Cuba will endure changing relationship with Soviets

Global Viewpoint

December 06, 1990|By Carlos Rafael Rodriguez

Havana

THE WORD to define Cuba's relationship with the Soviet Union is uncertainty. We don't know what will happen in the long run. The only certainty is that, in the immediate future, the situation will worsen.

As a result of the U.S. trade embargo, Cuba conducts 70 percent of its total trade with the U.S.S.R. and gets 90 percent of its oil from the Soviets. So we are prepared for the worst, for what I estimate will be five to six very difficult years ahead.

We must adjust to the changes in the world, hoping that the Soviet Union can sustain and reconsolidate itself while we put in place our own alternatives.

Because we are not a rich country, Cuba will always have a frugal socialism. In the immediate years ahead, as Fidel has correctly said, our women may have to wear the same clothes for five years.

But in those years we will hasten to develop tourism, which can generate hard currency, as well as sugar cane by-products and the successful biotechnology and genetic engineering we have already begun with the export of the vaccine for meningitis type-B. These, along with an emphasis on more efficient agricultural production, will enable Cuba to face the future standing upright.

One of the great uncertainties we face with the Soviets is that we must pay for their oil in hard currency beginning in 1991. Other countries that were in Comecon [the Soviet bloc trading group] will also begin to trade in hard currency at that time.

Since the debt crisis in 1982, foreign exchange has been very hard to come by for Cuba. But hard-currency trade with the Soviets and Eastern Europeans is a two-way street for Cuba. Although it would mean buying Soviet oil with hard currency, it would also mean selling sugar in hard currency. So trade in hard currency alone will not introduce a great difference -- the difference will be in the price, which is what we are discussing with the Soviets now.

In the context of this discussion, there has emerged in the Soviet Union a group of people who can be considered enemies of the relationship with Cuba. This group is ignorant.

Recently, the paper Komsomolskaya Pravda published an article insulting Fidel, his brother Raul and the Cuban people, repeating the CIA figure that we receive a five-billion ruble annual subsidy from the Soviet Union.

Such a subsidy does not exist. The price we have been paid for sugar has been balanced by the higher prices that we paid for manufactured products, and in some years for oil, that we receive from the Soviet Union. The price they have paid us for sugar has been similar to their own production costs for sugar, production which they cannot increase in any efficient way. That's pure economics, not a subsidy.

The Soviets currently import 4 million tons of sugar a year from Cuba. In the most efficient case, they are producing sugar in the Ukraine -- where the best land is devoted to sugar cane -- at a cost of over $600 a ton. If they attempt to start production on new land, the sugar is estimated to cost them about $1,200 per ton -- quite a lot to pay if they want to replace the four million tons they get from Cuba.

The price the Soviet Union will pay for Cuban sugar is not going to be the supposed "world market price" of $180-220 a ton, which only refers to that small part of the sugar trade remaining after negotiated agreements.

Of the 27 million tons of sugar traded globally each year, some 20 million tons are sold by negotiated agreement, not at the world market price. For example, the Lome Convention sets the price of sugar purchased by the European Community from sugar-producing countries of the Pacific, Africa and the Caribbean.

The figure we are discussing with the Soviets is somewhat higher than the Lome price -- which is between $400-570 a ton -- and a little bit less than our asking price.

With respect to oil, the price we have paid the Soviets has also not been subsidized. On the contrary, in the contract we have had since 1985 that ends this year, we paid a price based on an average over a five-year period. In some years, that was bad business for Cuba because we paid a price higher than the world market. But we didn't protest, because we considered adequate the prices the Soviets paid us for Cuban sugar.

We had planned to continue this formula, but now oil prices are subject to the volatile situation in the Persian Gulf. We did not know that oil would exceed $40 a barrel, and might reach as high as $100 a barrel.

So an agreement must be reached with the Soviets. Otherwise, Cuba -- or anybody else in the developing world -- cannot buy Soviet oil. We simply cannot afford it.

As a consequence of the uncertainty in their economy, the Soviets have told us that they are not going to negotiate a new five-year program in 1991 in regard to oil. Rather, we will come to an agreement for 1991, and in 1992 we will discuss the next four years. As a consequence, Cuba is prepared to consume the minimum amount of oil.

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