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  HOME | Venezuela (Click here for more Venezuela news)

Venezuela's Chávez Fills $9.4 Billion Yearly Post-Soviet Gap in Cuba’s Accounts
“In nominal terms, the Venezuelan subsidy is higher than whatever subsidy the Soviet Union gave to Cuba,” says Carmelo Mesa, a Cuban economist who’s a visiting professor at Tulane University.

By Jeremy Morgan
Latin American Herald Tribune staff

CARACAS – Time was when the Castro regime in Cuba looked to the Soviet Union to keep its economic head above water. That was until the USSR fell apart two decades ago and the well of subsidies dried up.

Hard times were had by most people in Havana and elsewhere on the sugar cane island. A new rich friend was needed, and around a decade ago, duly appeared. Venezuela’s President Hugo Chávez came to the much-needed rescue, and continues to do so to this day, even if Chávez’s favored mentor, the ailing Fidel, has made way for his brother, Raúl.

In nominal terms, at least, Caracas looks to be as open-handed towards Havana as Moscow ever was. According to Carmelo Mesa, a Cuban economist who’s a visiting professor at Tulane University in the United States, Venezuela bankrolled Cuba to the tune of $9.4 billion last year.

This includes $2 billion to take account of the cost of subsidizing Venezuelan oil exports to Cuba. Venezuela sends oil to Cuba at a “preferential” price of just $27 a barrel.

That price is below even the low point of a little over $34 a barrel that the price of Venezuela’s mix of medium-grade and heavy crude oil hit at the end of last year. At present, Venezuela's oil basket is wobbling up and down at around $60 a barrel.

Venezuela is also calculated to have footed the bill for $1.37 billion for 76 bilateral projects last year. More of these are said to be waiting in the wings, and in addition, there’s the (perhaps theoretical) cost of servicing Cuba’s burgeoning debts to Venezuela.

However, the biggest ticket item on last year’s account is said to have been Barrio Adentro, the flagship project launched by Chávez in 2003 to bring basic medical services to poor barrios across Venezuela.

Chávez adjudged the existing state health service to have fallen down on the job; he lambasted the medical profession for turning their backs on the poor; he set up Barrio Adentro; and he staffed it largely with doctors, nurses and other medical staff brought in from Cuba.

To some extent, this made sense. For all the shortcomings of the Castro regime, presumed or actual, Cuba trains many medical professionals, even if the courses are much shorter in years. experience and technology than Western countries would expect from their doctors.

This, it would seem, has not come cheaply. According to Mesa’s breakdown, which was published Monday by the conservative (and quite openly anti-Chávez) newspaper, El Universal, the payroll for Cuban medical and ancillary staff at Barrio Adentro reached $5.6 billion in 2008.

News of this came after a string of reports to the effect that Barrio Adentro began to come apart at the seams quite some time ago. One reason for this, it was said, that Cubans had used Barrio Adentro to leave Cuba, and then piggie-backed on Chávez’s parallel public health program to make their way into private practice, not least of all in the highly lucrative health market in the United States.

There are some problems with this. If so many Cubans had used Barrio Adentro for their own purposes, how come the payroll costs remained so high?

Mesa puzzled about this, evidently convinced that a lot of Cubans had flown the coop. “What happened with all these Cuban doctors that there were, and for whom Venezuela paid this sum last year?” he asked. “Where are these doctors?” To him, the situation was “inexplicable.”

In this context, it’s now being remembered that none other than Chávez himself finally rang an alarm bell about what was going on (or not) at Barrio Adentro last month.

On September 20, Chavez reported that 2,000 centers in the Barrio Adentro network didn’t actually have any medical staff. By then, the evidence of one’s own eyes indicated that he’d got a point, in that at least some of the centers had acquired a distinctly abandoned air about them.

Declaring an “emergency” in the health sector, Chávez announced that he would bring in a whole lot more Cubans, or Venezuelans who’d been trained in Cuba, all over again. They would arrive on October 8, he added, 1,111 Cubans and 213 Cuban-trained Venezuelans in all, and they would include specialists in a range of medical skills.

However, by this week, all talk of a rescue job had evidently been consigned to the past. On Monday, Chávez rang up the state channel VTV to extol the virtues of the health sector, claiming that Venezuela was “one of the countries which offer the best and most ample health systems.”

Chávez was in Bolívar state, opening a new “integral diagnosis” center boasting 24 doctors, six nurses and other personnel. As to Barrio Adentro, he said, at present it had “more than 13,165” doctors working for it, the majority of them Cubans with “some” Venezuelans.

The president urged everybody to give Barrio Adentro a new impulse, regardless of whether he was around to make it happen, and then he denied that it was being “relaunched” because it had never gotten behind. Instead, it was being strengthened by “rectification” and by giving it impulse anew.

But while Barrio Adentro hogs the limelight in the Cuban-Venezuelan relationship, it’s by no means the only important element in the bilateral equation. Mesa cited statistics from the University of Miami showing that the Cuban government’s debts to Venezuela had reached $11.4 billion, of which $4.6 billion had accumulated on the oil account alone.

This implied that even as the Cubans were benefiting from the low-cost oil, they weren’t actually keeping up payments on the bill. And in the process, Venezuela has become Cuba’s biggest single trading partner in what to all intents in purposes looks rather like a one-way street, amid signs that Venezuela might well be paying the bill in both directions.

Cuba’s total foreign trade was worth $17.9 billion, according to Cuban statistics quoted by Mesa. Out of this overall total, Cuban exports to Venezuela came out at just $415 million, Venezuela’s exports to Cuba at $4.47 billion.

Cuba’s overall trade deficit totalled $10.56 billion last year. Of this, Mesa continued, $4.06 billion corresponded to Venezuela, or 38 percent of the total shortfall on all trade.

Mesa asked how a bilateral trade deficit of over $4 billion last year alone was being covered. At this juncture, he pointed to the bill for Barrio Adentro, suggesting that this was how the gap was being filled.

Mesa concluded that Venezuela was the biggest provider of subsidy to Cuba, and perhaps ever. “In nominal terms, the Venezuelan subsidy is higher than whatever subsidy the Soviet Union gave to Cuba,” he claimed.


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