International Politics, 2008, 45, (594–612) r 2008 Palgrave Macmillan Ltd 1384-5748/08 www.palgrave-journals.com/ip

Moscow, Havana and the Neoliberal Economic Model Mervyn J. Bain Department of Politics and International Relations, University of Aberdeen, Edward Wright Building, Dunbar Street, Aberdeen AB24 3QY, UK. E-mail: [email protected]

The focus of this article is the relationship that developed between Russia and Cuba in the years since the disintegration of the Soviet Union. The reasons for both the deterioration in relations in the early 1990s and their improvement from the middle of the decade will be analysed. A variety of different causes are important for both but significantly the improvement in the relationship has taken place when globally the neoliberal economic model has been pre-eminent. This article will argue that chief among the reasons for closer Russian–Cuban relations has been the neoliberal economic model. International Politics (2008) 45, 594–612. doi:10.1057/ip.2008.22; published online 4 July 2008 Keywords: Russia; Cuba; Soviet Union; neoliberal economic model; bi-lateral relations; Putin

Introduction The relationship that quickly developed between the Soviet Union and Cuba in the aftermath of the victory of the Cuban Revolution was not only vital for the Caribbean island, but was also highly significant in the Cold War in general, most noticeably in October 1962. At its inception, a variety of different reasons pushed the two countries together but after Fidel Castro proclaimed himself Marxist–Leninist in December 1961 the relationship was underpinned by this common ideology. Soviet–Cuba relations lasted for over 30 years and it was only with the disintegration of the Soviet Union in December 1991 that they were abruptly terminated. This event did not only herald the end of Soviet-Cuban relations but it also ended the bipolar nature of international relations that had existed for over 40 years, and marked the beginning of a New World Order. In addition, it also impacted massively on the nature of international economics. The neoliberal economic model, no longer facing competition from the Soviet planned economy, became the dominant economic policy of the late 20th century and early 21st century.

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Immediately after December 1991 the Russian Federation appeared to embrace these policies as it attempted to swiftly move from the Soviet planned economy to the free market. Moreover, it also tried to foster closer relations with the West. At this time Russian–Cuban relations deteriorated drastically, but since the mid-1990s relations between Moscow and Havana have improved, illustrated by the Russian President Vladimir Putin visiting the island in December 2000 (Granma, December 10, 2000, 1). Again, a number of reasons are responsible for this, but a return to the significance of MarxistLeninism in the relationship is certainly not among them. This article will argue that the economic links between the two countries have been vital for this improvement, and will conclude that, although not by design by either government but instead as a by-product of the increase of transnational investment by large corporations in Cuba in the 1990s, it has ironically been the neoliberal free market; the antithesis of the Marxist planned economy, that has been highly significant for the closer relationship that has developed between Russia and Cuba since the mid-1990s. In order to do this, this article will focus on both the reasons for the relationship’s deterioration in the years immediately after 1992 and its subsequent improvement from 1995 onwards, with a variety of reasons explaining both. Other reasons, which will be examined first, were also significant in both the downturn in bilateral relations in the years 1992–1994 and its subsequent improvement, but the effects of the neoliberal economic model has also had a crucial and unique role, to play in both. It has also resulted in the relationship’s foundations in the 21st century being very different from the Soviet era and this will be analysed in detail.

The Evolution of Bilateral Relations On December 25, 1991, the Soviet flag was lowered for the last time from above the Kremlin, which confined both the Soviet Union and Cuban-Soviet relations to history. The end to this relationship was so swift and dramatic that by the end of 1992 it would have appeared to many as if the relationship had never existed. Many of the pressures that drove the two countries together in the late 1950s and early 1960s, and then formed the foundations of CubanSoviet relations, also disappeared. Most noticeably this included the geostrategic importance of the island for Moscow during the Cold War and the shared common ideology of Marxist-Leninism, among others. (Bain, 2007, 212–232) The downturn in relations was both economic and political. In 1988, trade between the two countries had reached almost $10bn but fell to $3.3bn in 1991 and below $1b by 1992.1 In four short years Cuba had to withstand a decrease International Politics 2008 45

