Cuba and Venezuela’s Ties of Solidarity Fray

The Wall Street Journal

The oil from Caracas that once paid for doctors from Havana is running low, imperiling an ideological union

Fidel Castro and Hugo Chávez proclaimed a decade ago that they presided over a single country, combining Cuba’s educated workforce with Venezuela’s oil wealth to challenge U.S. power across Latin America.

Now Mr. Castro is gone, three years after Mr. Chávez’s death, and the union between their two countries, while still strong on paper, is withering away fast.

Daily shipments of more than 100,000 barrels of subsidized Venezuelan oil, the lifeblood of Cuba’s economy, have dropped by more than half since 2013, according to oil traders and Cuban refinery workers. In November, Cuba had to buy oil on the open market for the first time in 12 years, because of Venezuela’s plummeting output.

Meanwhile, thousands of Cuban doctors who toiled in Venezuelan shantytowns to pay off the oil deliveries are quietly returning home, scaling back an important vestige of the popular social programs Mr. Chávez left to his now embattled successor, Nicolás Maduro. The air bridge between the two Caribbean countries is also dissolving: Cuba’s flagship airline, Cubana de Aviación, stopped regular flights to Caracas earlier this year. Charters from Caracas to Havana have scaled back too as demand slumped.

On the surface, leaders in both countries swear to an ironclad coupling, which detractors mockingly call Cubazuela.

After Mr. Castro died last month, Venezuela’s government declared three days of mourning; Mr. Maduro and a large delegation of high officials then spent several days in Cuba to pay respects. He sat to the right of Raúl Castro, Cuba’s president and the elder Mr. Castro’s successor, at the memorial ceremony in Havana, fighting back tears before his turn came to speak to the crowds.

“Raúl, count on Venezuela,” said Mr. Maduro, who as a young man underwent political training in Cuba. “We will carry on the path of victory, the path of Fidel.”

In the good times under Mr. Chávez, who cast himself as Fidel Castro’s spiritual son, Venezuela restarted and expanded the oil refinery here in Cienfuegos, making it the city’s largest employer. Venezuela built new houses and brought in new city buses. The largess helped this city partially recover from the collapse of the surrounding sugar mills and become a symbol of the economic union between the two countries.

“Deep down, we are one single government, one single country,” Mr. Chávez said during a 2007 visit to a nearby town.

Reselling subsidized oil from Venezuela on the open market earned Cuba billions of dollars, allowing the country to get back on its feet after the demise of its Cold War-era benefactor, the Soviet Union.

But all that has changed now in this port city, with its wide colonial boulevards and leafy coastal promenade. The posters and murals of Mr. Chávez hugging Mr. Castro or picturing the pair walking together through sunflower fields are now fading.

Residents say their future lies with American tourists and investors, not with Mr. Maduro.

“We are very grateful to Chávez, but we have to fend for ourselves now,” said Antonio Alborniz, a former refinery truck driver who recently switched to driving a tourist taxi. “The oil is gone.”“Deep down, we are one single government, one single country,” Mr. Chávez said during a 2007 visit to a nearby town.

Reselling subsidized oil from Venezuela on the open market earned Cuba billions of dollars, allowing the country to get back on its feet after the demise of its Cold War-era benefactor, the Soviet Union.

But all that has changed now in this port city, with its wide colonial boulevards and leafy coastal promenade. The posters and murals of Mr. Chávez hugging Mr. Castro or picturing the pair walking together through sunflower fields are now fading.

Residents say their future lies with American tourists and investors, not with Mr. Maduro.

“We are very grateful to Chávez, but we have to fend for ourselves now,” said Antonio Alborniz, a former refinery truck driver who recently switched to driving a tourist taxi. “The oil is gone.”

Now the refinery sits idle. The last Venezuelan oil tanker docked here in August, according to oil traders. The shutdown has already sharply raised the cost of living for many residents, who had relied on cheap gasoline smuggled out of the refinery to alleviate hardship.

Overall, Venezuelan exports of crude oil and refined products to Cuba, which generate most of the island’s electricity, fell to about 55,000 barrels a day this year through October from the peak of 115,000 in 2008, according to data from Petro-Logistics SA, a consulting firm that tracks tanker movements. Traders say deliveries have fallen further since, though it is unclear by how much.

Venezuela’s crude production has fallen so much that state oil company Petróleos de Venezuela SA, known as PDVSA, had to resort to buying oil abroad to meet its minimum obligations to Cuba for December and January, according to oil traders involved in the deals. After that, the Cuban government may have to source most of its crude itself.

Cuba’s foreign ministry and PDVSA didn’t reply to requests for comment.

Venezuelan officials say the Cuban government has gone through many hardships since the fall of the Soviet Union, insisting it won’t let Venezuela’s economic crisis affect the alliance.

“Fidel was very well aware of Venezuela’s current problems,” Ali Rodríguez, Venezuela’s ambassador to Havana and a former guerrilla inspired by Mr. Castro, said in an interview. “The Cuban government understands that Venezuela can no longer provide them all the things that it used to.”

As Venezuelan oil dwindles, Cuba is being forced to reduce its side of the bargain, summoning home the medical personnel who helped make Mr. Chávez popular. There were 38,300 Cuban doctors and nurses working in Venezuela at the end of May, 4,000 fewer than three years ago, according to John Kirk, a professor at Dalhousie University in Halifax, Canada, who closely tracks Cuban medical missions.

At its peak, 65,000 Cuban medical staff worked in Venezuela, according to Mr. Rodríguez, who declined to discuss the current levels.

Many of the returning doctors aren’t being replaced, and Cuban medical personnel are increasingly turning down Venezuelan postings because of spiraling violence in that country, according to interviews with half a dozen Cuban doctors who served in Venezuela. Hundreds posted in Venezuela also defected, hoping to reach the U.S.

Cuba’s exports of services, mostly medical missions, fell 15% to $470 million last year from 2013, according to government statistics.

The loss of money from reselling Venezuelan oil coupled with the shrinking medical exports are putting pressure on Cuban foreign exchange earnings at the time when some here worry that U.S. President-elect Donald Trump will scale back remittances to the island from Cuban Americans, the annual value of which is greater than what Cuba earns in exports.

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