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    Venezuelan oil might be behind Cuba’s pivot to the U.S.

    Venezuelan oil might be behind Cuba’s pivot to the U.S.
    12/18/2014 8:44 PM 12/18/2014 11:05 PM

    After 53 years of acrimony, a motivating factor in Cuba striking a
    historic deal with the United States to renew diplomatic relations might
    have been Venezuelan oil.

    Both sides, of course, were eager to see their prisoners released —
    USAID contractor Alan Gross and a CIA agent in the U.S. case and the
    three Cuban spies that Cuba wanted freed. But analysts say there were
    also other factors that pushed the two countries toward their surprise

    Venezuela currently ships 100,000 barrels of subsidized oil to Cuba
    daily and it has been a lifeline for Cuba. In exchange, Venezuela
    receives thousands of doctors, teachers and some military advisers.

    But with falling oil prices eating into Venezuelan revenue, high
    inflation, food shortages and a newly minted law from Washington
    sanctioning Venezuelan officials who engaged in human rights abuses,
    things are not going well for Cuba’s ideological soul mate.

    It’s not so much a question of Venezuela not wanting to help Cuba but
    more of how long it will have the capacity to continue.

    “Given the economic disaster in Venezuela today any rational person
    dependent on Venezuelan financial support would have to be looking at
    other options,” said Cynthia Arnson, director of the Latin American
    program at the Woodrow Wilson Internatonal Center.

    Cuba needs 150,000 barrels of oil daily and produces 50,000 barrels
    itself. The subsidized Venezuelan oil adds up to around $3 billion a
    year, said Jorge Piñon, who heads the Latin American energy program at
    the University of Texas at Austin.

    “I think there will come a time when Venezuela says it can no longer
    support PetroCaribe,” he said. PetroCaribe is Venezuela’s alliance with
    Caribbean states that allows them to get oil under highly favorable
    terms. “And I think President [Nicolás] Maduro will write off everyone
    else before Cuba.”

    But with the Venezuelan economy on the ropes, he said, there is a
    possibility of an economic collapse and a change in government that
    might not be as friendly with Cuba.

    The problem, said Piñon, is Cuba “has all of its eggs in one basket and
    that is Venezuela. Cuba faces the same risk today that it faced after
    the collapse of the Soviet Union in the early 1990s when it had all its
    eggs in the Soviet basket, he said.

    “The Cubans learned lessons during the special period [a time of extreme
    austerity in Cuba after the Soviet collapse],” Piñon said.

    So it doesn’t surprise him that Cuba is interested in a more robust
    economic relationship with the U.S. “To me, the relationship with the
    United States is an insurance policy against a potential Venezuelan
    collapse,” he said.

    Other oil producers that Cuba is friendly with — Russia, Brazil, Angola
    and Algeria — also don’t have the financial capability to give Cuba
    subsidized oil, he said.

    “For Cuba, the only possible short-term replacement for Venezuela might
    be increased remittances and travel from the U.S.,” said Peter Hakim,
    president emeritus and senior fellow at the Inter-American Dialogue.

    Among the steps outlined Wednesday by President Barack Obama to open a
    new era of relations with Cuba are increasing the level of quarterly
    remittances that might be sent to Cuban nationals from $500 to $2,000 as
    well as new rules that should make it easier for more Americans to
    travel to Cuba.

    Another potential solution is for Cuba to discover major new oil finds.
    But foreign oil companies that have drilled off Cuba’s north coast in
    recent years have been disappointed.

    There is another area, however, where there are potential deep-water oil
    reserves — the Eastern Gap, an area far off the coast of Naples in the
    Gulf of Mexico.

    In its announcement of its new Cuba policy, the White House said it was
    “prepared to invite the governments of Cuba and Mexico to discuss shared
    maritime boundaries in the Gulf of Mexico.”

    “Mexico and the United States are getting close to working in the
    Eastern Gap,” Piñon said.

    While there’s an understanding that all three countries share the
    Eastern Gap, which is in international waters, the boundaries for each
    country still haven’t been delimited.

    Even though its friends are having their own economic woes and economic
    growth in Cuba is estimated to come in at an anemic 1.3 percent this
    year, Pedro Freyre, an international lawyer at Akerman and an expert on
    the embargo, said he is isn’t convinced that Cuba’s ailing economy
    played into the timing of the agreement between the U.S. and Cuba.

    “It is true that Venezuela is really up against it and the wheels are
    coming off,” said Freyre, “but the Cubans have long planned for an
    economy without the United States. The U.S. as a replacement for
    possible lost economic ties with Venezuela? That’s not the way they think.”

    For him, the timing of the move to renew diplomatic relations is a “tale
    of two lame-duck legacies” — that of Obama as he finishes his second
    term and of Cuban leader Raúl Castro who has said he wants to retire in

    “Since he took over from Fidel, Raúl has said he wants to mend fences
    with the United States but no one believed him,” Freyre said. And Obama
    had long said he wanted to take major steps to improve relations with
    Cuba. Gross’ continued imprisonment had become a roadblock to the process.

    When secret high-level negotiations between Cuba and the United States
    began 18 months ago, freeing Alan Gross was the United States’ primary
    goal, said Hakim.

    “Initially his imprisonment was an obstacle to improving relations with
    Cuba but as the talks progressed, he became a vehicle that allowed this
    agreement to happen,” Hakim said.

    Another reason why the announcement might have come at this moment in
    time is because the stars lined up correctly — the mid-term elections
    were over, the new Congress has yet to be seated and it’s still a few
    months before “presidential politics overwhelm the Washington
    decision-making process,” said Hakim.

    With the Summit of the Americas in April, the Obama administration
    wanted to show a “quantum change’’ in U.S. Cuba policy, said Peter
    Kornbluh, director of the Cuba Documentation Project at the National
    Security Archive. The U.S. has been under fire around the hemisphere for
    its policy of isolating Cuba.

    The administration also might have wanted to move forward now to get out
    in front of anything the new Congress might do on immigration reform.
    The Republicans will control 54 of 100 seats in the Senate next year and
    hold 247 of 435 seats in the House.

    In previous discussions about immigration reform, the Cuban Adjustment
    Act, which allows Cubans who reach U.S. soil to become paroled into the
    United States and then permanent residents a year later, hasn’t been on
    the table.

    Now the context is different, but Freyre sees no indication it will be
    added to whatever immigration legislation emerges. Some members of the
    South Florida delegation have talked about tweaking the act so that
    Cubans who become adjusted can’t return to Cuba on trips for a set
    period of time but they want to keep it in place.

    “It would be horrendously unpopular in Miami to touch it,” Freyre said.

    Hakim also thinks a change is unlikely: “There may be some in the
    administration that want to see a change in Cuban immigration policy but
    right now it’s a hotter issue than the embargo.”

    Miami Herald Staff Writer Jim Wyss contributed to this report.

    Source: Venezuelan oil might be behind Cuba’s pivot to the U.S. | The
    Miami Herald –