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in excess of 90% in its trade with Moscow. On this situation Castro would comment, ‘We had lost everything’ (Castro, 1997, 6) with the result being that in the early 1990s the Cuban economy was in free-fall. As the government in Havana struggled to deal with this, it was dealt a further setback in September 1992 when the joint collaboration project to build a nuclear power station at Juragua was mothballed. The Russian government wanted payment of $300,000 a month for this in hard currency, which the Cuban government simply could not afford (Granma, September 8, 1992, 3–6). This was not just a blow to Cuba’s prestige but also had consequences for its economy. The island at this time was suffering from electrical shortages and the opening of this facility would not only have helped alleviate this, but also would have, in general, benefited the island’s economy. During the Cold War, the Soviet Union had not just been Cuba’s most important trading partner but Moscow had also been one of Havana’s staunchest political allies. In the years after 1992 this side of the relationship also suffered and was graphically illustrated in November 1992 at the United Nations (UN) when Moscow abstained from the vote with regard to the Cuban Democracy Act or Torricelli Bill (Izvestia, November 25, 1992, 5). This bill, passed by the United States Congress, further tightened the economic embargo against the island in the hope that it would speed the demise of the Castro regime. Moreover, also in 1992 at the UN Conventions on Human Rights held in Geneva, Moscow, for the first time ever, voted against Cuba in this forum. This action was repeated in both 1993 and 1994 (Izvestia, March 9, 1992, 7; March 12, 1993, 3; March 11, 1995, 3). Cuban displeasure at this was shown in 1995 when Castro accused Russia of hypocrisy due to Moscow’s human rights abuses in the Chechen war when he stated, ‘This made me think of Chechnya. Strange things happen in this world. Let me be clear: I am against the disintegration of any countryy. However, the dispatches carried news of who knows how many thousands of cannons shelling the region, hundreds of planes and helicopters bombing the region, tens of thousands of soldiers fighting, and civilian casualties. Yet, they voted against Cuba at the Human Rights Commission, against a country that has never had a single missing person, where never in 36 years of Revolution has there been a political crime, where no one is tortured’ (Castro, 1995). Relations between the two former Cold War allies had deteriorated to such an extent that in 1995 at the 50th anniversary celebrations of the UN held in New York City people were uncertain whether Castro and the Russian President, Boris Yeltsin, would even greet each other. This was despite Yeltsin having been in Cuba in early 1987 (Granma, March 2, 1987, 1). In the end, the two leaders did shake hands but this was the total of their pleasantries. A variety of different reasons explain this dramatic change in relations between Moscow and Havana. In the new democratic Russia of the 1990s International Politics 2008 45

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many people disliked things that had close connections to previously discredited Soviet regimes and this certainly applied to Moscow’s relationship with Havana. Besides this, Russian–Cuban relations had very different foundations from Soviet-Cuban relations. Not only was Moscow no longer tied to the island by Marxist–Leninist ideology but also the significance of Cuba to the Kremlin had decreased as the Caribbean island’s strategic importance had fallen with the reduction in tension between the superpowers in the final years of the Cold War. In addition, the victory of the Liberal Westernizers in the debate on Russian foreign policy had resulted in improved Russian-United States relations being a priority for Moscow, illustrated by the signing of the Russian-United States Partnership and Friendship Charter in June 1992 and a number of summits being held throughout the last decade of the 20th century. (White House Press Release, June 17, 1992; Malcolm and Pravda, 1996, 537–552). As a result of the continued strained relationship between Washington and Havana, it was not possible for Moscow to enjoy good relations with both countries and throughout the 1990s the US government would put pressure on Russia to further reduce its ties with Cuba. Moreover, as stated, economic reasons were also vital but these will be detailed in the next section. The relationship may have deteriorated in the years immediately after 1992 but it never completely disintegrated. A number of Russians remained on the island through marriage but of even more importance was the decision that Moscow took regarding the listening post at Lourdes. Moscow paid Havana $200m a year for the use of this facility as it was ‘ynecessary in order to maintain stable communications with our embassies in Latin America’ (Izvestia, November 4, 1992, 5). The significance of this was that it not only highlighted the fact that the relationship was never completely terminated, but it also had massive repercussions for Moscow’s relationship with Washington in the 1990s. However, from the mid-1990s the relationship between Havana and Moscow began to improve. In 1995, Moscow again voted with Cuba at the UN Human Rights Convention, significantly the year that Russia became heavily involved in the Chechen war (Izvestia, March 11, 1995, 3). If Moscow continued to vote against Cuba in Geneva it could have brought increased global attention on its own human rights record in Chechnya and this was something that Moscow wished to avoid. In May of the following year Russia significantly voted with Cuba at the UN over the shooting down of two planes operated by the Cuban-exile group ‘Brothers in Arms’ by the Cuban air force (Sosnovsky, 1996b). Moreover, from the mid-1990s visits by the two countries elites also began to take place. The lack of such visits since 1992, when compared to the Soviet era, had been conspicuous by their absence. The first of these visits took place in International Politics 2008 45

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June 1996 when the Russian Foreign Minister Yevgeny Primakov travelled to Cuba and during this trip he was awarded the honour of meeting both Fidel and Rau´l Castro. As Primakov was preparing to leave Cuba, Fidel Castro commented, ‘Recently, relations have been improving little by little. There have been good moments, there have been critical moments and now there’s an upswing’ (Granma International Weekly, June 5, 1996, 3). In January 1999, the Cuban Foreign Minister Roberto Robaina reciprocated this trip when he travelled to Moscow and in September 1999 the new Russian Foreign Minister Igor Ivanov visited Cuba (Charodeyev, 1999; Gornostayev, 1999). The recommencement of these visits was very important but they were not underpinned by a return of Marxist-Leninism being significant in the relationship. This ideology may have been the cornerstone of the relationship during the Soviet era but it has not been in the post-Soviet period. From the mid-1990s, Russian foreign policy underwent a change with an increase in the importance of nationalism being prevalent in this, but this change was significant for the improvement in relations between Havana and Moscow. The Russian government disliked the unipolar nature of the world that had appeared since 1992, a belief shared with Havana, and Moscow began to try and reassert its influence in international relations and distance itself, somewhat, from the West. This desire increased after North Atlantic Treaty Organisation (NATO) action in the former Yugoslavia, as the Russian government was unhappy with the treatment that their fellow Serbs had been subjected to. In addition, Moscow also became increasingly disillusioned with the West’s policies towards Iraq. This change in Russian foreign policy was borne out by Moscow’s willingness to ‘tickle the Americans’ underbelly’ (Sosnovsky, 1996a, 50). Improved relations with Cuba were in complete accordance with this desire. In direct relation to this, Yeltsin’s government faced internal pressures as many Russians disliked the importance that Moscow had attached to its relations with Washington and blamed the policies of the International Monetary Fund (IMF) and World Bank for their economic plight (Light, 1996, 82–83). Moreover, they wished to see their country’s geopolitical position improve. This was illustrated in January 1995 when the Russian Duma held hearings, driven by the Communist Party of Russia, on the future of Russian– Cuban relations that called for a restoration of political and economic ties and for those people who had been responsible for its deterioration in the early 1990s to be punished (Velekhov, 1995). Moreover, segments of the Russian army, who have always enjoyed close relations with their Cuban counterparts, also wished for the relationship to improve, and this further increased the pressure on Yeltsin’s government with regards to Russian–Cuban relations. Since August 2006 with Rau´l Castro’s at first temporary accession to power, which has subsequently become permanent, it is not without justification to suggest that the links between to two military forces, which remain strong, will International Politics 2008 45

