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Russia Sends Cuba First Oil in a Year to Ease Blackouts and Unrest

    Havana turns back to Moscow as other allies reduce supply
    Island facing one of its deepest crises since Soviet collapse
Havana turns back to Moscow as other allies reduce supply. Island facing one of its deepest crises since Soviet collapse (Kper)

Jim Wyss and Scott Squires, Bloomberg News

EnergiesNet.com 03 29 2024

When a Russian fuel tanker docks east of Havana this week, it will be welcome relief for Cuban officials trying to stymie growing unrest.  

Some 715,000 barrels of crude are due to arrive Friday at the port of Matanzas in Russia’s first oil shipment to Cuba in a year. The island is facing blackouts and food shortages that have sparked mass migration and soured the national mood, with anger boiling over into the largest street protests since 2021 earlier this month.

The Cuban government blames its woes on the US trade embargo imposed after the 1959 revolution. Brazil, the Caribbean Community and other regional allies are urging Washington to ease sanctions, but that’s a tough sell during an election year in which Republican nominee Donald Trump is talking up regime change in Havana should he win his rematch against President Joe Biden. 

Now mired in one of its worst economic slumps since the fall of the Soviet Union, the communist-run nation finds itself — once again — beholden to its backers at the Kremlin. 

“What we need is for the fuel, wheat and fertilizer Russia has been offering to get here as quickly as possible,” Cuban economist Omar Everleny Perez said by phone from Miami. “There’s obviously a lot of political goodwill between Russia and Cuba, but in practice we’re not seeing the benefits on the street yet.” 

For decades the Soviet Union was Cuba’s biggest supporter. When the USSR collapsed in 1991 it led to years of hardship known on the island as its “special period.” By some measures, the country is suffering a second version today as inflation soars, the economy crumbles and hunger grips large swathes of the population.

The government’s once enviable social safety net is also in tatters. It recently asked the United Nations for powdered milk to feed children — a first for Cuba. Chronic wheat shortages have meant a lack of bread and government food rations, which have been steadily reduced, are often delayed by weeks, Perez said. 

Cuba and Russia signed a deal last year that was supposed to ease some of the island’s suffering, but it’s been off to a slow start as Vladimir Putin’s government prosecutes its war in Ukraine. That could change when a Gabon-flagged ship beneficially owned by Russia’s Sovcomflot PJSC, which is sanctioned by the US, pulls into harbor.

The vessel left the Baltic coast on March 9 and its cargo will begin supplying Havana’s refineries. It will likely cover demand “for about 35 days,” said Jorge Piñon, a researcher at the University of Texas Energy Institute who tracks oil shipments to the island. 

It’s Russia’s biggest since September 2022, according to trade intelligence firm Kpler. And it should help tame island-wide blackouts that have been exacerbated by the fuel crunch.

“Cuba is short on oil, with a total deficit of around 100,000 barrels per day,” Piñon said in an interview. “We expect Russian oil to continue coming at a tanker per month — enough to keep the Havana refinery running at this rate.”

Havana had little choice but to return to Russia’s orbit after some of its other allies pared back support.

Longtime backer Venezuela has reduced fuel deliveries to about 35,000 barrels per day, according to Piñon, down from about 80,000 in 2020. And while Mexico is donating about 25,000 barrels daily, it’s facing domestic pressure to begin charging the cash-strapped island given state-run Petroleos Mexicanos — which denies it’s sending crude to Cuba — has financial woes of its own. Mexico’s presidency, finance ministry and Pemex didn’t respond to requests for comment.

By contrast, trade between Moscow and Havana is booming again, with some 100 Russian companies starting operations in Cuba over the past year. Russian tourism surged 340% in 2023 — more than any other nationality, aided in part by the island’s rollout of the Mir payment card issued by Russia’s central bank. Even so, Cuba has only recovered about half of its pre-pandemic visitors, sapping a critical source of hard currency.

Last year’s agreement was designed to bolster Russia’s participation in the island’s economy. And Cuba’s trade and investment minister, Ricardo Cabrisas, was back in Moscow last week hoping to build on that success. 

Brazil is also stepping up as President Luiz Inacio Lula da Silva pushes to repair relations with Havana that frayed under his predecessor. His government has expressed great concern about economic deterioration in Cuba and has teamed up with the United Arab Emirates to send powdered milk, rice, soybeans and corn to the island, with the first dairy shipment arriving last month. 

Lula regularly presses American officials to loosen restrictions on Cuba, according to a person with direct knowledge of the matter who requested anonymity because the discussions aren’t public. But so far those calls — including to reverse Trump’s 2021 decision to put Cuba back on the US list of state sponsors of terrorism — have fallen on deaf ears.

Cuba’s inclusion on the list has been a powerful deterrent to foreign investors and financial institutions. While Biden initially said he would undo Trump’s aggressive tightening of sanctions, changes have been modest. Even a limited step to allow more US financial support of small businesses on the island was shelved last year amid political blowback after it was publicly floated by the administration.

For his part, Cuban President Miguel Diaz-Canel — who used his X account to congratulate Putin on his re-election the same day protests broke out — has acknowledged the food and power problem his country is facing. But he maintains it’s Washington’s fault for trying to bar producers, shipping agencies and banks from doing business with the island.   

“The fundamental problem we’re having is the energy persecution the country is facing,” he said in a televised interview in the days after this month’s protests. “And also because we don’t always have the hard currency necessary to buy the products.”

On the ground, things have never been more difficult. “You can’t find food, you can’t find rice — and if you do find it, you can’t afford it,” said Juan Gonzales, who lives in Santiago de Cuba, the site of some of the largest demonstrations this month.

Echoing government talking points, the 68-year-old muertero, or spiritualist, added that the protests were about food and power — not toppling the six-decade-old communist regime.  

“Things are really hard here, but we’re moving forward,” Gonzales said by phone. “Long live the revolution.”

–With assistance from Catherine Traywick, Dina Khrennikova, Simone Iglesias, Maya Averbuch and Lucia Kassai.

bloomberg.com 03 28 2024

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