Technically, the ideological friendship between Russia and Cuba ended with the collapse of the Soviet Union in 1991. But Cuba’s need for foreign investment and Russia’s oil interests have renewed and diversified relations between the Cold War allies. More recently, Vladimir Putin’s preference for Trump over other US presidents is also pivotal to the oil diplomacy between Russia and Cuba. Given the ‘America First’ and isolationist stance of the US administration, the door has opened for Russia to advance its geostrategic interests south of the US border.
The Americas has become a region of economic significance for Russia in recent years. In countries such as Cuba, Mexico, Venezuela, Brazil, and Argentina, state-owned Russian energy companies have attracted business and developed its influence in the region. This growing influence has been assisted by Trump’s hostile ‘America First’ rhetoric and economic nationalist stance, fuelling anti-American sentiment in Latin America.
Indeed, the reluctance of the US to economically engage with Cuba and Venezuela has opened the door for Russia to provide financial assistance and gain strategic leverage. As the Venezuelan economy has been damaged by US sanctions and regional isolation more broadly, Russia’s increasing oil investment is providing the Maduro regime with crucial resources. The Kremlin has also lent billions of money to Venezuela: in November, Russia agreed to restructure $3.15 billion of debt payments that Venezuela owes.
But it is Russia’s historic economic ties with its old friend Cuba which are seminal to its renewed influence in the region. During the Cold War, the Soviet Union subsidised Fidel Castro’s regime as a means of having a resilient ideological ally in close geographical proximity to the United States. But the collapse of the bipolar world order and the burden of the US trade embargo impoverished Cuban society and isolated the communist country. However, in 2018, a resurgent ‘state capitalist’ Russia is proving a timely amigo for the island’s political leadership.
Just last month in La Havana, Cuban leader Raul Castro met with Igor Sechin, head of the Russian state-owned oil company Rosneft. The two discussed the prospect of an energy agreement as Rosneft looks to expand its activities in Cuba. The company, which has already benefited from the economic vacuum in Venezuela, commenced shipments of oil to the Caribbean island in May 2017.
In the latest developments, Rosneft aims to inaugurate joint production projects with the Cuban oil industry and the modernisation of oil refinery Cienfuegos. Amid decreasing shipments of cheap oil from Venezuela, the enhancement of Cuba’s oil capacity is pivotal and will provide essential capital for the government. Rosneft’s Cuba deal has already been valued at $105 million for approximately 1,865,000 barrels.
This comes as Russian exports to Cuba increased by eighty-one percent last year, while the state-owed Russian Railway (RZD) is negotiating the construction of a high-speed railway between Havana and the coastal town of Varadero. The Cuban-Russian trade diplomacy was also evident in Vladimir Putin’s Christmas and New Year’s message to Raul Castro.
It is important to emphasise the significance of Russia for the Castro government. Realising that the Soviet model of a centrally planned economy was no longer sustainable for Cuba’s social and economic stagnation, Raul Castro implemented reforms to give a degree of openness to the economy and attract foreign investors. In 2017, Cuba received over $2 billion in investment which its leaders claim is necessary to substantially grow a stagnant economy. But much foreign investment in Cuba is with firms closely affiliated to the country’s military and political leadership, as opposed to private businesses. This is why the strengthening of Russian oil investment in Cuba holds such political weight; providing the elite with vital capital in order to avoid an economic meltdown that could topple their power.
The recent economic openings for Russia in Cuba cannot be isolated from the politics north of the Rio Grande. When Russia supported the election of Donald Trump (and Trump claimed to get along ”very, very well” with the Kremlin chief) very few had Cuba in mind. But the president’s ‘America First’ stance has alienated its southern neighbours, allowing Russia to gain strategic ground in the Americas through economic pursuits.
In November, the White House imposed sanctions affecting trade and travel to Cuba. In what was a de facto denouncement of Obama’s détente with the island, Trump’s Cuba stance has obstructed many American businesses seeking opportunities in Cuba, while simultaneously depriving Cuban partners of capital from the US.
Throughout history, Russia has always been a great power and it is no secret that Vladimir Putin views his country’s destiny in these terms. In order to enhance its global image, Moscow vows to sustain and deepen the multipolar world order while playing a central role in it. A significant factor in the emergence of global multipolarity has been the relative decline of US power and Western values, and the Americas currently provide the opportunity for Russia to undermine these values. In countries like Cuba and Venezuela, Russian financial support does not only expand its commercial interests, it also sustains regimes that do not conform to Western democracy and neoliberalism. The isolationism of the US lends itself to Russian opportunism – in its own backyard.