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continue to be important in Russian–Cuban relations due to Rau´l being the long time head of the Cuban Revolutionary Army (FAR) and his close association over a number of decades with top echelons of the Russian military. In addition to this, a legacy from the Soviet era has also been significant, with Cuban sugar being particularly important in it. On average, Russia consumes about three times the amount of sugar that it produces and this shortfall before 1991 had been met by the purchase of sugar from the Caribbean island. However, even in the years immediately after 1992 Moscow found it easier to buy Cuban sugar, due to links made from the Soviet era, not least the fact that citizens in each country can speak each other’s respective languages, rather than purchase it from new vendors. In the same manner, the United Kingdom and France continue to buy primary produce from their former colonies in the Caribbean. Russian interest is not, however, concentrated solely on sugar because in recent years as Cuban sugar production has fallen Russian companies have begun to take an increased interest in another of Cuba’s main exports, namely nickel (Russia, Cuba to Boost Trade). In relation to this, neoliberal economic reforms have played a very significant role in the improvement in Cuban-Soviet relations, but not for the reasons that may be first thought. This will be analysed in the section on neoliberal economic reforms. The Cuban debt, accumulated during the Soviet era, continues to be crucial to the post-1992 relationship between Moscow and Havana. In 1992 A. Ermakov, head of the Cuban Department in the Russian Latin American Department and a Russian Member of Parliament, stated in an interview, ‘One of the problems that obstructs relations with Cuba is its debt with the Soviet Union, which is in excess of 17 billion rubles’ (Hispano Americano, 1992). The payment of the debt is not the only problem, as the two countries have even failed to reach agreement on the actual level of the debt. Cuban payment of this is unlikely, but if relations were completely severed the chance of this would decrease still further and this is something that Russia, due to its own economic problems, cannot afford to do. Moreover, in 2005, Russia announced that it had deferred the debts payment, a first for Moscow, but crucially it was not simply cancelled.2 This illustrates not only that Moscow continues to hope that the debt will be paid, but also its importance and that of the Russian–Cuban relationship itself to the Russian Federation. The closer relationship that has developed has also been in Cuba’s interest. In the 1990s, great technological advances in general may have been made, but the struggling Cuban economy at that time was still reliant on Soviet era machinery. Due to the age of this machinery it required much maintenance and spare parts were also needed (Izvestia, November 30, 1993, 3). With the disappearance of the Soviet Union, acquisition of these spare parts had become International Politics 2008 45

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increasingly problematic for the Cuban government. A healthy relationship with Russia, a more than willing vendor, would help alleviate this problem. This was a significant reason for Havana wanting good relations with Moscow. In addition, the Caribbean island required investment and Russian interest in the Cuban economy would be a vital component of the new relationship between the two countries, again this will be examined in the next section. As has been suggested, contacts made during the Soviet era, most noticeably intermarriage and language, have survived the end of Soviet-Cuban relations and have been important in the relationship that has developed since the mid1990s. In recent years this has been added to by a resurgence in cultural links between the two countries. This has been remarkable, as during the Soviet era disparaging comments about these cultural links had often been made. The upturn culminated in a cinema, video and graphic arts project entitled ‘Days of the Russian contemporary culture in Havana’ taking place in Havana in November 2005 (Pavlov, 1994, 249; Loss, 2006). This has been indicative of the improvement in Russian–Cuban relations since the mid-1990s. There is, however, one exception to this process when in October 2001 Putin announced the closure of the listening post at Lourdes due to its cost. It appeared that pressure from Washington had played a part in this decision as in July 2000 the United States Congress had stated that the Russian debt to the US would not be rescheduled until this facility was closed. Moreover, in June 2001, Putin had met George W. Bush in Slovenia and this left the Russian leader facing accusations from members of his own press that he had given in to US pressure (Karmen, 2001). The government in Havana were very unhappy at this decision and the state newspaper Granma stated that the cost of the base ‘was not an extraordinary figure if one considers that it is barely 3% of the damage to our country’s economy by the disintegration of the Socialist bloc and the USSR’ (Granma, October 18, 2001, 1). However, any problems between Moscow and Havana over this appeared to have been very short lived and it has not had a long-lasting affect on Russian–Cuban relations. In the years immediately after the disintegration of the Soviet Union, relations between Havana and Moscow deteriorated as both the significance of Marxist-Leninism had been removed from it, and also Moscow sought to improve its relationship with the United States. However, the relationship never completely disintegrated and from the mid-1990s began to improve. Significantly this improvement was not based on a return to its traditional Marxist–Leninist foundations but was instead partly the result of a change in Russian foreign policy, a shared dislike of the unipolar nature of global politics and a legacy from the Soviet era. This included the debt accumulated by the Caribbean island to the Soviet Union, intermarriage, language connections that made conducting the relationship easier and the Cuban need for spare parts for Soviet era machinery. International Politics 2008 45

