According to Euronews, 90% of Cuba’s debt to Moscow will be taken care of, about $29.53 billion and the remaining 10% ($3.29 billion), to be paid over the next 10 years. The remaining 10% also predicted to be invested directly back into sectors of the Cuban economy.
Russia plans specifically to invest in the development of Cuba’s Mariel Port, which is conveniently located 30 miles from Havana on the northwestern coast, situated in the Gulf Shore facing the United States.
According to NPR, in the 1980’s, ” it was the exit point for 125,000 Cubans who were desperately fleeing to Florida, some of them with assistance from the U.S. government. The Soviet Union was collapsing, and its aid to Cuba was withering. That, coupled with decades of U.S. embargo, was causing the island’s economy to nosedive.”
Now Mariel is a much quieter city, however that could soon change with the re-development of the port. The Mariel Port would be able to lodge some of the world’s largest cargo ships, with the help of Russian investment.
Russian Minister of Defense, Sergei Shoygu stated, ” that Russia would establish permanent bases in Cuba, Vietnam, Nicaragua, Singapore, and the Seychelle islands off Africa. The Russian navy also plans to visit other friendly countries, and Moscow is negotiating to open refueling stations for its strategic bombers.”
With Russia offering to cut off previous Cuban debt, there will be a much stronger resurgence of Russian influence within Cuba, just like in the olden days.
Brasil, with the 7th largest nominal GDP in the world, finds itself in a recession. Despite the hosting of the 2014 FIFA World Cup, Brasil’s economic stability has actually gone downhill instead of the reverse.
The Brasil’s statistics bureau reported, “economic output, GDP, fell by 0.6% in the three months to June, worse than analysts had predicted, and revised figures for the first quarter of the year also showed a fall of 0.2%.”
Brasil, recently the star country of Latin America, because of its advancements and initial progressive involvement in the global community, has taken a turn for the worst and hit a wall. Unfortunately, soon to be facing reelections, Brasil’s left-leaning President Dilma Rousseff has been of recent blame for the economic downturn.
“It is a good picture of what the economy is suffering – a slowdown in industry, a fall in investment, rising inventories. The recovery from here will be slight,” noted Eduardo Velho, chief economist at investment firm INVX Global in Sao Paulo. Velho also noted that great reforms would need to be implemented by whoever wins the election in October.
This is having a sufficient effect on interrelations and trade among Latin countries.
Due to the Ukraine Crisis and disapproval by the European Union of recent Russian actions, Russia has responded to EU sanctions by embargoing EU products. In turn this has pushed Russia to look for alternate sources of provisions.
Developing Latin America, with economies eager to expand has begun to welcome Russian as well as Chinese investment and trade negotiations. Although Brussels and other Western powers have urged against such increased relations, the opportunity to aid and support an entity such as Russia help aid in economic development.
Why wouldn’t certain Latin American countries take the chance to expand and create such a trade relation as the one being offered by Russia?
According to Reuters, Brasil jumped all in devoting 90 new meat plants to be geared to exportation for Russia. Brasil has also greatly began to increase its corn and soy bean sales to Russia.
Argentina as well jumped on board, sending members to Moscow in August to quickly sign exportation contracts. The eagerness of Argentina, deriving from the desire to increase revenues to stabilize it’s central banks reserves that have, ” fallen more than 5 percent over the last year to $28.968 billion,” reported by Reuters.
“Moscow has blocked food imports from the United States, the EU, Australia, Canada and Norway in retaliation for sanctions over the Ukraine crisis,” according to Reuters.
Chile, the leading economy within Latin America has also been reached out to by Russia to replace the EU’s supply of fish imports into Russia.
In the midst of the Crimea Crisis back in April 2014, stopping and negotiating in Kiev was not on the itinerary for Russian Chancellor Sergei Lavrov. He did not rush to the scene where the United Nations was putting great pressure on the evacuation of Russian forces and hoping to create a Security Resolution, no, Lavrov’s eyes were set on Cuba, Nicaragua, Peru, and Chile.
The question is, why was Russia’s head chancellor venturing to Latin America while the biggest crisis between Russia and the Western since the Cold War, had erupted? Although Obama is constantly scolded by Putin for referring to Russia as a “regional power,” Russia has been very active in trying to change that.
The Russian Minister of Foreign Affairs noted that Lavrov made the tour to, “delve into issues of bilateral cooperation” and “review [previously] approved agreements.”
At the same time, Lavrov specifically thanked Cuban and Nicaraguan presidents for their vote against U.N. condemnation of Russian actions in Crimea back in April.
Larvov happily met with Raul Castro and continued on to Nicaragua, Peru and finished up in Santiago, Chile.
Later, as known, Putin returned in July for another tour of various Latin American Nations.
As the world becomes more globalized and intertwined, more and more logistical agreements and alliances are made among countries. These agreements reflect the growing presence and importance of “free trade,” the unrestricted flow by a government of imports and exports between countries.
Latin America, a region greatly cultivated for its vast amounts of resources, is involved in many of these free trade agreements, but the importance here is what multilateral relations are being made within these agreements. The eyes of the world have slowly begun to linger over to Latin America as greater conflicts have arisen in previous regions of interest. So what are some examples of the logistical agreements in which Latin America has gotten involved in?
