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12/12/13 - Miami Herald - Obama's gesture trumps Putin's money in Cuba 

Are the 1950s coming back? The United States and Russia appear to be vying
for influence on Cuba again, one with a handshake and the other with money.

The White House says President Obama's handshake with Cuban counterpart
Raul Castro at Nelson Mandela's funeral was not planned and carried no
political meaning. Be that as it may, analysts speculated about its
implications, and Sen. John McCain went so far as to compare it to World
War II-era British Prime Minister Neville Chamberlain shaking hands with
Hitler. Bearing out the theory that the leader of the free world greeting a
dictator is great publicity for the latter, Granma, the Cuban Communist
Party's newspaper, ran a photo of the handshake and pointed out that it was
a historic first.

Accidents like this don't just happen. Many remembered Obama's remarks at a
Florida fundraiser in November, where he suggested revising the 53-year-old
U.S. embargo against Cuba. For many Cubans, Obama's attitude, and the
handshake, spell hope that the two countries will cease hostilities, ease
travel restrictions and start trading.

By contrast, Granma had nothing to say about another momentous event: the
debt deal Cuba clinched with Russia less than a week before the famous
handshake. It was, on paper, the biggest debt write-off in Russian history.
President Vladimir Putin's government agreed to reduce Cuba's debt to $3.2
billion from $32 billion, payable in equal installments over the next 10
years.

Only $1 billion of Cuba's debt to Russia was actually denominated in
dollars. The rest was in two dead currencies: 10.3 billion Soviet rubles
and 10.3 billion so-called transfer rubles, a payment vehicle used by the
Communist bloc before it fell apart in the late 1980s. Putting a value on
these amounts is difficult: By the arbitrary benchmarks used in Soviet
times, Cuba's debt would amount to almost half a trillion dollars.

Such absurd numbers give an idea of how deeply the Soviet Union was
involved in maintaining Communist Cuba's livelihood in the face of a
hostile United States. Until 1988, 85 percent of Cuba's two-way trade was
with the Soviet Union. Soviet dissidents used to decry the exchange of
Russian oil for Cuban cane sugar and the green, flavorless oranges that
filled Soviet groceries.

With the Soviet Union's collapse, Cuba's economy took a huge hit. Trade
with Russia went from $9 billion in 1990 to $506 million in 1994. Cuba has
been struggling to restructure its foreign debt, to Russia and other
countries, ever since. The $32 billion valuation of what Castro's regime
owed Russia is just as meaningless as $500 billion would be. Cuba borrowed
in a different world, and the Soviet Union never really expected to get the
money back.

Still, the debt relief is a major breakthrough. The mountain of Soviet-era
debt is gone, and Russia is promising help with restructuring Cuba's $6
billion in obligations to the Paris club of creditor nations. For a country
that earns hard-currency revenue of only about $18 billion a year, much of
it from tourism, this is a big deal.

Putin's interest in maintaining relations with Cuba illustrates the island
nation's outsized place in the Russian psyche. "It is a matter of
geopolitical reputation," explained Mikhail Belyat, a Latin America expert
at Moscow State University of the Humanities, in an interview with TV Rain.
"We used to be there when the Soviet Union still existed, we were the
second pole, a counterbalance."

Putin believes in geopolitics, and pictures of Obama's handshake with
Castro will convince him that the debt write-off was a timely move. Russia
has to "come back" to Cuba before the U.S. does or risk forever losing its
tenuous foothold in the tropics.

The write-off will not mean much, however, if the U.S. lifts the embargo.
Its proximity and huge trade potential will outweigh any benefits of
rebuilding the old friendship with Russia. Putin's Soviet dreams of Cuba
can be shattered with just a handshake. That may explain the Granma
editors' news judgment.

Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor.

(c) 2013, Bloomberg News


Original Source / Fuente Original:
http://www.miamiherald.com/2013/12/12/3814142/obamas-gesture-trumps-putins-money.html


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