THE CARIBBEAN

CUBA’S ALLIES PLEDGE TO ASSIST THE COUNTRY END ITS ECONOMIC CRISIS

CUBA’S ALLIES PLEDGE TO ASSIST THE COUNTRY END ITS ECONOMIC CRISIS
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Avellon Williams

HAVANA, CUBA- In a rare trip outside Cuba last week, Cuban President Miguel Diaz-Canel announced that China, Russia, Algeria, and Turkey had agreed to restructure Cuba’s debt, supply new trade and investment financing, and ease an energy crisis.

President Miguel Diaz-Canel /Image, AA/

It would be greatly appreciated if any assistance could be provided to Cuba during this time of crisis. The country has a long way to go in recovering from the unilateral drop in output caused by the Coronavirus pandemic, including power outages and shortages of food and medicine.

In recent years, Cuba’s debt to business partners and suppliers has ballooned, leading some to refuse to do business with Cuba unless it is in cash, according to foreign business and diplomatic sources.

Cuba’s current foreign debt is classified as a state secret. There was $19.6 billion in foreign debt owed by the Caribbean island nation in 2019 before the pandemic.

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In an attempt to drum up financial support from key foreign allies, Diaz-Canel visited Russia, China, Algeria, and Turkey last week.

“We agreed to restructure the debt we had with those countries, which leaves us with payment facilities to move forward,” Diaz-Canel said on state-run TV.

Cuba and the four countries did not provide details on the debt restructuring.

Former Cuban central bank economist Pavel Vidal, based in Colombia, was skeptical the new deals would be a silver bullet, pointing to Cuba’s unwillingness to implement promised market reforms.

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“Diaz-Canel’s international tour tried to unblock financial and commercial flows based on political agreements and blaming everything on U.S. sanctions and the pandemic,” Vidal said.

“Confidence will continue to be limited by the mistrust that committing international resources naturally generates in an economy that shows no signs of being well managed and with dubious future prospects.”

There is little Cuba can do but ask for help from friends.

Few countries in the world are not members of multilateral lending organizations like the International Monetary Fund or World Bank, where many nations are seeking assistance after a pandemic.

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In recent years, some modest changes have been made – such as legalizing small and medium-sized businesses and giving state companies greater autonomy.

Analysts say potential lenders are spooked by a reluctance to embrace more ambitious market reforms.

To emerge from the crisis, blackouts must be eliminated and fuel supplies must be increased.

Algeria and Russia have agreed to provide some regular oil supplies above the reduced amounts arriving from Venezuela, Diaz-Canel said on Sunday.

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A deal to repair decrepit power plants and finance wind and solar energy development was in the works, he said.

The deals did not alter the big picture, according to Jorge Pinon of the University of Texas at Austin Energy Institute.

“There is no short-term solution to Cuba’s electric power sector challenges; the system is old, tired, and broken. The problems are structural which requires two things that Cuba does not have: time and money,” he said.

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Avellon Williams

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