Venezuela’s economic collapse and Washington’s new sanctions on companies shipping Venezuelan oil to Cuba have plunged the island nation into its most severe energy crisis since the collapse of the Soviet Union in the early 1990s. In response, Havana is looking to its old ally Russia to plug the hole in energy supplies left by the decline in Venezuelan shipments. But the crisis is hampering plans to implement economic reforms that Havana hopes will respond to popular demands for economic liberalization while retaining the Communist Party’s political dominance.
Visiting Cuba last week, Prime Minister Dmitry Medvedev promised that Russia would help Cuba through the current crisis. But the long-term challenge for Havana is how to develop energy security, locking in stable sources of supply that don’t depend on shifting political winds.
Energy insecurity has been a chronic problem for Cuba, which has no economically viable coal supplies, no hydro-power and little onshore petroleum reserves. During the Cold War, Cuba got most of its oil from the Soviet Union at subsidized prices in exchange for sugar. After the Soviet Union collapsed, putting an end to those favorable terms of trade, Cuba could not afford to import enough energy to power its farms and factories. Havana’s ability to finance imports fell by 70 percent, with GDP dropping by 35 percent. Electricity blackouts were common during the 1990s, and private cars disappeared from the streets for lack of gasoline.