International Relations

Venezuela, Cuba’s patron, is supplying its armed forces with new weaponry. Will this be the advent of a modernization of Cuba’s own armed forces with the financial support and direct supply from Venezuela?

Via Bloomberg:

Venezuelan President Hugo Chavez will order $2 billion of Russian weapons, including submarines, during a visit to Moscow this month, Kommersant reported, without saying where it got the information. Venezuela, which has bought $4 billion of Russian arms in the last three years, will order four Project 636 diesel subs, Mi-28 combat helicopters and airplanes made by Ilyushin Co., Kommersant said.

Chavez is also purchasing arms from China.

Via Malaysia Sun:

Venezuelan President Hugo Chavez has contracted to buy Chinese military training planes, expanding recent arms purchases and cementing ties. Chavez has detailed the order for Chinese K-8 planes, calling them ‘excellent planes for the boys.’ Chavez has said he will continue working on the issue of military equipment through Chinese sources, even though the US has accused him of launching an arms race. Washington has accused Chavez of carrying out an arms spending spree that could destabilize the region.

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Via Bloomberg:

Venezuela supports the entry of Brazil and Cuba into the Organization of Petroleum Exporting Countries as their exploration programs are likely to make them exporters, Venezuelan President Hugo Chavez said.

Brazilian President Luiz Inacio Lula said he wanted Brazil to join the group, less than a year after Chavez first joked about the possibility in the wake of an oil find that may be the biggest in the Americas since 1976. State oil company Petroleos de Venezuela SA agreed a year ago to explore blocks off Cuba.

Chavez, a long-time advocate of higher oil prices, said Venezuela shouldn’t produce too much oil now as it must safeguard resources for the future. He doesn’t plan to reduce oil sales to the U.S., he said. Venezuela sold the least oil in five years to the world’s largest consumer in March.

Abdalla El-Badri, OPEC’s secretary general, will visit Venezuela to discuss “a variety of topics,” Chavez said, without elaborating further.

El Badri will discuss Venezuela’s oil output in a visit to the country, Dow Jones Newswires reported April 21, citing Energy and Oil Minister Rafael Ramirez. The topic is a source of contention, as OPEC uses estimates from outside consultants to gauge its members’ production, while Venezuela wants to report its own number.

OPEC published its individual members’ output targets on the Internet in September and then removed them. Venezuela says it produces 3.3 million barrels a day of oil and condensate. Bloomberg estimates crude output at 2.34 million.

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Fidel Castro in his May 4 op-ed voiced concern on the reassembly of the US 4th Fleet, which was announced in early April.   Today, the head of USSOUTHCOMM assured that the fleet did not pose a regional threat.

Via AFP:

The commander of US Southern Command, Admiral James Stavridis, sought Thursday to reassure Latin American military chiefs that reinstating the US Fourth Fleet in the region posed them no threat.

“It is not an offensive force in any way,” he told reporters after a meeting of military chiefs from Argentina, Brazil, Bolivia, Chile, Paraguay and Uruguay in Brasilia.

“The IV Fleet’s entire purpose is cooperation, friendship, response to natural disaster, missions of peace and, yes, there will be counter narcotics work, as is traditional.”

The Navy’s announcement last month that it was reviving the fleet after a nearly 60-year slumber, to direct increasing American naval presence in the Caribbean and Latin America, has provoked concern among leaders in the region.

Cuba’s former leader Fidel Castro said it signaled a return to gunboat diplomacy, while Bolivian President Evo Morales called it “the Fourth Fleet of intervention.”

The Fourth Fleet was a major US navy command during World War II when it was used to enforce blockades and protect against enemy submarines and raiders, but was eliminated in the 1950s.

From July 1 it will take operational responsibility over navy ships assigned to the region from the US Atlantic and Pacific Fleets, based out of Florida.

Stavridis said the fleet’s objectives included training exercises and humanitarian relief, adding: “It is strictly for planning and training.

“When the IV Fleet executes one of the missions that I mention, it will do so with ships that are given to it by the US Navy, for that mission. There is no aircraft carrier in the IV Fleet.”

