By Mike Jarvis, London UK
Cuba is in for another phase of severe belt-tightening as a number of factors, some beyond its control, seem to be conspiring in a perfect storm of challenges facing communist Caribbean state.
The idyllic image of Cuba; steeped in history, tropical culture and its socialist revolution is about to be tested again.
This time it’s the triple-whammy of an economic meltdown in Cuba’s main energy supplier Venezuela; a re-tightening of an economic squeeze on the island by the Donald Trump administration in the US; and the knock-on effects on global oil supplies following a major attack on Saudi Arabian oilfields.
And although the looming economic squeeze is a scenario not unfamiliar to the average Cuban, the gravity of the situation this time is serious enough for country’s president, Miguel Díaz-Canel, to warn of the possible return of large scale power outages, reduction in government services, and even rationing.
Already, reports from Havana this week tell of cutbacks to bus services in the country’s rural eastern districts, a vital agricultural hub for tobacco, sugar and other crops.
Public transportation is a vital component of Cuba’s social and economic fabric.
The attacks on Saudi Arabian oilfields and the resulting spike the price of oil on the world market will be particularly harsh on Cuba already facing an economic slowdown, despite its promising tourism sector.
Cuba retails its fuel at the second-lowest price in the world, next only to Venezuela, largely due to massive state subsidies and cheap oil from its regional socialist partner.
Whether either one can continue with this policy is left to be seen given their current individual challenges.
Cuba relies heavily on Venezuela for fuel supplies at very concessionary rates.
Venezuela has the world’s largest oil reserves but in recent years it has been unable to fully exploit its potential due to internal political turmoil. Saudi Arabia supplies more than 10 per cent of global crude and is the world's largest oil exporter.
With fears that the developing crisis in the Middle East could escalate following the attacks on Saudi Arabia, the impact globally on oil prices will be severe. But for Cuba, it could be crippling.
The US has fingered Iran, an ally of Cuba, as a likely perpetrator of the attacks. Iran has denied the accusations.
Over the past six decades, Cuba has endured a trade embargo imposed by the United States.
Recent relaxations under the Obama administration have been unravelled by President Trump putting further pressure on the country’s economy.
Prior to that, the collapse of Cuba’s main ideological and economic benefactor the Soviet Union in 1991 had sent the communist Caribbean island into an economic tailspin.
The downward spiral was arrested with a respite in the form of petroleum largesse from then-Venezuelan president Hugo Chavez’s socialist regime.
It gave Cuba the breathing space to secure vital energy supplies, look into its potential in the lucrative oil sector, and importantly, devote much attention to its tourism industry.
Once heavily America-focused in the pre-revolutionary days, Cuba has been widening its tourism appeal to a global market with much success.
But once again, the country is at an economic crossroad.
With Iran and Venezuela, two of Cuba’s main allies firmly in the crosshairs of the Trump administration, and with President Trump already adopting a more aggressive stance towards Cuba (only 90 miles from Florida), the coming period will be particularly testing for the communist island.
What lies ahead will be the biggest challenge to date for President Miguel Díaz-Canel, the country’s first ‘post-Castros’ leader, who took office just under a year and a half ago.
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