Russia Agrees to Write Off Cuban Debt Ahead of State Visit

Putin in Moscow
Russia's President Vladimir Putin attends a meeting in Moscow yesterday. Michael Klimentyev/RIA Novosti/Kremlin via Reuters

Russia has moved to strengthen ties with Cuba as it agreed to relieve 90% of the Communist state’s debt and invest in oil exploration projects off the island’s coast ahead of Russian president Vladimir Putin arrival in Havana for talks tomorrow.

Approximately $32 billion of Cuba’s $35.2 billion debt to Russia will be completely written off, Russian deputy finance minister Sergei Storchak said, claiming a large proportion of the figure accounted for credit given prior to the collapse of the USSR.

The remaining 10% of the debt will be used for environmental and development projects, reported Russian news agency ITAR TASS, with Russian companies already lining up for the contracts.

Russian state-owned oil companies Rosneft and Zarubezhneft plan to sign an agreement with Cuban state oil company Cubanpetroleo to explore elusive offshore reserves during Putin's visit, an aide said. Russian electricity trader RAO UES is also reported to have plans for projects in the island nation.

Putin will be received by Cuban president Raul Castro in Havana on Friday to hold discussions over the “ongoing bilateral economic and commercial relations” between the two countries.

Deputy foreign minister Lavrov has already met with his Cuban counterpart once this year. Last April he dubbed the U.S. trade embargo “unjust”, “contrary to the will of the United Nations” and “absolutely unacceptable”.

Putin’s visit underlines Moscow’s desire to establish new trade links with Havana.  

Over the last few years the Cuban government has been hard pressed to find developers for its offshore oil reserves. Currently the country’s oil demands are met almost exclusively by its main trading partner - Venezuela.

However, turmoil in Caracas has seen President Castro gradually grow more flexible on foreign investment. Most notably, this has resulted in the $1 billion redevelopment of seaport Mariel, funded largely by Brazil.

Its own oil reserves have not been successfully explored due to the island’s geography. Located in the path of the Gulfstream, an oil spill along the Cuban coastline could cause an uncontainable environmental catastrophe.

With only 110 miles between Cuba and the coast of Florida, further attempts at exploration of Cuban oil fields could cause consternation in the U.S.

Russia’s relationship with Cuba has long concerned the U.S. Earlier this month Miami Congressman Mario Diaz-Balart, a leading critic of the Castro regime, said the relationship had "damaged US interests and invited cronies of Putin's oil and security industries to our doorstep".