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Neoliberal Economics and its Effects The implosion of the Soviet Union and the deterioration in relations between Moscow and Havana in the years 1992–1994 had coincided with the preeminence of the neoliberal economic model. This has seen an increase in both transnational capital and multinational companies and moreover it was also seen by many to be the solution for a variety of global problems (Arceneaux and Pion-Berlin, 2005, 43–48). This had certainly been the case in the Western Hemisphere where, from the 1980s, under the direction of the IMF and World Bank, a number of countries have reformed their economies in line with this model. This also applied to Russia who post 1992 economically embraced the ideas of the West with the transition to the neoliberal economic model being carried out as quickly as possible (White, 2000, 123–129). The result of this was that Russian–Cuban trade fell as Russian companies no longer wished to sell goods to Cuba, as increased profits could be made by trading with countries geographically closer to Russia thus reducing expensive transport costs. This was the logical conclusion of neoliberal economics, but was illustrated by the fact that in the little trade that was conducted between the two countries at this time Russian exports to Cuba fell at a faster rate than Russian imports of Cuban goods (Anuario Estadistico de Cuba, 2000, VI-5–VI-7). This was an integral reason for the degeneration of Russian–Cuban relations in the years 1992–1994. In its purest form, neoliberalism entails both cutting state spending while simultaneously removing protectionist trade barriers. This is done in an attempt to attract foreign investment and results in countries’ economies being integrated into the global economy. Investment in Latin America, in general, and Cuba before 1959, from outwith the region was not new but what was very different in the 1990s was that this investment was on a truly global scale and not predominantly from the United States or the Soviet Union, as had previously been the case. This article’s focus is the pre-eminence of international capitalism, illustrated by the growth of transnational investment from multinational companies, with the upshot being an increase in interdependence between various world economies. This was vital for not just the Cuban Revolution but also, as stated, the improvement in relations between Havana and Moscow from the mid-1990s onwards. Throughout the Soviet period Cuba tried on a number of occasions to reduce its dependency on the Soviet Union and a further attempt had been made in the late 1980s. This had been done to try and offset the negative effects for the Caribbean island of the reform processes implemented by Mikhail Gorbachev, but illustrated the prevalence of realist pragmatism within the Cuban Revolution. Trying to encourage tourism to the island did this, and in International Politics 2008 45

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May 1990 it came to fruition when the Cuban President was present at the opening of a new hotel on Varadero Beach that had been financed by foreign money (Granma International, May 27, 1990, 3; Erisman, 2000, 36–44). After 1992, as the economic situation deteriorated still further, and again illustrating realist pragmatism, various new measures were passed in the hope of encouraging further foreign investment to the island. Ideologically, the Castro regime may not have wished to implement further reforms, but due to the gravity of the situation they were a necessity. These included both the right to be self-employed and to posses US dollars, but in January 1995 legislation went even further when a mining law was passed that allowed foreign companies to become involved in joint ventures in both oil and mineral exploration and production. In September of the same year, a new foreign investment law was also passed that not only allowed foreign companies to move their entire profits abroad, but also significantly allowed them to part own Cuban enterprises. With nationalism having such a prominent place in the Cuban revolution, this law was truly historic. Again, it was hoped that Cuba’s tourist industry would be particularly attractive to foreign investors. Significantly, the FAR and Rau´l Castro have been at the forefront of this and, again, it could be expected that this policy of encouraging tourism to the island will continue to be vital to the island’s economy with Rau´l’s permanent accession to Cuban Presidency.3 These changes in the law were designed to take advantage of the increase in transnational investment and the result was that in the 1990s the countries with which Cuba conducted trade changed dramatically from the Soviet era, as after a number of decades the Cuban economy has become more integrated into the world economy. The socialist-trading bloc’s position within the island’s economy was usurped as companies from over 100 countries are now involved in the island. In the last decade of the 20th century countries such as Spain, France, Italy and Canada replaced the Soviet Union and eastern European countries as Cuba’s most important trading partners. In 1995, Canada was the Caribbean island’s main export partner and Spain held the same position with regards to goods imported into Cuba, with each holding 15 and 12% of their respective markets (Anuario Estadistico de Cuba, 2000, VI-5–VI-7). The success of this is illustrated by the fact that by mid-1995, 212 joint ventures had come to fruition with over nine different countries from around the world. In the period from 1998 to 2001 a further 190 joint enterprises, in conjunction with 28 countries, were created. In comparison, this has risen from 11, not including socialist bloc countries, in 1991. Canadian companies have invested in the island’s nickel industry while Mexican ones have tended to concentrate on Cuba’s telecommunication links. European countries have taken an interest in the tourist, tobacco and alcohol industries. One of the most high profile was that in 1992 the French Company, Pernod Ricard, bought an interest in and International Politics 2008 45

