18 September 2018

As Venezuelans starve, Maduro gives oil away to Cuba


While Venezuelans live with an unprecedented and recurring shortage of food and medicines, and an economic crisis punctuated by the highest inflation in the world and the lowest wages in the region, President Maduro continues to send millions of barrels of subsidised crude oil to Cuba.

Venezuelan oil production is plummeting. The government lacks the money to buy basic things like food, medicine or consumer goods, nor does it have the money to pay its debts. In the only official foreign exchange market, Dicom, only 20 million dollars have been traded in the first half of 2018, while in 2002, Venezuela traded 80 million dollars per day.

According to OPEC, in August oil production in Venezuela fell to an average of 1.23 million barrels per day (mbd), 2.8% less than in July, its lowest figure since the late 1980s. In addition, the country is about to close three of its largest refineries due to shortages of crude oil and personnel. This would have been an unimaginable situation two decades ago when the state-owned oil company and bedrock of the nation’s economy, PDVSA ,was the envy of the region and rated as the best in Latin America.

While this is happening, the Minister of Energy and Petroleum, Manuel Quevedo, promises the impossible. During an OPEC meeting, he said that before December PDVSA would meet the goal set by Maduro of producing one million more barrels of oil a day.

This will be a tall order, to say the least. In July, economist Ricardo Hausmann, director of the Center for International Development at Harvard University, said  that “GDP has fallen 50% and that is because imports have fallen more than 80% and private imports have fallen more than 90%”.

In spite of this, the government will not sacrifice oil subsidies to Cuba due to its commitment to the socialist alliance. According to a Reuters report, PDVSA has resumed supplying oil to the island; an amount that this year has totalled 11.74 million barrels – about 49,000 a day. What’s more, between June and August this reached 4.19 million barrels.

But the question many still ask is: why? After the fall of the Soviet Union in the 90’s, Cuba’s socialist system experienced a huge crisis, which had an immediate and devastating effect on the island’s social, political and economic life. With the arrival of Hugo Chavez to power in Venezuela, Cuba has depended financially on its South American ally, which has covered up to 70% of its fuel needs for years.

In exchange, the Castro regime has not only provided medicine and education to Venezuela but has also offered the experience of Cuban intelligence that helped keep both Chavez and now Maduro in power.

Today, Cuba is the backbone of the Venezuelan regime. Havana is providing Maduro with the instruments of repression and the intelligence apparatus that allows him to remain in power despite the storm of opposition he faces. According to documents from the US State Department and Stratfor — a private intelligence agency — published by WikiLeaks,, Chavez initiated the cooperation program with Cuba.

The deal was that Caracas used oil to pay for the services of the tens of thousands of Cuban medical personnel assigned to work in Venezuela. But the program, which at one point cost Venezuela more than $5 billion per year, also paid for Cuban assistance with intelligence and national security issues.

Venezuelan intelligence received a strong boost following the alliance between Chávez and Cuba. That is why the strongman was indebted to the Castros. His regime could more easily detect plots and snoop on the opposition thanks to the large number of Cubans involved in intelligence-gathering.

Both Maduro and his allies realized that SEBIN — the Venezuelan intelligence service — would never have been so effective if it had not been for the Cubans. If the island at any time decides to withdraw its cooperation, Maduro would have to quickly develop an intelligence capacity. Otherwise, he would be in trouble, and that’s a risk that the leader is not willing to take.

Raul Castro, meanwhile, knows that his plans for Venezuela are extremely unstable. For example, it is no longer feasible to sacrifice Maduro and put someone like Tareck El Aissami, Diosdado Cabello or any other Chavista henchman in his place. The time to do so expired when they began to massacre protesters in the streets.

For Cuba, the fall of Maduro would represent the largest blow to their aim of extending socialism in Latin America. For Maduro, Cuba is one of the few backers holding back the abrupt collapse of his regime and he will do whatever it takes to keep it that way, even if he has to starve his people to death for it.

Jorge C Carrasco is a Cuban freelance journalist.