is generally believed to be worth more than the Soviet subsidy that kept the island afloat during the cold war and could be equivalent to about a fifth of the island’s GDP.

Largesse

Any cutback in such largesse would leave the government in Havana horribly exposed and could risk a repeat of the depression that followed the collapse of its Soviet benefactor.

Cuba’s alliance with Venezuela was the fulfilment of a long-held dream by Fidel Castro, who first cast covetous glances in Venezuela’s direction shortly after coming to power in 1959. He knew his experiment in tropical socialism would benefit from his Caribbean neighbour’s huge oil reserves, if only he could get his hands on part of its wealth.

It was with this goal that during the 1960s he publicly courted Caracas’s democratically elected administrations while covertly funding the Venezuelan guerrilla groups seeking to overthrow them. The dual track strategy eventually failed, and instead Mr Castro was forced to rely on the Soviet Union. Its collapse in 1991 led many to predict Cuba’s communist experiment was doomed. But Mr Castro, a wily strategist, instead turned his gaze again to Venezuela and its oil.