China Is Squeezing Russia Out Of Cuba

The island is experiencing a deep economic crisis.

China is increasing its economic presence in Cuba, squeezing out Russia, notes Reuters. Amid the island's energy collapse, China is planning 55 new solar power projects. Chinese ships have already arrived at the port of Mariel with solar panels, spare parts and fuel. Russia was originally supposed to participate in these initiatives, but most of the Russian projects were never realized.

Cuba is experiencing a deep economic crisis: the country is facing shortages of food, fuel and medicine, hours-long power cuts, reduced tourist traffic and exports. The situation is exacerbated by sanctions imposed by the Donald Trump administration. The state of Cuba's power grid is critical: over the past year, the national power grid has failed four times, leaving millions of people without light and paralyzing the work of schools and businesses. The commissioning of Chinese solar plants is expected to significantly increase generating capacity, virtually covering the daytime power shortage and reducing fuel consumption for nighttime power supply.

Russia pledged significant support to Cuba two years ago. In May 2023, Deputy Prime Minister Dmitri Chernyshenko attended the inauguration of the island's largest steel plant, rebuilt with a $100 million Russian loan.However, despite the ceremony, production never got off the ground: severe fuel and electricity shortages paralyzed industry across the island.

At least eight agreements between Russian and Cuban structures were signed during that visit - on wheat supplies, opening of the Rusmarket supermarket in Havana, restoration of historical architecture and cooperation in the field of artificial intelligence. A project to restore the resort village of Tarara near Havana was also presented. However, most of the initiatives have remained on paper: the buildings in Tarara are still abandoned, Rusmarket never opened, the Yumuri shopping center is partially empty, and the restoration of the Santo Angel Church has stalled.

Since 2018, Cuba has been participating in China's One Belt, One Road initiative. Since then, Beijing has invested in key facilities - transportation, port and telecommunications infrastructure. Against the backdrop of Moscow's inability to provide loans, Russia is losing its status as Cuba's main foreign economic partner. According to William LeoGrande, a professor at American University, Chinese investment could play the role of a "lifeline" for the Cuban economy.

Fulton Armstrong, a former U.S. National Intelligence Officer for Latin America, believes that Russian and Chinese investments are insufficient to overcome structural problems. "Havana cannot count on a magic pill from either Moscow or Beijing," he said. - Only a strong flow of trade and investment from China could stabilize the situation, but that is unlikely."

Conditions for financing both Chinese and Russian projects remain largely opaque. It is unclear whether the support is provided through state-owned banks, private companies or other mechanisms, as well as how exactly Cuba will settle these obligations. Russia previously granted Havana a deferral of payments on a 2015 €1.2 billion loan allocated for the construction of two power plants, Maximo Gomez and East Havana. And in 2014, President Vladimir Putin wrote off $32 billion of Cuba's debt.

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