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global distribution rights for Havana Club rum. In the same manner, in the year 2000 the French-Spanish company Altadis bought 50% of Habanos, the international distributor of Cuban cigars (Pe´rez-Lo´pez, 1997, 33–34; Amberg, 2000; Ospina, 2002, 77). The result of this policy is that the Cuban economy has recovered from its nadir of the early 1990s when trade in 1994 totalled just 3.3bn pesos. Its problems have not, however, completely disappeared, and trade has not returned to levels enjoyed in the Soviet era, but it grew to 5.4bn pesos in 1996 and 9.5bn pesos in 2005 (Anuario Estadistico de Cuba, 2000, VI-5–VI-7; Anuario Estadistico de Cuba, 2006, VI-5–VI-7). This is despite, in 1996, the United States government passing the Cuban Liberty and Democratic Solidarity Act, or Helms-Burton Act, which aimed to tighten the US embargo against the island by attempting to prevent companies from third-party countries trading with Cuba. Moreover, this upturn in the economy has been achieved despite the Caribbean island not having access to money from the IMF, World Bank or the Inter-American Development Bank. The levels of foreign investment may be a fraction of that from the socialist countries during the Soviet era, but it has been invaluable to the Cuban government. The United States embargo, appearing to be the antithesis of neoliberal economics, has conversely made Cuba a more appealing investment opportunity for foreign companies, as US companies, which held the preeminent position within the Cuban economy before 1959, are still prohibited from trading with Cuba. The upshot is that foreign companies do not have to face this competition and have been able to gain a foothold in the Cuban economy before the embargo ends when they will again have to face competition from US firms. This has been borne out by survey conducted in 2005 in Florida, which stated that 65% of the 417 executives polled would be ‘likely to do business in a post-Castro Cuba’ (Miami Herald, October 13, 2005). In addition, once US citizens are again allowed to travel to Cuba, these foreign companies would hope that their profits would further increase due to the expected influx of US dollars. As has been outlined, a variety of reasons drove the improvement in relations between Havana and Moscow from the mid-1990s onwards, but the opening up of the island’s economy was also vital to this improvement. As detailed, the result of these changes was that Cuba’s trading partners changed drastically in the 1990s when compared to the Soviet era as the socialist-trading bloc has been replaced in importance by companies from around the world. In short, the Soviet Union’s position within the Cuban economy had been lost. As relations deteriorated in the early 1990s, Moscow had to witness this influx of foreign money into the Cuban economy. In the period from 1995 to 1997, 260 joint projects with Cuban and foreign money were opened but only International Politics 2008 45

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two of these had been with Russia money (Batchikov, 1997, 2). In December 2000 Stanislav Kondrashov wrote, ‘yin Cuba’s nickel industry, Canadian capital now reigns supreme. And the Chinese dominate the consumer goods market. The Spanish, the British and the Mexicans are investing in Cuba’ (Kondrashov, 2000, 3). Moreover, Moscow also realized that its colossal investment during the Soviet era had simply been wasted. In December 2000, while in Cuba Vladimir Putin commented, ‘We lost a lot of positions which were a top priority for both countries, and our Russian companies in Cuba have been replaced by Western competitors’ (Newman, 1999). Russian companies realized that they were missing out on the investment potential that the Cuban economy offered, which again was increased due to the lack of competition from US companies. Just as with companies from other countries investing in Cuba, Russian ones would hope to have a presence in the Cuban economy before the end of the US embargo and the expected deluge of dollars from the north. Moreover, as stated, due to traditional links and language ability from the Soviet era, it would also be easier for Russian companies to cultivate links with Cuban companies but, again, this opportunity had been wasted. Simply Russia wanted a ‘piece of the action’ in the ‘new’ Cuban economy of the 1990s. In relation to this, and Russia’s move to a market economy, S. Batchikov, co-chairman of the Russian Foreign Economic Policy Fund, would comment, ‘Any country, including Russia, that is building a market economy is interested in expanding the assortment of goods in its consumer market. And this means that high-quality Cuban tropical produce is of considerable interest to us, especially considering Russia’s natural and climatic conditions’ (Batchikov, 1994, 45). This comprised not just traditional Cuban exports of sugar and tropical fruit but also high quality Cuban rum and in May 1999 La Casa del Habano, a Cuban cigar emporium, was opened in Moscow (Izvestia, May 19, 1999). As has been detailed, the Helms-Burton Act has not affected investment in Cuba from foreign companies and Russia is no different. Not only did Russia vote against its implementation in the UN, but it also indicated that it was simply going to ignore it. In the aftermath of it becoming law, a Russian Foreign Ministry Declaration stated, ‘We confirm our intention to develop and broaden beneficial co-operation with Cuba as well as sectors of mutual interest, particularly in the commercial and economic sphere’ (Granma International Weekly, April 17, 1996, 13). In 1996 this was illustrated when the Russian Federation became Cuba’s largest trading partner with over 616m pesos worth of trade being carried out (Anuario Estadistico de Cuba, 2000, VI5–VI-7). This may not have been a return to the levels enjoyed during the Soviet era but 5 years after the disintegration of the Soviet Union this was quite remarkable. International Politics 2008 45

