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South-South Cooperation Between Venezuela and Cuba

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South-South Cooperation Between Venezuela and Cuba South-South Cooperation between Venezuela and Cuba Carlos A. Romero (Translated by Suzanna Collerd) Universidad Central de Venezuela Abstract ALBA, the Bank of the South, PetroAmerica, PetroCaribe, and the San Jose Oil Agreement; The cooperation relationship between Venezuela It is also based on bilateral programs channeled and Cuba creates a double contradiction. On the through state institutions and excluding or one hand, there is a relationship between two minimizing the participation of multilateral peripheral countries. On the other hand, there organizations, the private sector, cooperatives, is the political, social and cultural configuration and non-government organizations (NGO). between Caracas and a country that, in and by This case is part of the Venezuelan revenue itself, represents more than just a diplomatic and dependency process, in the sense that president commercial relationship. Chavez’s administration controls oil revenues with the purpose of promoting its continental Therefore, this is not, nor can it be a ‘normal’ leadership and providing the basis for a global relationship as carried out among many recognition that oscillates between solidarity governments of the South. In particular, there and clientelism. In this way, state and non-state is a relationship where oil and revolution are actors manipulate Venezuelan aid (a geopolitical understood as independent variables to explain revenue) in the form of favors, donations, such rapprochement. Here, the author tries transfers, third-party payments, direct aid, debt to analyze how Venezuela has prioritized forgiveness, financing, and non-returnable cooperation with Cuba in the context of building investments. These actors capture the revenue, a foreign policy independent from the United accessing it through the subsidized and deferred States (US). sale of oil, investment programs with substantial Venezuelan financing, and the payment for professional services, and no longer through the Introduction traditional commercial (exchange) or economic (value added) ways.1 In the context of South-South cooperation, the relationship between Venezuela and Cuba is a special case. The purpose here is to understand Economic, Commercial and Social the extent and the intention of a relationship that Cooperation amounts to 1% of Venezuela’s gross domestic product (GDP), includes programs that add up The relationship between Venezuela and to almost US$1.5 billion in 2009, consists of 31 Cuba can be divided into two stages. The first, Cuban entities and institutions’ intervention in fundamentally bilateral, went from the arrival more than 157 bilateral projects, and bilateral of Hugo Chávez to the presidency for the first trade growth of 81% between 2008 and 2009. time in 1999 until 2004. The second goes from This is cooperation based on Venezuela’s 2004 until today, in the context of the Bolivarian regional programs such as the Bank of the Alliance for the Peoples of Our America, ALBA. 107 The Reality of Aid During the first stage, the Venezuelan interest in In late 2004, the creation of the Bolivarian Cuba was the convergence and defense of two Alternative for the Peoples of Our America similar ideological and political projects as well ALBA, known since 2009 as Bolivarian Alliance as an economic and commercial rapprochement for the Peoples of Our America – People’s to create a common identity at the regional Trade Agreement (ALBA-TCP) gave a more level. The purpose then was to circumvent the regional flavor to the relationship between US economic embargo of Cuba, reactivate and the two countries. In fact, a joint declaration grow the supply of Venezuelan oil in the island, on December 14, 2004, when the Integral help Castro’s regime to overcome a severe Cooperation Agreement Between Cuba and economic crisis, reinvigorate the global leftist Venezuela was modified and expanded, states movement, and condemn American military that “a convergence of positions at a global actions in Afghanistan and Iraq as well as the scale is sought.” A key reflection also emerges American protection of anti-Castro terrorist from this declaration: “Once consolidated the Luis Posadas Carriles. Later, there were joint Bolivarian process after the decisive victory efforts to condemn the arrest of five Cuban in the August 15, 2004 recall referendum and citizens whom American prosecutors accused the October 31, 2004 regional elections, and of being spies. given that Cuba is in a position to guarantee its own sustainable development, the cooperation From the economic and commercial point of between the Republic of Cuba and the Bolivarian view, this relationship took a fundamental turn Republic of Venezuela will be based starting with the signing of the Integral Cooperation today not only on the principles of solidarity, Agreement Between Cuba and Venezuela in which will always be present, but also on the October 2000. The purpose was to promote the exchange