Are Moscow and Havana becoming strong allies again? It does indeed appear so.
Russia has officially eliminated approximately $32 billion of Cuba’s outstanding debt, which dates back decades ago when the country received it from the Soviet Union. Cuba will still be required to pay back $3.2 billion over the next 10 years. The Kremlin said in a statement that Russian President Vladimir Putin wrote off the debt after the parliament approved the measure.
The first payment from Cuba is scheduled to take place in October and the funds will be transferred to the Russian lender Vnesheconombank’s account opened at the National Bank of Cuba.
“Putin has signed a federal law ‘On the ratification of the agreement between the government of the Russian Federation and the government of the Republic of Cuba on the regulation of the arrears of the Republic of Cuba to the Russian Federation on loans, granted at the time of the former USSR,’ passed by the Duma on July 4, 2014, and approved by the Federation Council on July 9, 2014,” the Kremlin said in a statement.
The write-off comes as Putin embarks on his tour of Latin America and arrived in Havana on Friday to meet with top Cuban officials. The Russian leader also met with German Chancellor Angela Merkel over the weekend in Brazil.
Cuba has been struggling to revamp its debt in order to improve the economy and lure in investment from abroad. For instance, Japan forgave about $1.4 billion of Cuban debt in 2012, while Cuba restructured its $6 billion debt to China in 2011. Mexico also forgave roughly $478 million that Cuba owes, but it will still pay back $146 million within a decade.
According to official estimates, Cuba’s total debt stands at $13.6 billion (as of 2012 numbers). Soon after the Soviet Union collapsed, Russia had become the legal heir to Cuba’s loans, but the Caribbean republic attempted to rebuff this fact and noted that the debt was in a currency that ceased to exist and owned by a country that had been eviscerated.
Meanwhile, geopolitical analysts say that Putin’s recent move wasn’t necessarily for commercial interests but rather a strategic endeavor. Jaime Suchlicki, a Cuba expert at the University of Miami, told the Wall Street Journal that Putin is highly interested in getting hold of a berth for Russia’s fleet at Cuba’s port of Mariel which opened earlier this year. This port is viewed as an extremely important economic element for the socialist nation that has suffered from intense poverty over the years.
Furthermore, Moscow wants to install a space tracking station in Cuba that can then double as an electronics listening system targeted towards the United States.
Cuba, the USSR and the U.S. were on the brink of nuclear catastrophe otherwise known as the Cuban Missile Crisis. Leaders at the time assured mutual destruction, but later agreed to a peace pact. In the meantime, the U.S. applied embargoes against Cuba, but the country survived with its $9 billion annual trade with the USSR.