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Unsurprisingly, Cuba’s burgeoning tourist industry has attracted interest from Russia. In 1996, the ‘Latina’ travel agency opened in Moscow specializing in travel to Latin America and in addition, the Russian travel agencies Atlantic Travel Agency, Druzhina and Atlas have all opened offices in Havana. The result has been that the number of Russian holidaying in Cuba has risen from just over 9,000 in 1994 to an excess of 20,000 in 2005 (Anuario Estadistico de Cuba, 2006, VI-5–VI-7). This constitutes a very small percentage of Cuba’s near one million European visitors per year, but travel to Cuba from Russia was aided not just by the appearance of more wealthy Russians, who could afford to travel to Cuba, but also in August 1999 the airline companies KLM and Air France began flying routes from Russia to Havana with stopovers in Amsterdam and Paris, respectively. Moreover, in December 1999 Aeroflot and Cubana began their own joint service from Russia to Cuba.4 Vladimir Putin’s trip to Cuba in December 2000 raised concerns in the West that Marxist-Leninism may have been returning to importance in relations between Russia and Cuba. This was not just because this trip was made so early in the infancy of his Presidency but also because of his KGB past. However, these concerns have proven to be unfounded as it has been the Cuban economy and not Marxist-Leninism that has been of the most interest to the Russian President, as was illustrated by the afore cited quote by the Russian President while in Cuba about Western companies usurping Russian ones in the Cuban economy. Moreover, a number of economic agreements were signed during his trip, which included the Norilisk Nickel Company agreeing to invest $300m in the nickel-ore processing plant at Las Camariocas in Holguin province and a joint agreement to build diesel equipment for the Cuban sugar industry was also signed. As stated, the importance of nickel to the ‘new’ relationship has increased as Cuban sugar output has fallen in recent years. This was illustrated in an interview in March 2005 with the Cuban ambassador to Russia, Jorge Marti Martı´ nez. In this he said, ‘Cuba comes second in the world in nickel reserves and fifth among nickel exporterythe world is showing a great interest in this branch of the Cuban economy and we are keen on cooperation with Russia’.5 The island’s biotechnology industry, which first attracted Moscow’s attention during the Soviet era, has also been of interest to Russia. This was illustrated when biotechnology was also part of an exchange deal for 2001– 2005 signed during Putin’s trip when Cuban sugar, rum, medicines and medical equipment were to be exchanged for Russian oil, machinery and chemicals.6 Economic links and attempts to re-address the loss of their former pre-eminent position within the Cuban economy were key factors during Putin’s trip to Cuba. The result, ironically, is that the free market, the very antithesis of the planned economy, has provided a very powerful reason for the improvement in International Politics 2008 45

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Russian–Cuban relations from the mid-1990s. This was most certainly not by design as the goal of the economic reforms made in Cuba in the 1990s had not been to specifically attract investment from Russia but just investment in general. However, the result of these had been to dramatically change the island’s trading partners from the Soviet era and this was something that Russian companies wished to address. This has provided a powerful and important reason for the improvement in the relationship from the mid-1990s onwards. This irony is increased further as a result of the Castro regime’s ideological aversion to neoliberal economics and recent attempts to try and move away from this model. Not only have anti-globalization conferences been held in Havana, but also the appearance of an apparent anti-US bloc in Latin America, which has seen Cuba in conjunction with Hugo Chavez’s Venezuela create the Bolivarian Alternative for the Americas (ALBA) to challenge the US backed Free Trade of the Americas (FTAA) (Granma, April 29, 2005, 1). This in conjunction with Russia’s recent increased interest in the region has questioned the significance of neoliberal economics to this process in general and in Russian–Cuban relations specifically. A shared political outlook and a willingness to challenge the apparent unipolar nature of world politics is important in this, but so too are economic links, as at the forefront of Russia’s interest in Latin America is the sale of military hardware to the region. The most high profile example of this may have been the Venezuelan purchase of 100,000 Kalashnikovs, fighter planes and helicopters in 2005, but in April 2007, 18 Russian companies exhibited goods at the Latin American Aero and Defense (LAAD) trade fair, the largest and most important in the region, held in Rio de Janerio.7 Countries in the Western Hemisphere may be attracted to these Russian goods partly as a result of wanting to buy them from an alternative vendor to the United States, but this most certainly does not reduce the importance of economics to Russian interest in the continent. Moscow is attempting to expand its markets for these goods in the whole region and not just a few specific countries but also the Russian Federation faces competition from other global arms manufacturers. With relation to the sale of Russian arms to Latin America, Alexander Yakovenko, a spokesman for the Russian Foreign Ministry, said in an interview, ‘Russia is a recognized producer of arms, which are in demand on world markets, including in this region’.8 The result is that the ideas of the neoliberal economic model are an important factor in Russia’s recent increased interest in Latin America. The appearance of this apparent anti-US bloc in the region has undoubtedly had repercussions for Russian–Cuban relations, as Cuba’s relationship with Venezuela has become vital to the Cuban Revolution, not least as a source of oil, and the Russian share of the Cuban trade has subsequently fallen. International Politics 2008 45

