Venezuela's role in warming Cuba - US relations

Cuba had relied on Venezuela to prop up its economy. But with that support uncertain, the Castro brothers appear to have decided to come in from the cold.

A lot of people have been getting credit for the US-Cuba breakthrough today, from Raul Castro and Barack Obama to Pope Francis and Canadian Prime Minister Stephen Harper.

But there's someone else who deserves credit for taking Cuban-US diplomatic relations to the brink of normalization, though he probably doesn't want it: Venezuelan President Nicolás Maduro. 

In the late 1990s, President Maduro's predecessor Hugo Chávez launched his political career with Fidel Castro as a mentor. Mr. Chávez was a staunch friend of the Cuban revolution, joined Castro in a Latin American bloc opposed to "US imperialism," and showered his resource-poor Caribbean neighbor with oil. In exchange, Cuba dispatched doctors to tend to Venezuela's sick.

But since the death of former President Chávez nearly two years ago, Venezuela's socialist regime has looked shaky. More recently, Venezuela's revenue was slashed by the collapse of global oil prices. Unsurprisingly, Raul and Fidel have been looking to diversify their economic and diplomatic support.

Falling oil prices have “deepened Venezuela’s crisis and [are] likely to diminish a major source of support for Cuba,” says Michael Shifter, president of the Inter-American Dialogue, who is currently in Havana. He adds that Cuba's already "dire economic situation" has been exacerbated. 

Economic dejá-vu?

It’s difficult to know just how much Cuba relies on Venezuelan money and oil, given both countries’ opaque governments. But estimates range from $5 billion to $15 billion a year, or around 15 percent of Cuba's GDP.

Mr. Shifter told the Christian Science Monitor in 2012 that were Chávez to lose power in Venezuela, the “impact on the Cuban economy would be enormous.”

Venezuela's Maduro, who was elected in April 2013, has approval ratings in the mid-twenties that appear unlikely to improve soon. Oil sales make up 96 percent of Venezuela foreign currency income.

The Venezuelan currency has fallen over 30 percent in the last month and annual inflation is running at more than 60 percent. Shortages of basic goods, electricity blackouts, and one of the world’s highest murder rates are adding to Maduro's woes.

Many Venezuelans are questioning subsidies for Cuba at a time of economic crisis at home, and cutting Cuba off would prove politically much easier than increasing energy prices for Venezuelans.

Cuba's leaders know how painful it is to lose a benefactor. In the early nineties, Cuba went through what was known as the Special Period after the collapse of the Soviet Union. The economy contracted 35 percent between 1989 and 1993 and oil imports decreased by 90 percent.

Food shortages were common. Some Cubans who grew up in that period, like blogger Yoani Sánchez, complain of stunted growth due to a lack of food. Cuba's economy was still struggling by the time Chávez took office in 1999, and saved the day for the Castros. 

“Venezuela threw a last-minute lifeline to the Cuban government," says Christopher Sabatini, senior director of policy for the Americas Society, based in New York. Mr. Sabatini says it’s difficult to overstate the importance that Venezuela’s troubles at home have on the recent news between Cuba and the US.