CUBA: South-South Diplomacy Props Up Economic Modernisation

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Jun 13 2011 (IPS) - The diplomatic offensive undertaken by Cuba in recent weeks is propping up the most important medium-term development programmes implemented as part of what the Raúl Castro government describes as the “updating” of the economic system without abandoning socialism.

Within a few days of each other, former Brazilian President Luiz Inacio Lula da Silva (2003-2011), Chinese Vice President Xi Jinping – likely successor to the current Chinese president – and Venezuelan President Hugo Chávez passed through Havana, the latter arriving Jun. 8 to review with his hosts the progress of strategic joint projects.

All three countries support major Cuban economic projects, such as the Cienfuegos and Mariel development zones, 254 and 45 km from Havana, respectively, whose success depends on the impact of structural reforms passed in April for bolstering the efficiency of the state business system.

In Cienfuegos, Venezuelan and Chinese investment comes together in the oil industry. The refinery in that province, remodelled with help from Caracas, will be able to increase production from 65,000 to 150,000 barrels a day, via a multimillion dollar financial injection from Beijing. The plans include a liquefied gas plant and a 320 km gas pipeline network.

Researchers lend particular importance to investment in the Cienfuegos petrochemical industrial complex, which includes the expansion of the refinery, the modernisation of that city’s port, and other projects. In December, the first 373 technicians will graduate and occupy jobs in the complex.

“The impact will be significant on employment, on the rest of the national industry, and on exports, principally to the Caribbean region,” economist Pavel Vidal commented. In his opinion, these investments and others are fundamental to the five percent GDP growth anticipated for the 2011-2015 period.

Other agreements cover the construction of a refinery in Matanzas, about 100 km from Havana, expansion of the city’s port storage capacity, and the setting into operation of the oil pipeline that joins it with Cienfuegos.

The largest project in the telecommunications area is the laying of an underwater cable from Venezuela to the eastern Cuban city of Santiago de Cuba, which according to Venezuelan sources could go into operation in July. China’s participation is anticipated in this sector for improving services through that inter-ocean connection.

Chávez arrived in Cuba the day after the end of the visit by the Chinese vice president, who continued his Latin America tour via Uruguay and Chile. It was the first visit to Havana this year by the Venezuelan leader, following one in November, when he and his host, President Raúl Castro, extended a comprehensive bilateral cooperation agreement that turned 10 years old in 2010.

Castro picked precisely that celebration to announce the holding of the Sixth Congress of the Communist Party of Cuba (PCC) and invite the Cuban population to analyse, in widely organised debates, the draft economic and social policy guidelines, which were finally approved by the Apr. 16-19 congress.

The introduction to the guidelines document states that beginning in 2004, new possibilities were opened to Cuba for international integration in the framework of the Bolivarian Alliance for the Peoples of Our America (ALBA), a bloc to which Cuba belongs, along with Venezuela, Bolivia, Nicaragua, Ecuador, Dominica, St. Vincent and the Grenadines and Antigua and Barbuda.

Recent reports from the bloc quoted by the Cuban media said the combined international reserves of ALBA members were in excess of 52 billion dollars, and their combined GDP amounted to 465 billion dollars. From the bloc’s foundation to date, more than 22 billion dollars has flowed among the eight member states (Honduras withdrew after the 2009 coup d’état that overthrew president Manuel Zelaya).

In the last six or seven years, trade and financial relations also have increased “substantially” with China, Vietnam, Russia, Angola, Brazil and Algeria.

The Chinese vice president, who met Jun. 5 with Castro, signed 13 agreements and letters of intent in the areas of finance, technology, oil and informatics and communications.

China is now Cuba’s No. 2 economic and trade partner, after Venezuela. Bilateral trade grew from 800 million dollars in 2006 to 1.8 billion in 2010.

The Asian giant principally buys from Cuba sugar, rum and biotechnology products, while Cuba imports Chinese cars, buses and electronic items.

With a much smaller flow of trade, of no more than 400 million dollars in 2009, Brazil and Cuba nevertheless have important relations in fields such as biotechnology, including the joint production of vaccines, while maintaining other important cooperation initiatives and financing for infrastructure projects in Cuba.

On his first visit to Cuba as former president, Lula was accompanied by Castro on a Jun. 2 tour of the expansion and modernisation works underway in the port of Mariel, carried out with financing from Brazil. The remodelling will equip the port terminal to receive ships with 15-metre drafts.

According to academic reports, Brazil’s investment totals some 300 million dollars for now. The projects in Mariel include the construction of a large infrastructure of highways and modern rail lines, as well as the restoration of a polytechnic institute for training young people in the specialties that this economic zone will require.