One of the most important trade agreements involved with the Latin American region is the Asia-Pacific Economic Cooperation, APEC. APEC was created in 1989 with the hope of creating a stronger Asia-Pacific community. It was established between 21 countries that are as follows: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; Viet Nam.
‘“APEC has 21 members – referred to as “member economies” – which account for approximately 40 percent of the world’s population, approximately 55 percent of world GDP and about 44 percent of world trade,”’ according to APEC’s website analysis.
Agreements and commitments by APEC are created on a voluntary basis. Unlike other multilateral trade bodies like the WTO, within APEC, there are no treaty obligations required of participants.
Another very important multilateral trade organization involved with Latin America is the Organization of Petroleum Exporting Countries, OPEC. OPEC consists of: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.
OPEC was originally created in a Baghdad Conference in 1960 between the founding five: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The OPEC alliance seeks to “secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.”
There is much debate, whether OPEC is an effective cartel, or an irrelevant alliance that actually has minimal effect on the fluctuation of the prices of oil. Between the 1960’s to the 80’s, OPEC began to gradually raise their prices which eventually led to the switch to alternate energy sources such as natural gas by buyer countries. This in turn hurt the petrodollar. Although prices had gone down during the 90’s, in the 21st century due to the conflicts in the Middle East and a political crisis in Venezuela, the demand for oil inevitably declined.
Despite the decline, Venezuela has been looked at as one of the leading crude oil producers within Latin America.
APEC and OPEC are just two examples of alliances made with countries in Latin America. Among these, there is also the: Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), Andean Community (CAN), Caribbean Community and Common Market (CARICOM), Free Trade Area of the Americas (FTAA), Global System of Trade Preferences among Developing Countries (GSTP), Southern Common Market (MERCOSUR).
Most of the agreements are metaphors for the alliances and multilateral relations that are connected by trade. With more recent developments, like the BRICS New Development bank that consists of: Brasil, Russia, Indonesia, China, and South Africa, Latin America’s dominance and importance has switched. This demonstrating Russia and China’s fancy to different aspects of the region, the bigger power of influence won’t just be the United States anymore.
The real analysis comes in asking, does the increase in free trade agreements have more advantages or disadvantages? The main benefits being, the increase in productivity and economic growth, but it is commonly known that most of the countries, especially Latin American countries struggle with an equal distribution of wealth despite the presence of recent economic growth.
This goes into the disadvantages, of economies, like those of Latin America that become especially dependent on international trade cycles. With every negotiation, setting the standard of a trade agreement, does not mean there is a level playing ground. For example the agricultural/cultivation sector of production where the actual resource (example: coffee) is bought for cheap within a country (example Brasil) and distributed by private enterprises at a greater price, is an illustration of exploitation. Simple trade agreements fail to protect the value of a product at its original cultivation.
Despite these factors, the number of free trade organizations that Latin America has joined have only grown. These relations will continue to be monitored.
Venezuela, a country scarred by “U.S.-backed coups,” as described by the BRICS Post has been one of the most active countries in Latin America to start steering away from U.S. relations and seeking partnerships with other countries.
This past July, Chinese President Xi Jingping, like Russian President Vladimir Putin, toured around Latin America affirming and creating mutual trade relations within the region. XI and Venezuelan Socialist President Nicolas Maduro met in Caracas to discuss bilateral funding and their trade agreements.
Just last year Xi and Maduro signed 24 agreements during Maduro’s visit to China, where in 2013, bilateral trade between the two had reached $19.2 billion according to a BRICS Post analysis. Maduro has attended BRICS meetings and supports the development of further BRICS and UNSAN (Union for South American Nations) relations and negotiations. Maduro hopes the two can grow to be a “working alliance.”
Venezuela has one of the most prominent oil industries in Latin America and in recent times has been widely turned to as an alternate oil source, China being one of these alternate partners. Venezuela is one of China’s main oil exporters. Venezuelan state oil company PDVSA has about a 40% investment in an oil processing plant in the Guangdong province of China. China has also been funding other projects as well for Venezuela, like funding the launch of two satellites for the country and working on the launch of a third one.
Putin clearly taking advantage of the 2014 FIFA World Cup being held in Brasil, as he decided to make a Latin America tour out of it, before reaching Brasil for the final game.
This July, in Buenos Aires, Putin met with Argentinian president, Kristina Fernandez de Kircher finalizing Russian plans to help build Argentina’s third nuclear power plant. Both presidents commented that the nuclear development will be for peaceful purposes.
With the invasion of Crimea last Spring by Russian forces, that are still ever-so present there today, it is curious to see Putin outside of the former Soviet realm. Putin, however is continually working to prove that Russia is not simply a “regional power,” as President Obama mentioned in an address to the nation.
“Mr. Putin said he “highly valued” Argentina’s stance on international issues, and noted that the growth in trade between the countries had increased by double digits in the past year,” according to Jonathan Gilbert of the New York Times.
Ironically, President Kircher, had accused many Western leaders of hypocrisy, as Crimea and its people had the right to vote in favor of Russia and to become apart of the nation, denying westernization and further integration into the European Union.
This blog is a platform for the investigation of the economic situations and governmental transitions within Latin America and how these factors have increased activities with unusual trading partners.