The Russian Federation has agreed to postpone the payment of certain debts owed by the Republic of Cuba, allowing small island developing states to repay billions of dollars in external debt by 2027.
These debts, worth a total of $ 2.3 billion, are the result of numerous loans made by Russia on behalf of Cuba’s power generation, metal and transportation infrastructure.
The new terms of debt repayment, approved by Duma in Russia on Tuesday, were originally drafted by the Cuban parliament last year.
The timing of the new announcement partially suggests that it is an act of appreciation from Moscow for Cuba’s response to recent events in Ukraine and its secession areas. The Cuban government has expressed support for Russian President Vladimir Putin’s approval of the separatist-owned territory of Ukraine’s Donbus, and Cuba recognizes the United States as a legitimate merger of Russians ethnically. He accused him of waging a “promotional war” against what he was doing. The territory of Luhansk and Donetsk.
This is not the first time Russia has exercised generosity in debt repayment. In the summer of 2014, just months after Russia’s merger with Crimean, which the Cuban government found legal, Putin visited Havana, allowing 90% of Cuba’s debt to Russia during the Soviet era.
Communist states have also sought debt forgiveness from Western creditors and have repeatedly appealed to the Paris Club for postponement of international debt. Such a recent postponement occurred in October last year when the Paris Club agreed to postpone Cuba’s debt payments for one year until November 2022.
Debt is a persistent challenge for the Cuban economy, and the country’s communist government has struggled for decades to earn enough income to pay interest on unpaid external debt. Some analysts expected a formal restructuring of diplomatic relations between Cuba and the United States to signal an economic recovery, but since the 2015 settlement, the island nation’s international trade has actually fallen by billions of dollars. Foreign investors are suffering from their unpaid debt on their stocks in the country.
Debt burdens have slowed the island’s economic growth, resulting in food and drug shortages, culminating in the country’s largest protests last year since the establishment of the Communist Party of Cuba in 1959. The CCP (Chinese Communist Party) virus is particularly challenging for Cuba as it wants to revive the emerging economy by emphasizing tourism, an industry that has been uniquely damaged by the government’s pandemic regulations. ..
Thus, we find that Cuba is in the same position it faced shortly after the Cold War. It is internationally isolated, pushed deeper into Russia’s sphere of influence, and there is a clear lack of a solution to the problem. The government has undermined market reforms, but such reforms have proven inadequate to deal with the debt situation. For the time being, Cuba will continue to wander in search of debt extensions from stronger beneficiaries, but its economy is lagging behind and its people are becoming more and more restless in slow progress.