Cuba and other Venezuela beneficiaries worry about life after Chavez

CARACAS, Venezuela — In communist Cuba, people remember how painful it was to lose the patronage of the former Soviet Union, their longtime sugar daddy. They certainly don’t want to lose another one.

But that’s the fear now gripping the island, as Cubans ponder the fate of Hugo Chavez, Venezuela’s left-wing president, who recently underwent cancer surgery in Havana. Now back in a hospital in Venezuela, Chavez is reported to be undergoing a new and “difficult” round of chemotherapy, his condition a closely guarded secret. Many Cubans are concerned that the death of Chavez could result in oil-rich Venezuela getting a new leader who is less enthralled by the idea of socialist solidarity, and less keen on propping up the chronically underperforming Cuban economy.

Chavez, 58, was too sick to attend his swearing-in ceremony in early January in Caracas, creating a constitutional crisis that was resolved, to some extent, when Venezuela’s Supreme Court ruled that his attendance wasn’t necessary for him to begin serving his fourth presidential term. If Chavez dies, the Venezuelan Constitution mandates that a special election be held to choose his replacement.

Havana residents, meanwhile, say local gossip tends to mingle questions about Chavez’s health with concern about the future of the energy lifeline Chavez has thrown them, consisting of about 100,000 barrels of heavily subsidized Venezuelan oil a day. That’s about two-thirds of Cuba’s daily oil consumption.

“Undoubtedly, anyone you talk to here knows that Cuba depends on Venezuela economically, and that a change would be very traumatic,” Hector Palacios, 69, a Havana-based sociologist, said in a telephone interview.

Cuban gadfly blogger Yoani Sanchez, writing in the Spanish newspaper El Pais, recently recalled part of a conversation she overheard between two women in the capital:

“If something happens to Chavez,” one of them said, “we are going to fall into a second ‘Special Period.’”

The Special Period was what Cuba’s communist leadership called the era of severe austerity imposed in the early 1990s after the breakup of the Soviet bloc, one of the most trying times in modern Cuban history.

For decades, the Soviet Union and its allies bought Cuban sugar at inflated prices and, much like Venezuela today, supplied the island with large quantities of cheap oil. When the Soviet Union ended, so did the arrangement, and the Cuban economy approached the brink of collapse. Fuel shortages forced farmers to turn to draft animals to plow their fields. Food shortages were so severe that house cats ended up on dinner tables.

But then a new socialist ally emerged from Cuba’s own backyard. Chavez, an acolyte of Cuban leader Fidel Castro, was elected in 1998. By 2000, Venezuela, which boasts the hemisphere’s largest petroleum reserves, had stepped in to provide cheap oil. The Cubans are free to sell any oil they don’t use on the open market to generate badly needed dollars. The total value of Venezuelan aid to Cuba could amount to $6 billion a year.

Following his vision of a more economically integrated Latin America independent of U.S. influence, Chavez has extended his largesse to other Caribbean and Central American countries under the so-called Petrocaribe program, which allows nations to buy oil from Venezuela on extremely generous terms.

The purchasing countries typically pay 5% to 50% of market value for the oil and pay off the remainder over a period of up to 25 years, with goods and services sometimes accepted as payment in lieu of cash.

As a result, Cubans aren’t the only ones worried these days. Officials in the Dominican Republic, Nicaragua and Jamaica have expressed concern that a post-Chavez Venezuela would not have the political will to continue the costly program. Its leaders will face a domestic fiscal deficit of nearly 20% caused in part by Chavez’s popular anti-poverty programs.

Though poverty has declined under Chavez, the country has suffered in other ways, with a 20% inflation rate and food shortages stemming from federally mandated price controls. And while Chavez was being treated in Havana, his designated political heir, Vice President Nicolas Maduro, ordered a 46% devaluation of the bolivar, the Venezuelan currency, which will probably send inflation soaring even higher.

Still, there is a good chance Chavez’s socialist program would survive without him. He remains popular in Venezuela, and experts say that Maduro — a former bus driver and labor leader sympathetic to Havana — would have the best chance of succeeding Chavez as president if elections are called before the impact of the currency devaluation is deeply felt.

The anti-Chavez faction may again be represented by Henrique Capriles, Chavez’s opponent in last year’s presidential contest who has said he opposes giving away Venezuelan oil as “gifts.”

The good news for Cuba is that, regardless of who the next president is, it won’t be easy to quickly unravel the relationship between the two countries. Cuba pays for its oil, in part, by supplying Venezuela with about 60,000 workers. About half of them are the doctors, nurses and technicians who staff the 10,000 clinics in a medical outreach program that is a popular showpiece of Chavez’s welfare state.

The two countries’ cooperation also includes numerous joint commercial ventures and more than 150 binational accords signed since 2000. The National Assembly, moreover, has a pro-Chavez majority, and elections for deputies aren’t scheduled until September 2015.

After the Special Period, the Cuban government realized it needed to diversify to avoid an over-reliance on one key ally. Today, Spain is heavily invested in the Cuban tourist business, Canada in its nickel industry. China, Vietnam and Brazil also have significant investments on the island.

All of that could soften the blow if Venezuela ever broke up with Cuba. But some say Cuba remains dangerously reliant on Venezuela, which is far and away its largest trading partner.

Still, Cuban officials are trying to gain some economic autonomy. Last year, exploratory drilling rigs made three attempts to find viable offshore oil wells in Cuban waters. One effort was headed by PDVSA, the Venezuelan state oil company; one by a Spanish, Norwegian and Indian consortium; and a third by a Malaysian-Russian team.

All three attempts failed, even though the U.S. Geological Survey estimates there could be nearly 5 billion barrels of recoverable crude off Cuba’s northwestern coast.

It’s safe to assume the drilling will continue.

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Times staff writer Fausset reported from Mexico City and special correspondent Kraul from Caracas. Special correspondents Mery Mogollon in Caracas and Cecilia Sanchez of The Times’ Mexico City bureau contributed to this report.