Cuba’s Second Special Period – 2016

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Published on Peak Surfer on June 12, 2016

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Discuss this article at the Economics Table inside the Diner

"Cuba’s economy minister told the Cuban Parliament last week, in a closed session, (drum roll) that the country would have to cut fuel consumption nearly a third in the second half of this year."
 

Foodlines in Soviet Union 1991 (photo by A. Bates)

The story of Cuba’s Special Period has been told here before, but just to refresh. (light bongo beat) In 1992 the Soviet Union was undergoing great social upheaval at home and in the shifts that followed could no longer support its massive foreign aid dole-out to client states such as Cuba. Without Russian fuel and food aid — and more importantly without the Eastern European export market for its sugar and other commodities — and still under the 30-year-old embargo imposed by the United States, Cuba sank into catastrophic recession. The caloric intake of its population shrank by a third. Oxen replaced tractors and combines. Cuba teetered at the brink of collapse.

In the face of these challenges, the spirit of the 1953-59 student-led revolt revived and bolstered the willingness of the population to come together, tighten their belts and do what needed to be done. (light guitar comes in with the bongo beat) Urban gardens led by permaculture instructors arriving from Australia and South America sprung up along sidewalks, on balconies, and on rooftops. Bicycles, horse taxis and “camels” (massive 300-passenger buses) replaced the diesel classic car fleet. Ride share coops, farmers coops, barefoot doctors and street markets ignored the daily power blackouts and kept the country alive, even thriving. (conga beat picking up, maracas coming in) It was an historic moment, although if you ask the average Cuban, as we did four years ago, they would tell you they would never want to repeat the experience.

Generalisimo Batista and his rival, medical student Ernesto "Che" Guevara


When we visited in 2012 we noticed, and blogged here, that Cuba was doing some remarkable things but that much of their economic development came from and is planning to go forward on, their alliance with friends in the South, notably Venezuela and Bolivia. Instead of being addicted to Soviet fossil energy, they were becoming enslaved to Orinoco Heavy. (castanet roll) Cuba uses 80,000 barrels per day of Venezuelan oil, but when we visited they had ambitious plans for offshore fracking, a giant harbor that would handle oil supertankers and Chinese container ships too large to dock in Miami or Houston, and a revival of the sugar industry using Brazilian next-gen technology to make ethanol. In Havana, the neighborhood gardens were still there, but they were beginning to look a little seedy. (tambourine, cow bell)

Following the student-led revolt, conditions improved markedly.


Cuba’s economy minister told the Cuban Parliament last week, in a closed session, (drum roll) that the country would have to cut fuel consumption nearly a third in the second half of this year because the Venezuelan spigot was slowly squeezing shut. Venezuelan oil exports to Cuba have dropped 40% since January. As the news rippled out through Havana there was a universal sense of Déjà vu. Fool me once, shame on you. Fool me twice, won’t be fooled again (as George W. Bush said in his being-folksy mode, unable to recall where he was in the fool-me-twice-shame-on-me proverb and so reverting to a rock anthem lyric from his Yale fraternity days).

 

Havana 2012 (photo by A. Bates)

Venezuela is running dry, as is neighboring Mexico, and bargain basement crude sales to bolster Venezuela’s economy don’t help. Venezuela can no more supply the Citgo stations in Havana than it can keep the lights on in hospitals in Caracas.

Since we are not exactly getting the White House morning briefing we can only speculate on connections between the US military/intelligence community (triple oxymoron there)’s goals in Venezuela. We know that as the curtain comes down on the Pentagon-mesmermized Drone King Administration and up on an uncertain successor, it could be a chessboard moment. (bass drum and brushed cymbals)

 

Havana 2012 (photo by A. Bates)

We know, for instance, that the shortages in Venezuela are specific products, so other food and consumer goods remain available. Could it be that the crisis in Venezuela is less about the oil economy and more about black ops by opposition elements? Those elements would include domestic food companies controlled by long-standing opponents of the Bolivarian revolution of 1999. They control, for instance, 62% of every arrepa, a staple of Venezuelan cuisine.

The market distortion is curious. Venezuelans can purchase yogurt, cheese, teas, vegetables, chocolate and fruit, but not meat, corn flour, milk, coffee, and personal hygiene products like soap, toilet paper, sanitary napkins and diapers. In a managed socialist economy you’d think the reverse would be true. It is only when you look at the ownership of the companies where scarcity exists that it begins to make sense.
 

V.P. candidate Mike Pence and actor Everett McGill – Under Siege 3?

The Friday night military coup in Turkey is another one of those things that can be explained by other factors but the timing is curious. There is no love lost in either Washington or Moscow for the Erdogan regime. Russian press and other sources linked Turkey to the CIA-covert resupply chain for the Islamic State in Syria (ISIS), which the Syrian Army, supported by spectacular Russian air strikes, is in the process of decimating. Erdogan was a klutz, but he was Washington’s klutz. He made that very clear when he shot down a commercial Russian airliner and then okay’ed a new pipeline to take offshore oil and gas Israel was stealing from Gaza through Turkey to Europe. That will potentially square US accounts with kleptocrats in Kiev who keep siphoning gas meant for Europe and not paying for it.

 

Havana 2012 (photo by A. Bates)

As we penned this Friday night this we were watching the air battle over Ankara not knowing who was fighting for whom over what. That Russia Today is a more reliable witness than The New York Times is the new normal.

Cubans have been here before, and actually, this time it may not be as bad. The embargo is lifting. Although Donald Trump is out-polling Hillary Clinton in Florida, especially with Cuban-Americans, his war-chest is no match for hers and

Havana 2012 (photo by A. Bates)

nationwide, at this point in the election cycle, he is a diminishing threat to US-Cuba détente. (muted instruments, brushed cymbals, then just bongo) With air routes opening, tourist hotels being planned, and Havana’s notorious nightclubs a shorter hop than Las Vegas for half the population of the United States, Cubans only have to hold their breath while they turn off the fans 8 hours per day.

Then the

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