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Venezuela has become Cuba’s single biggest trading partner, and in the year 2004 when Cuban–Venezuelan trade reached 1.368b pesos it was the first time since 1991 that trade between Cuba and any other country had exceeded 1b pesos. In addition, China has also become a significant player in the Cuban economy with trade in 2005 reaching almost 1b pesos. As a result of the nature of the Cuban government they would prefer to trade with countries which they have a political affinity with, but this has not signalled a reduction in Russian interest in the Cuban economy stimulated by the effects of neoliberal economics. This was illustrated by the fact that in 2002 Cuba remained Russia’s second largest trading partner in Latin America and in 2005 its sixth. Again, this is remarkable both due to the fact that the Cuban economy is smaller than that of other Latin American economies and it is over 15 years since the end of Soviet-Cuban relations. This was most certainly not predicted by Western commentators in the early 1990s (Anuario Estadistico de Cuba, 2006, VI-5–VI-7). In March 2003 Leonid Reyman, Russian Minister of Communication and Information Technology, spoke of this trend while in Cuba when he said, ‘We are worried about a slowdown in the bilateral trade and economic relations and we would like to reverse the process with the Cuban side’.9 Moreover, the Russian interest in the Russian economy has diversified in the 21st century. Reyman’s presence in Cuba illustrated that it was hoped that informational technology and telecommunications could be part of this desired improvement. In addition, in 2002 Havana hosted an international trade fair, which ten Russian companies attended. Raul de la Nuez, Cuban Minister of Foreign trade, had commented upon this when he said, ‘Our countries have years of long good traditions of trade and cooperation. Russia is one of the 10 biggest trade partners of Cuba’.10 In 2003 not only were Russian companies once again present at this fair but also the Volga Car factory, VAZ, was one of the most prominent companies at it.11 Moreover, projects involving gas and oil fields, which would bring a dynamic new dimension to the relationship, are also desired. In February 2005, Fidel Castro told Grigory Elkin, head of Russian Federal Technical Regulation and Metrology Agency, that Cuba would like both Russia to commence energy projects on the island of Cuba and also purchase electric generators from Russia. Moreover, in February 2007 the Russian company Gazprom (GAZP) and India’s Oil and natural Gas Cooperation (ONGC) discussed the possibility of joint work in Cuba while Jorge Marti Martı´ nez has not just spoken of the importance of nickel in the relationship, but also that the car industry and modernization of railroads were also projects that Russia could become involved in. The continuing Russian interest in the Cuban economy was further illustrated in May 2005 when 132 companies from the Moscow area attended a Cuban trade fair held in the Russian capital, and in International Politics 2008 45

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April 2007 an agreement over the production of enriched food was signed.12 In addition, the Caribbean island has wanted to purchase two Russian made IL 96-300 airplanes. This was to be partly funded by a d200m credit from a syndicate of Russian banks, and in a similar manner, in September 2006 Mikhail Fradkov, Russian Prime Minister, signed a d355m grant with the Cuban government for the purchase of Russian goods.13 These agreements have been important not just in themselves but also as they illustrate the confidence that both the Russian banks and the Russian government have in the Cuban economy. Hugo Chavez’s 1998 electoral victory has been very important for the Cuban Revolution but Russian interest in the Cuban economy commenced before this as a result of the loss of their pre-eminent position in the Cuban economy due to the effects of neoliberal economics in light of the changes made to the Cuban economy in the 1990s. The shift in the Latin American political landscape at the start of the 21st century has undoubtedly impacted on the Cuban economy in general and Russian–Cuban relations specifically but, as illustrated, it has not meant that Russian interest in it has disappeared. Merely, it has also resulted from the effects of neoliberal economics, which has seen competition in the Cuban economy become even more competitive. Socialist principles may have been the bedrock of Soviet-Cuban relations but the ideas of neoliberal economics have been significant in the relationship in the post-1992 period. Russian companies no longer wishing to trade with Cuba, as increased profits could be made by trading with companies that were geographically closer, was an important factor in the downturn in the relationship in the years 1992–1994. Conversely, it has also been important in this subsequent improvement, although this was not by design by either government. As the Cuban economy was reformed in line with these policies to take advantage of transnational investment, it resulted in the realization forming in Russia that it had lost its primary place in it as companies from other countries invested in the Caribbean island. A desire to address this position was a vital component in the improvement in relations between Russia and Cuba from the mid-1990s. It may not have returned to levels enjoyed in the Soviet era but Russia has once again become an important player in the Cuban economy.

Conclusions In the years since the disintegration of Soviet-Cuban relations, neoliberal economics have been significant in the relationship that has evolved between Russia and Cuba. In the period from 1992 to 1994, Russian companies no longer wished to trade with Cuba as trading with companies geographically International Politics 2008 45