of goods and services to the greatest exchange of goods and services in cooperative degree possible.”2 conditions, which led Venezuela to sell at a fixed, preferential price (US$27 a barrel) 53,000 The expansion of this agreement consolidated barrels of oil to Cuba since 2002. These barrels a new phase of economic complementarities are paid in the following way: the half in 90 beyond energy cooperation and the exchange days after purchase and the rest over 25 years, of human resources. In the Agreement for the with a 2-year grace period, including the cost of Constitution of the presently called Bolivarian transportation and insurance. Alternative for the Peoples of Our America ALBA, signed by Cuba and Venezuela in 2004, In exchange, Cuba sent more than 13,000 Bolivia joined later that same year, Nicaragua Cuban workers to Venezuela, mostly workers in 2006, Dominica and Honduras in 2008, and in the health (doctors, nurses and paramedics) Antigua and Barbuda, Saint Vincent and the and sports sectors – first as a sort of barter, and Grenadines, and Ecuador in 2009. then since 2003, in payments for professional services that reached roughly US$4.4 billion This alliance allows trade of goods inside in 2007. This led to growing cooperation in member countries with no tariffs, in addition to the energy sector, massive official Cuban the Unified System for Regional Compensation participation in Venezuela’s government social (SUCRE) for foreign exchange operations missions, and subsequent bilateral promotion in between member countries, and considered the the Americas. basis for a future common monetary system. 108 Special Report on South-South Cooperation 2010 Also, the alliance promotes the creation of merchant fleet; Alba Cultural; the Bank of ALBA several ALBA ‘grand-national’ companies such and the Bank of the South, both promoted as Constructora Alba, PDVSA-Cuba S.A., the by Venezuela to create a financial integration, Alba Steel Mill project, a Cuban stock share autonomous management of foreign debt and a in TeleSUR, the Complementation in the social solidarity fund (comprised of concessional Sugar Industry Project, the Cuban Housing loans, no-interest loans, donations, humanitarian Project (PetroCasas), the bi-national Cuba- aid and non-reimbursable technical assistance). Venezuelan project for the endogenous agricultural development of Cienfuegos, the In this context, trade relations between Cuba project for a joint rail company, the project and Venezuela grew from US$388.2 million in for joint companies in the technology sector, 1998 to US$464 million in 1999, US$912 million foreign exchange financing agreements through in 2000, US$2.5 billion in 2005, US$3.2 billion Banco Industrial de Venezuela and Banco de in 2006, and to US$7.1 billion in 2007, close Comercio Exterior de Venezuela, agreements to 45% of the island’s total trade of goods and on tourism promotion and air and maritime services. In 2007, trade totaled almost US$2.7 services (including open skies status for Cuban billion in goods and US$4.4 billion in services. state airlines over Venezuela), a US$63.4 million project to lay a 1,630-kilometer long submarine In 2008, trade of goods between Cuba and cable between La Guaira (Venezuela) and Venezuela totaled about US$5.375 billion, Siboney (Cuba) currently in execution by US$4.892 billion of which were Venezuelan the Telecomunicaciones Gran Caribe, S.A exports to Cuba and US$483 million were Venezuelan imports from Cuba. Adding the Company (formed by Telecom Venezuela payment for professional services as part of and Transit of Cuba), and the joint project to the trade between the two countries, total trade build an international airport in Saint Vincent amounted to US$10.975 billion, a 35% increase and the Grenadines, for a total of more than since 2007. 26 joint companies and 190 more in their final negotiation stages. Total aid to Havana from Caracas in 2008 was about US$ 9.970 billion: US$5.6 billion In addition, there are the Caracas Energy in payments for professional services; US$2.5 Cooperation Agreement; TeleSUR; the Latin billion in subsidies for oil sold at a fixed price American Parliamentary and People’s Forum of US$27 and US$1.87 billion in other bilateral for the Defense of National Economies; cooperation projects. (Accumulated aid since PETROAlba; the Gran Nacional Energy 1999 is calculated to be about US$18 billion) Company; the ALBA Energy Council; Ports of ALBA, S.A, company created to modernize, refurbish and build ports in Venezuela and Currently, Venezuela is Cuba’s main trading Cuba; the socialist joint venture ‘Guardián partner. On December 12, 2009, in the closing act del Alba S.A.’, to make software to safeguard of the 10th Cuban-Venezuelan Intergovernmental technological sovereignty; Transalba, a Cuban- Meeting, both countries declared that they had Venezuelan logistics joint venture to supply signed 285 new commercial, economic, oil and hydrocarbons to the countries of the area and social cooperation projects that will cost more that contributes to the development of a joint than US$ 3.185 billion.
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