MercoPress. South Atlantic News Agency

Cuba admits Venezuelan recession is hitting hard: Chavist oil shipments down 20%

Venezuelan oil shipments to the island have declined by 19.5%, forcing an energy rationing that is reminding people of the early 90s, when the Soviet Union dissolved

Venezuela’s grim situation is impacting not only millions of households around the country: it is also sending panic waves across the Caribbean all the way to Cuba, a solid ally that for decades now has relied heavily on Chavismo’s generosity.

 Cuba, a totalitarian country with a weak economy, has alienated itself from the rest of the world and has largely relied on Venezuela to stay financially afloat. But Venezuela’s falling oil prices is causing Cuba to distance itself from the South American country.

So far this year Venezuelan oil shipments to the island have declined by 19.5%, forcing an energy rationing that is reminding people of the early 90s, when the Soviet Union dissolved and Cuba lost its top provider almost overnight.

Now with Venezuela’s wealth slowly fading away, the geopolitical chessboard may change in a way that some say will inevitably drive Havana closer to the U.S.

“Venezuela’s inability to help Cuba creates a void that will very likely be filled by the U.S.,” said foreign policy expert Giovanna De Michelle.

“Cuba’s opening to foreign investment has been slow, but now they don’t have another option if you consider Venezuela’s grim situation,” said Felix Arellano, also an internationalist.

Venezuela and Cuba started strengthening ties soon after Hugo Chavez, a socialist and open admirer of Fidel Castro, came to power in 1999. The alliance, fueled by a close personal friendship, helped the Castro brothers keep the island afloat amid the Soviet Union domino collapse.

Currently – and for more than a decade now – Venezuela supplies more than 50% of the island’s intake of oil at very preferential terms. In exchange, in 2003 Cuba started providing human resources to Venezuela, mostly teachers and medical doctors to support Chavez’s various social programs, like Barrio Adentro and Misión Robinson, which focused on reducing analphabetism.

According to the most recent information available, in 2013 Venezuela provided Cuba with 99,000 barrels of crude oil a day. To date, Cuba has sent approximately 200,000 workers to Venezuela.

This oil-for-workers deal greatly benefited both Castro’s and Chavez’s agendas: while Cuba kept running on cheap oil, Venezuela found a way to secure and preserve the social programs that are the backbone of Chavismo.

After Chavez died in 2013, his handpicked successor Nicolas Maduro has kept the close relationship with Fidel and Raul Castro — according to an FNL count, Maduro has visited Cuba 15 times since becoming president three years ago.

Raúl Castro has acknowledged the repercussions that Venezuela’s deepening crisis is having on Cuba. He said Cuba’s economy grew just 1% in the first part of the year, half of what the government had planned for, due in part to “a certain contraction in the fuel supplies agreed upon with Venezuela, despite the firm will of President Maduro and his government to fulfill them.“

”Logically that has caused additional tensions in the functioning of the Cuban economy,” Castro told the National Assembly.

Analysts say the severity of the financial and political crisis in Venezuela may force Cuba to change course sooner rather than later.

“Havana needs to also start drawing investments from Europe, Brazil, Canada and China,” Arellano told FNL. “The down part for the Castro brothers is that this might require political changes in the near future.”

As for the U.S., it is very likely Washington will keep pushing to increase its influence in Cuba regardless of November’s election outcome. “American investors are betting big on Cuba, which will probably result in the ease of the U.S. embargo [over the island] in the near future,” De Michelle said.