The Wall Street Journal
Given the credibility that President Obama and Vice President Joe Biden lent to Cuban propaganda while they were in office, I half-expected to see them enjoying spring break in Varadero Beach last week.
The regime said Friday it will close its borders to foreigners starting March 24. But until now Havana has been trying to make lemonade out of the coronavirus by advertising Cuban holidays as an escape from the pandemic. The independent Cuban news outlet 14ymedio reported last week that regime tour companies were boasting about the island’s state-of-the-art health-care system, saying it’s capable of taking on the contagious virus. This is known as being hard up for hard currency.
Cuba already has been denounced for treating its medical workers like chattel when it sends them abroad to earn money for the regime and indoctrinate populations. But now it’s doubling down on the scheme, claiming that Havana is stepping up to help the world in a time of crisis.
It also maintains it makes magic in its pharmaceutical labs. Doctors around the world have long relied on interferon as an immune-system booster for treating viral infections and other illnesses. But now Cuba is using its army of global influencers to promote claims that its production of a type of the drug is the cutting-edge of science.
Italian tourists have experienced a different reality. A 61-year-old from the Lombardy region of Italy died of the virus on Wednesday at Havana’s Pedro Kuri Institute for Tropical Diseases, one of the island’s best hospitals. Another Italian corona patient, confined in the same facility, complained bitterly on social media about no toilet paper, no spoons for soup, no news about her condition and no communication with doctors.
In a country where soap and water are luxuries, ramping up traffic from Europe was a precarious strategy. But desperate times spawn crackpot measures, and the Cuban economy is skating dangerously close to the edge. The regime needs dollars to maintain the police state that has kept it in power for six decades. Its problem today, in a word, is oil.
Cuba hasn’t done well on its own since Fidel Castro took power in 1959. It was a dependent of the Soviet Union until 1991. Havana was then forced to legalize the dollar and microenterprises and let foreign investors take minority stakes in regime companies. But the ruling elite didn’t like it.
The Castros found a new sugar daddy in Venezuela’s Hugo Chávez, who came to power in 1999. A symbiotic relationship blossomed: Cuba would exchange its comparative advantage in repression for Venezuelan petroleum products. At the deal’s peak, from 2010-12, Havana received some $4 billion annually in oil subsidies from Venezuela.
But the party wasn’t to last. Venezuela was pumping 3.4 million barrels a day before chavismo. Output is now around 750,000 barrels a day-and falling-thanks to poor well management, a scarcity of skilled labor and a collapse of investment.
Caracas has been eating big discounts because it’s difficult for buyers to get around U.S. sanctions. Russia’s Rosneft, formerly Venezuela’s key customer, is said to be put off by all that effort. Other former buyers can get heavy crude more easily from Saudi Arabia. With the international oil-price swoon, tar-heavy Venezuelan crude has plummeted to between $10 and $15 a barrel.
Venezuelan storage capacity on land and at sea is full up, so it is sending the excess to Cuba. This has boosted daily shipments back to 100,000 barrels a day from lows of around 20,000 before fall 2019. The Castro regime has been filling its storage tanks and selling what it can on the black market.
Yet more than crude, Havana needs gasoline, diesel and gas oil for electricity production, which Venezuela used to provide but no longer has the infrastructure to produce. Venezuela resorts to swaps when it can, but the terms are terrible. So despite the uptick in crude supplies, Cuba is still limping badly.
Meanwhile the effects of the coronavirus shutdown “are likely to be catastrophic for Venezuela,” Francisco Monaldi, an energy economist at Rice University, told me in a telephone interview last week. Running water and soap aren’t readily available in hospitals or even in many homes. Gasoline shortages make getting imported food to cities outside the capital difficult. Venezuela is heavily dependent on some $3 billion in annual remittances from citizens who fled, mostly to other South American countries, in recent years. If their jobs dry up in a deep regional recession, so will the flow of money. This will put more pressure on Venezuelan leadership to end subsidies to Cuba.
What’s more, it may be necessary to cap wells, and that’s unlikely to be temporary. Experts say it won’t be easy to restart them when human and financial capital is in short supply.
All this explains Havana’s efforts to use the pandemic to boost European tourism and to create the illusion that it specializes in advanced medical care. It’s a sick joke.
By Mary Anastasia O'Grady
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