Luxner News Inc, Stock Photos of Latin America & the Caribbean

Article Search

Passage of Dec. 2 referendum in Venezuela to keep cheap oil flowing to Cuba for years
CubaNews / December 2007

By Larry Luxner

On Dec. 2, Venezuelans will go to the polls to vote on some rather drastic changes to the nation’s constitution.

If passed as widely expected, the referendum will abolish presidential term limits, allowing President Hugo Chávez to be re-elected indefinitely (his current term ends in 2012).

They’ll also give the Chávez government total control over Venezuela’s Central Bank as well as the power to handpick vice-presidents without voter consent, further eroding democracy.

Needless to say, the referendum is being very closely watched in both Miami and Havana — and will be covered by CubaNews in a special report in the January 2008 issue.

“Obviously, the fortunes of Cuba have become extremely linked to Chávez and his Bolivarian revolution,” said Daniel Erikson, deputy director of Cuba projects at Inter-American Dialogue in Washington. “As far as the Cubans are concerned, the longer Chávez stays in power, the better. So the fact that he’s eliminating term limits and may be there for another 20 or 25 years is seen as a positive thing.”

Under an agreement between the two countries, Venezuela ships 98,000 barrels of oil to Cuba every day on preferential terms. In 2007, those oil subsidies will amount to just under $3 billion, according to a new report by the University of Miami’s Institute for Cuban and Cuban-American Studies.

On Nov. 18, Chávez announced during an OPEC summit in Saudi Arabia that Venezuela and Cuba would start production at a renovated Cienfuegos oil refinery “in coming days.”

The refinery — a joint venture between state-owned Petróleos de Venezuela SA and Cubapetroleo (CUPET) — aims to process 65,000 barrels of crude a day into refined fuels. The two countries invested $236 million in the project. In the second phase, another $1.3 billion will be invested to boost output to 100,000 barrels a day.

The refinery, completed in 1991 with an in-stalled capacity of 76,000 b/d, has sat idle for 14 years because of its reliance on outdated Soviet technology.

As Erikson says, “the Cubans have been caught with their pants down once before, relying to much on an ally” — the Soviet Union.

“Oil prices could potentially drop in the future, and Cuba is exploring its own oil reserves, which to me indicates a continued interest in achieving some energy independence from Venezuela,” he said, “because, even if Chávez wins this referendum, there are still concerns about the viability of this relationship.”

Philip Peters, vice-president of the Lexington Institute, a think tank in Arlington, Va., said “of course the Cubans are watching this closely. As long as Chávez remains in office, the Cuba-Venezuela relationship remains strong. It’s hard to imagine what a different Venezuelan president would do regarding subsidized oil for Cuba.”

Violence preceding the Dec. 2 referendum has already flared up in Caracas and several other major cities, driving the bolivar — Venezuela’s currency — to a new black-market low of 6,800 to the dollar.

“A lot of people are leaving Venezuela because they feel the country is going down the drain,” Robert Bottome, publisher of VenEconomy Weekly and an outspoken critic Chávez, told CubaNews by phone from Caracas. “It’s a terrible thing to say, but it’s true; the opportunities to invest and grow have been severely curtailed by the Chávez regime.”

Yet in Havana, top officials of the Castro regime are rooting loudly for Venezuela’s pugnacious president.

“Cuba is very, very comfortable with Chá-vez,” says Jorge Piñón, a Cuban-born energy expert with the University of Miami.

“The two countries are very close, to the point where Chávez’s personal security apparatus is Cuban, not Venezuelan. He wants to be Castro’s heir-apparent in Latin America. He even said the two countries ought to be a single nation. And I think oil and the relationship between Castro and Chávez are key in any future political transition in Cuba.” Ironically, if the referendum passes, Venezuela could end up replacing Cuba as the Western Hemisphere’s only socialist country — especially if Fidel and Rául pass from the scene and Chávez remains in power.

“A lot of the questions in Miami assume that in the next two to three years, Fidel dies and a political transition begins in Cuba,” said UM’s Piñón. “Assume it’s a pro-Western transition, and that it doesn’t agree with Chávez. Chávez holds a very important card in his hand to blackmail any future transitional government in Cuba, and that card happens to be oil. If Chávez pulls the 98,000 barrels a day, the Cuban economy would collapse.”

Luxner News Inc, PO Box 938521 - Margate, FL 33093 USA tel=301.365.1745 fax=301.365.1829 web site design washington dc