Amid Obama Bailout, Cuba Braces for Venezuelan Crisis

Tuesday, July 5, 2016
From Reuters:

Cuba plans cuts in fuel, electricity consumption: sources

Cuba has ordered some state firms and joint ventures to reduce fuel and electricity consumption, a senior diplomat and the director of a foreign joint venture said on Thursday, in the latest sign a crisis in ally Venezuela is hurting the economy.

While it was not clear exactly what triggered the cuts, Cuba's President Raul Castro warned in December that the economy would go through a rough patch in 2016, citing the impact of low oil prices on the trade relationship with Venezuela.

The extent of the rationing, which is expected to take effect in July and be announced next week at a session of the National Assembly, is expected to depend on the sector but there are signs some of the belt-tightening could be quite sharp.

"I saw a copy of the Economy Ministry instructions to the state oil and electricity monopolies yesterday; it stated quotas would be reduced up to 50 percent through the end of the year," the foreign director of a joint venture said on condition of anonymity.

"I called the ministry that supervises our company and they said the level of cuts to our sector were still under discussion," he said.

Low oil prices have taken Venezuela to the brink of economic collapse and destabilized its leftist government, which ships Cuba 90,000 barrels of oil per day as part of an exchange that sends tens of thousands of Cuban professionals to Venezuela.

So far Venezuela seems to be meeting its oil commitments to Cuba although cash payments for doctors and other Cuban professionals have dried up in the past 18 months, experts say.