Fudging the Castro-Chavez Numbers

Thursday, December 27, 2012
With the health of Venezuela's Hugo Chavez quickly deteriorating, Cuba "experts" are looking to minimize (perception-wise) the economic impact of his largesse towards the Castro brothers.

And, the AP has provided the platform.

Thus, they've ingeniously concluded:
Experts peg the total Venezuelan subsidy to Cuba at around $2 billion to $4 billion a year.
"A (loss of) $2 billion to $4 billion would definitely pinch. But it is not the same relative weight as the sudden complete withdrawal of the Soviet subsidies in the early '90s," said Richard E. Feinberg, a professor of international political economy at the University of California, San Diego.
Brilliant, except last year alone, Venezuela bankrolled Cuba to the tune of nearly $10 billion.

And this is a conservative estimate, for Venezuelan economists pegged trade in 2008 at almost $11 billion.

Consequently, the most renowned Cuban economist (coincidentally) observed yesterday:
“In nominal terms, the Venezuelan subsidy is higher than whatever subsidy the Soviet Union gave to Cuba,” says Carmelo Mesa, a Cuban economist who’s a visiting professor at Tulane University.  
But just as absurd as trying to fudge the numbers on Chavez's subsidies to Castro is the AP's analysis of Raul's "economic diversification" efforts.

The AP mentions "Cuba's successes in courting foreign investors for joint ventures."

Yet, only cites Brazil's Odebrecht (attention Miami-Dade County) as an example.

On this issue, we recommend a re-read of an article earlier this year in The Economist about foreign investors running away from Cuba in droves.  It's the one about how Raul has imprisoned many of his long-term foreign business partners, which is apparently easier for him than sharing profits or having to make debt payments.

And no AP article about the Cuban economy is complete without some mention of Raul's efforts with "independent and cooperative farming" and his new experiment with "non-farm collectives."

Except that the Castros have been experimenting with so-called "private" farming cooperatives since the 1970's and even The New York Times recognized last month that these have netted few results -- if any.

Bottom line: Raul's bogus "diversification" is not going to ameliorate the tens of billions in Chavez's largesse.

No matter how you fudge the numbers.

Unless, of course, the United States decides to unilaterally lift sanctions and become Castro's third major historic subsidy -- pursuant to the Soviet Union and Venezuela.

Something Raul and Cuba "experts" are keenly aware of.