US watches as Cuba and Russia strengthen economic ties

US watches as Cuba and Russia strengthen economic ties

The last few weeks have seen marked escalations of business ties between Russia and Cuba. The US is watching this very closely. What can we expect, diplomatically and economically, as a result of these moves?

As the sun rises in Havana and the Cuban people get ready for another day, one is left wondering, what is in store for this small but geo-politically essential nation?

With many corners of the world experiencing technical revolutions, launching global trade and investment partnerships, and fomenting revolutions via social media, it seems an exciting time for humanity. However, it looks as if somebody forgot to tell the Cuban people.

With its planned economy and state controlled media, one wouldn’t blame an average Cuban for not knowing the difference between a tweet and a Twix. In fact, according to the Brookings Institute less than 5% of Cubans have access to the internet. Ignorance, in this case, is not bliss; it is crippling to the aspirations and development of a nation.

However, this is slowly changing. With the United States’ July 20 announcement that it would begin to open diplomatic relations with the Caribbean island, the Cuban people can look forward to a different life. But despite this warming of relations, Havana has continually kept old friends.

Unlike the US — who cut all diplomatic ties with Cuba, and in fact placed the country under five decades of degenerative sanctions and placed its leadership on the State departments list of foreign terrorists — Russia has maintained close diplomatic and business ties with the island.

Improving business                                                                                                                    

This thirst for Russian support and trade is only increasing. “Cuba wants Russian business to help in the economic development of the island,” stated the vice president of Cuba’s Council of Ministers, Ricardo Cabrisas.

On November 2, Cabrisas held a meeting with Deputy Russian Industry and Trade Minister Georgy Kalamanov and Russian First Deputy Minister of Economic Development Aleksey Likhachev during the Havana International Trade Fair, and moved forward on plans for Russia to invest heavily in energy and metallurgy. These investments should not only see improved services to the Cuban people but also increasing employment and prosperity.

Castro and Putin

Raúl Castro and Vladimir Putin shake on new investments

This move to involve the Russians is a strategic one for Raúl Castro, who does not want to rely heavily on US business in the much needed development of the country.

Furthermore, Cuba still has a chip on its shoulder regarding the 50 years of sanctions imposed by the US and other nations, as well as the repeated calls for the US to relinquish control of Guantanamo Bay, which appear to have fallen on deaf ears.

Cuba does not feel comfortable letting America lead it into the “new age.” Working with the Russians will give Havana much needed leverage when interacting with the Americans on the international stage in the coming years.

Furthermore, there has also been talk that Moscow is investing in naval cooperation and secret intelligence with Cuba. “We are interested in boosting cooperation in the military-navy sphere,” said Sergei Shoigu, Russia’s Defence Minister. Because Cuba is in America’s “backyard, increasing Russian intelligence involvement comes as an unwelcome development for the US.  However, the US reaction to this development must be tempered so as not to discourage further US-Cuban integration.

Playing catch-up                                                                                                                                 

It seems as if the United States’ relationship to Cuba has been reactionary in nature, especially in relation to Russia’s involvement. For example, we saw sanctions originally imposed on Cuba following closer diplomatic and military ties between Moscow and Havana.

Fast forward through 45 years of sanctions and isolation, and we see a change of tone in America’s foreign policy to Cuba following the presidential election of Putin in March of 2000, when Putin announced a renewal of bilateral ties between the two nations. Seven months later, on the 18th October, President Clinton passed the Trade Sanction Reform and Export Enhancement Act which altered regulations in regards to US trade with Cuba.

Whether there is a direct correlation between the two events is up for debate, but what we can say for certain is that Russian-Cuban relations have been a focal point for the US, with this latest move by Russia being as always closely watched as ever.

My enemy’s enemy is my friend

Leaving aside the geo-strategic interests that the Russians historically have in Cuba, the two former Soviet comrades also endeavor to support each other’s interests. Russia is still Cuba’s primary creditor, and in 2014 wrote off 90% of Cuba’s debt of about $32 billion. Both nations are also the target of US sanctions and have been vocal about the lifting of sanctions off the other.

It has also been reported that Castro has sent Cuban soldiers to support Russian efforts in Syria. Furthermore, Castro has also voiced his opposition to NATO’s plans of expansion along the Russian border.

In addition, it seems as if American interventionism has been a key component in the strengthening of business ties between Russia and its Latin American partners. Russia’s presence in Latin America is notable, with strong trade relations with fellow BRICS nation Brazil.

But one might also be inclined to ask, for how long will this partnership last? There has been speculation that for as long as Fidel Castro is alive, US-Cuban relations will remain cold. Following his death we may see a rapid escalation of diplomatic and economic ties, with Russia being left in the cold.

As the old idiom states, “necessity breeds innovation.” Havana and Moscow both have grievances against the US, and are both finding ways to innovate their trade and commerce. These next few years in Cuba’s development will be crucial.

As one of the remaining socialist time capsules left in the world, it will be interesting to see if Havana can reconcile economic transformation with its socialist ideology. Only time will tell. 

Categories: Economics, Latin America

About Author

Klisman Murati

Holding an honours degree in Human Rights & Social Anthropology, a Masters in Security Studies from the University College London and diplomas from Transparency International and the Geneva Centre for Security Policy in Outer Space Security, Klisman writes and represents GRI in the world news media. He has contributed to our understanding of terrorism, security, corruption, NATO, macroeconomics, sovereign credit risk, outer space, and energy, in places like Brazil, Cuba, Russia, EMEA region, and China. He has also represented GRI with Al Jazeera Arabic, BBC Radio, IG Group and is regularly quoted in other global publications as well as being referenced by academics and the EU Commission.