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Via The Miami Herald:

The top U.S. diplomat in Cuba, Michael Parmly, will be leaving his post and will be replaced by a top official at the State Department’s Bureau of Democracy, Human Rights and Labor, the Department confirmed Thursday.

Jonathan D. Farrar, now acting assistant secretary at the bureau, has broad experience in Latin America, with previous postings at the U.S. embassies in Mexico, Belize, Paraguay and Uruguay.

State Department spokeswoman Heidi Bronke confirmed Farrar will succeed Parmly this summer. There was no immediate word on Parmly’s next assignment after completing a normal three-year posting in Havana.

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Via ACN:
Cuban Foreign Investment and Economic Collaboration Minister Marta Lomas and Honduran Technical Cooperation Secretariat representative Karen Zelaya lead the meeting of the First Bi-national Joint Commission being held in Havana today and tomorrow.  The aim of the meeting is to coordinate bilateral relations between nations and fulfillment of the work program agreed between Havana and Tegucigalpa in 2007.

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Via Mehr News Agency:

The Islamic Republic of Iran’s Shipping Lines (IRISL) plans to initiate a weekly shipping line to Venezuelan and Cuban ports, the IRISL Europe line department Manager, Saeed Meghdadi said here on Wednesday. “This line was initiated in accordance to the general policies of the Islamic Republic of Iran for supporting and expanding non-oil exports and in response to the numerous requests made by merchants,” he explained, Mehr reported. The first shipment in this line will be from Bandar Abbas Port to Venezuela and Cuba on May 16. Seven containers will shipped from Iran’s Bandar Abbas via Malta (Malta), Barcelona (Spain), to Havana (Cuba) and Puerto Cabello (Venezuela).

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Via CanaNews:

Cuba will provide assistance to Jamaica in developing its agricultural sector, according to an agreement signed in Havana as Prime Minister Bruce Golding wraps up a three-day official visit.

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Stratfor’s Global Market Brief assesses Cuba’s future economic reforms, which will be slow paced.

Some snippets of the brief:

Meanwhile, the Cuban economy faces significant problems. Its black market is growing significantly. Inequality is on the rise, along with corruption and crime. Its agricultural output is in decline and its industry inefficient. Though Cuba is unlikely to address these problems by embarking upon an openly free-market, capitalist course, it is no secret that Raul has been looking to China and Vietnam as candidates for economic emulation.

Raul Castro clearly would prefer to model any economic reforms on China, which has maintained state control along with its rapid gross domestic product growth. China is approximately 86 times larger in population than Cuba, but with a much larger proportional rural population — something that helped fuel China’s industrialization. In contrast, Cuba’s economy is more similar to those of the former Eastern Bloc nations, which experienced economic havoc in the 1990s after moving quickly from command-and-control economies toward liberalization.

To avoid such an outcome, Cuba will proceed slowly. Raul cannot make radical changes, and he knows it. Drastic changes reinventing Cuba’s capital structure could prove disruptive, possibly even undermining the island nation’s military. While he must implement reforms to maintain economic growth and prevent Cuba’s standard of living from worsening, continued assistance from Venezuela and China — Cuba’s two largest trading partners — will allow Raul and whoever takes his place to proceed with reforms at a slow pace for quite some time.

[…]

Cuban market reforms similarly could pave the way for significant foreign investment in the agriculture, service and technology sectors. Raul Castro is less opposed to ethanol than his predecessor was, and Cuba has the capacity to manufacture as much as 3.2 billion gallons of ethanol annually from its sugar crop. This could serve as a huge source of capital, particularly as demand for the fuel rises worldwide. Cuba’s well-educated population also could provide an ideal labor pool for outsourcing in a variety of areas in the service sector, as well as in technology and biotechnology firms.

For any real economic takeoff to occur, however, Cuba’s leaders will have to promote an entrepreneurial ethos among its people and businesses. (Such an ethos already exists in the black market.) Cuba will have to invent a business culture mostly from scratch, though it already has instituted programs that support (albeit heavily taxed) small businesses that serve the tourist industry. The regime also will have to balance any economic reforms with its propaganda of economic egalitarianism, though this already is being undermined by rising inequality. A successful model for maintaining communist rhetoric in support of the party while simultaneously pushing through capitalist reforms exists in China, and Cuba has been watching.

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