Tuesday, November 27, 2018

Cuba’s Losing Gamble on a Barter Trade Relationship With Venezuela

Professor emeritus at Harvard University, Jorge Dominguez most recently held the position of Antonio Madero Professor for the Study of Mexico. Focused on researching Latin American domestic and international politics, Jorge Dominguez co-edited The Cuban Economy in a New Era: An Agenda for Change toward Durable Development (David Rockefeller Center for Latin American Studies, Series on Latin American Studies 33).

In a recent Readara interview, Dr. Domínguez spoke of the background of the book as being a political situation that evolved when Fidel Castro became extremely sick in 2006 and his brother Raul Castro took on a position as acting president. With Fidel remaining in poor health until his death a decade later, Raul Castro formally became president in early 2008. 

Unfortunately, the brother inherited what Dr. Domínguez describes as Fidel Castro’s “last gambit in economic policy,” involving a close “solidarity relationship” alliance with Hugo Chavez, president of Venezuela at that time. 

The foundation of this was barter trade, which relies on goods and services being exchanged, rather than cash instruments. Venezuela provided petroleum to Cuba at a major discount, while Cuba provided services, particularly health care personnel. This created a boom in the Cuban economy from 2002 to 2007, but ultimately succumbed to a worldwide petroleum price collapse, as the international financial crisis hit. Raul Castro took the reins at exactly the moment that Cuba was bearing the full weight of this economic uncertainty.