Russia's long shadow over Cuba

In July 2014, a report in the Moscow daily newspaper Kommersant caused a sensation when it revealed that Russia would reactivate its "Lourdes" listening station in Cuba, which is located around 160 kilometers (100 miles) from the continental US. At one point nearly 3,000 employees used to work at this secret listening post which was the largest outside of Russia.

During the Cold War, Moscow used the base to listen to telephone calls and radio traffic in the US. But in 2001, Vladimir Putin ordered station's closure for financial reasons. The alleged reopening plans announced three years ago reflected Moscow's increased interest in Latin America and its longtime ally Cuba. More precisely they were a result of rising tensions with the United States and the West in general as a result of the Syrian conflict and the Ukraine crisis.

Although the listening station is still shuttered, the current environment is similar to that in the summer of 2014; while relations between Cuba and the US are rapidly cooling down, Russia is stepping up its game.

According to Tass, the Russian government's news agency, the Kremlin and the Cuban government agreed in mid-October to expand Russian oil supplies and deepen cooperation on oil production around the island.

This help could not come at a better time, since Venezuela is plagued by economic and political problems and can no longer provide a steady delivery of oil — leaving a hole for the Russian energy giant Rosneft to fill.

The oil sector as a trailblazer

As early as March, Rosneft had already committed to deliver 250,000 tons of oil and diesel fuel to Cuba. Observers suspect that the business is part of a so-called triangle deal. In the last two years, Rosneft lent PDVSA, Venezuela's state-owned oil and natural gas company, an estimated $5 billion (4.3 billion euros). Any oil supplied to Cuba by PDVSA could thus go toward settling this debt — thus completing the triangle.

The scenario is reminiscent of the 1970s and 1980s, when the Soviet Union was the main guarantor of Cuba's economic — and hence its political — survival.

This went hand in hand with the Sovietization of the country. At the time Soviet products poured into Cuba, replacing refrigerators, televisions and other consumer goods from the United States. In addition, more and more Ladas and other Russian cars started to appear on the streets of the island.

In 1972, along with Vietnam, Cuba also became the only third-world country member of the Soviet-led Council for Mutual Economic Assistance (COMECON). In the 1980s, the Soviet Union was providing annual economic aid of about $2 billion in addition to about 13 million tons of oil. Cuba became increasingly dependent on the Soviet Union and by 1989, 85 percent of its foreign trade was with COMECON partners.

The collapse of the Soviet Union and the dissolution of COMECON in 1991 were therefore especially hard on the Caribbean island. In 1993, Russian oil supplies fell from 13 million tons to 4 million tons, while imports fell by 75 percent. Cuba was plunged into a deep economic crisis. In 1991, the island's debt to the Soviet Union amounted to about $35 billion.

Being generous from afar

Decades later in 2014, Russia —the successor to the Soviet Union — forgave 90 percent of Cuba's debt. The remaining $3.5 billion is supposed to be settled by giving preferential treatment to Russian investments on the island.

Thus Rosneft is involved in the modernization of Cuba's largest refinery in Cienfuegos, even through Venezuela has drastically reduced its oil deliveries. Instead of 100,000 barrels a day, Caracas is currently only delivering about 55,000 barrels a day to the Caribbean island. Against this background, Cuba has also extended test drilling in the Gulf of Mexico. Unsurprisingly, Russian companies are also involved in this initiative.

In September, both countries signed a whole package of agreements, including in the energy and railroad sectors, while other agreements cover food production and the textile industry. In addition, Russia is suppling trucks, buses and elevators. The island also expects around 100,000 Russian tourists this year.

Geostrategic interests

In all, trade between Russia and Cuba rose 73 percent in the first half of 2017 to $176 million. It is still a long way from Cuba's biggest trading partners — China and Venezuela — but the trend is clear. 

Russia also signed an agreement at the end of 2016 to modernize Cuba's armed forces. And reports keep appearing that Russia could again open a military base on Cuba. However, this seems unlikely since Havana is still interested in a stable relationship with the US.

But in the past months this relationship has deteriorated since US diplomats were reportedly victims of "acoustic attacks" in which at least 22 US diplomats and their immediate family suffered from migraines, nausea, memory gaps and numbness. Some have even reported a loss of hearing. As a result the American government withdrew a large part of its embassy staff from Cuba and expelled 15 Cuban diplomats from the US.

Yet while the tensions between the US and Cuba grow under Donald Trump, countries like China, Iran and Russia are stepping into the breach.

"Cuba is trying to diversify its relations," says Richard Feinberg, an expert on Latin America at the Brookings Institution. "As closer economic relations with the US are not likely to occur in the coming years, one has to look for alternative allies, especially strong countries such as Russia and China can offer favorable payment conditions."