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closer to the Russian Federation could make increased profits. This was an important reason for the downturn in relations in these years as was the removal of Marxist–Leninist ideology from it. Moreover, at this time Moscow looked to the West both economically and politically and due to the continued strained relationship between Havana and Washington this made good relations between Moscow and Havana problematic. In addition, the Cuban government’s close association with former discredited Soviet regimes increased the desire in Russia to reduce ties with the Caribbean island. Russian–Cuban relations did undoubtedly deteriorate in this period but significantly they were never completely terminated. The Russian military continuing to use the listening post at Lourdes was the highest profile example of this. From the mid-1990s, Russian–Cuban relations began to improve with a variety of different reasons explaining this. Politically, Russia’s position with the West began to change, which manifested itself most publicly in an alteration in Russian foreign policy that saw Moscow attempting to increase its geopolitical position. Improved Russian–Cuban relations were in complete accordance with this. In addition, a legacy from the Soviet era remains that includes intermarriage, culture, language skills in both countries that make conducting the relationship easier and Havana’s remaining unpaid debt to Moscow. In a similar manner, in the mid-1990s Cuba remained an important source of sugar for Russia, while Russia remained an important source of spare parts for Soviet era machinery that was still being used in the Cuban economy. However, what has also been absolutely crucial was Russian investment in the Cuban economy. This has become an important cornerstone of the relationship that has developed between the two countries from the mid-1990s onwards with the neoliberal economic model being pivotal to this, although not by the specific design of either government. In the early 1990s, the Cuban government had taken tentative steps towards this, and partially opened its economy to the world market, in an attempt to attract desperately needed foreign investment. The results have been dramatic as not only have they aided the survival of the Castro regime, but also dramatically altered Cuba’s trading partners when compared to the Soviet era. Russian companies, who had eagerly embraced neoliberal economics, had to watch as an increasing number of foreign companies invested in the Caribbean island, which resulted in the loss of their privileged position within its economy. This was something they were unhappy about as they felt they were missing out on the investment potential that the island offered, made more appealing by the lack of competition from the United States companies due to the economic embargo. Moreover, Russian companies also felt that the massive investment from the Soviet era had been lost. Simply, they wanted a ‘piece of International Politics 2008 45

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the action’ and it was for these reasons that Russian companies have become increasingly involved in the Cuban economy over the last decade. The appearance of an apparent anti-United States bloc in Latin America with Cuba and Venezuela at the forefront of this, and the increased Russian interest in it, has questioned the significance of neoliberal economics in Russian–Cuban relations. A shared dislike of the unipolar nature of global politics is important but so too is the Russian desire to increase their economic links with the region. Significantly, Russian interest in the Cuban economy began before this process, and although the Russian share of the Cuban market has decreased it is not the result of a loss of interest in it, and is something that both countries wish to address. The significance of the effects of neoliberal economics begun in the Yeltsin era has continued in Putin’s Presidency and remains important in the relationship. The result is that in 2005 Cuba was Russia’s sixth most important trading partner in Latin America. In excess of 15 years after the disintegration of Soviet–Cuban relations this is remarkable. Ideology has always been crucial in the relationship between Moscow and Havana and post 1992 it continues to be. Ironically, it is no longer MarxistLeninism but instead neoliberal economics, and it partly explains both the deterioration in relations from 1992 to 1994 and also its subsequent improvement. Other reasons are also important but neoliberalism has undoubtedly been significant in Russian–Cuban relations, and continues to be so.

About the author Mervyn J. Bain is a lecturer in the Department of Politics and International Relations at the University of Aberdeen. His research interests are Latin America, specifically Cuba’s relationship with the Soviet Union and Russia. He has published articles on Cuba’s relationship with the Soviet Union and Russia in the Journal of Latin American Studies and the Journal of Transatlantic Studies. He is author of the books ‘Soviet-Cuban Relations 1985 to 1991. Changing Perceptions in Moscow and Havana’, (2007) and ‘Russian-Cuban Relations Since 1992. Continuing Camaraderie in a Post-Soviet World ’, (2008).

Notes 1 Direction of Trade Statistics Yearbook (1997, 173) and Mesa-Lago (1993, 140–143). 2 ITARR-TASS news agency, Moscow in Russian 1053 September 15, 2005, BBC Monitoring. 3 For analysis on this see Pe´rez-Lo´pez (1997, 15–22) and Overview of Foreign Investment in Cuba (2001). 4 ‘Tourism in Cuba: Selected Statistics’. (June 2005) and ‘More Russian Tourists Expected’ (1999, 4). International Politics 2008 45

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611 5 ‘Russia, Cuba to Boost Trade Cooperation — Ambassador’. (2005) ITARR-TASS. 6 Moscow Interfax in Eng 1203 GMT 22 March 01 FBIS-SOV 2001 0322027 CEP20010322000270. 7 RIA Novosti April 17, 2007. The importance of economic links between Venezuela and Russia was shown by Hugo Chavez’s recent trip to Russia when this topic dominated talks. ‘Reafirma Venezuela su alianza con Rusis y Bielorussia’, (2007). Juventud Rebelde. 30 June. Electronic version. 8 Interfax Interview with Alexander Yakovenko (November 16, 2004). Ministry of Foreign Affairs of the Russian Federation Information and Press Department. Electronic version. 9 Moscow ITAR-TASS in R 0817 GMT 25 March 2003-FBIS-SOV-2003-0325 CEP 20030325000089. 10 Moscow ITAR-TASS in Eng 09092 GMT 8 November 02 FBIS-SOV-2002-11-8 CEP 20021108000013. 11 ITAR-TASS 18/9/2003. 12 ITAR-TASS, February 27, 2005, RIA Novosti, February 9, 2007, ITAR-TASS, January 1, 2005, Moscow Prensa Latina, December 17, 2005 and Ana Margarita Gonzalez (2007). 13 RIA Novosti (December 22, 2006, September 28, 2006).

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