The Not So Odd Couple: Chávez & Castro

Memorandum to the Press 05.62
Word Count: 2550
Tuesday, 21 June 2005

The Not So Odd Couple: Venezuela’s Hugo Chávez and Cuba’s Fidel Castro

• In late 2004, President Hugo Chávez nearly doubled Venezuela’s daily oil barrel deliveries to Cuba and Havana doubled the number of healthcare professionals and teachers it was stationing in Venezuela.
• The ongoing relationship between Chávez and Cuba's Fidel Castro began with Chávez's 1994 visit to Havana, significantly deepened after Chávez was elected president in 1998 and reached its culmination in late 2004.
• Chávez, a long-time admirer of Castro's achievements and of Havana’s refusal to buckle to the U.S., has pursued close ties with Castro because the Cuban leader is committed to helping him achieve his vision of a Bolivarian state.
• Venezuela’s increasing subsidization of the Cuban economy has allowed the island to rebound from the devastation it suffered when the U.S.S.R collapsed in 1989.
• The main reason for the tension between the U.S. and Venezuela is because Washington is frustrated that Chávez has undermined its effort to force Castro from power, by propping up the Cuban economy and making it more immune to being brought down by Washington’s hostile tactics.

On April 29, 2005 Venezuelan President Hugo Chávez and Cuban President Fidel Castro met in Havana to renew their call for a hemispheric trade pact, the Bolivarian Alternative for the Americas (ALBA), as an alternative to the U.S.-led Free Trade Area of the Americas (FTAA). The leaders’ initiative is merely the latest in a series of joint actions aimed at strengthening economic and political ties between the two leftist, anti-U.S. regimes.

Cooperation
Chávez and Castro’s mutual affection for each other began 11 years ago when Chávez visited Havana upon his release from a Venezuelan prison in 1994, after staging a failed coup. Since then, the two men have remained friendly and after Chávez won the Venezuelan presidency in 1998, they have collaborated on several trade and political programs. In 2000, the two leaders signed an accord in which Chávez agreed to provide Cuba with 53,000 barrels of oil a day at preferential prices from his country’s extensive oil stock. In exchange, Castro pledged to supply Venezuela with 20,000 medical professionals and educators. In August 2004, shortly after Chávez easily won a referendum on his presidency, the agreement was expanded: Venezuela now provides 90,000 barrels a day and Cuba upped the number of medical, public health officials and teachers to 40,000 in order to help staff the increasing number of health care and teaching centers it has in Venezuela. In April, Castro and Chávez signed the Regional Integration Project to further meld their countries’ respective economies not only by calling for the ALBA, but also by ensuring an influx of Venezuelan capital (the Venezuelan state oil company and bank opened offices in Cuba) into the Cuban economy and providing for the Cuban purchase of US $412 million worth of heavily subsidized goods from Venezuela that are critical to the well being of the Cuban economy.

Chávez and Castro often work in tandem on a number of fronts, providing each other with critical political support while opposing Washington’s increasingly overbearing deportment in the hemisphere. In 2004, critics claimed that Chávez turned a blind eye to Cuba’s alleged human rights abuses and voted against investigating these violations by the United Nations (UN) Human Rights Commission. Both leaders also have vehemently denounced U.S.-mandated free market principles, specifically the FTAA, as being hostile to Latin America’s economic well-being. Chávez and Castro also infuriated the U.S. by loudly expressing their disapproval of the war in Iraq.

Chávez’s Reasons for Cooperation
Chávez began pursing closer ties with Castro’s Cuba at a time of deteriorating political and economic conditions in Venezuela as a result of unrelenting opposition by the country’s middle class-led opposition, this situation culminated in the attempted coup of April 2002. During the 1990s, Venezuela, as did most other Latin American countries, embraced the neoliberal economic policies encouraged by the International Monetary Fund (IMF), which all but required that commitments to social programs and economic equity had to be severely cut in order to use scarce resources to strengthen the country’s free market standing. In exchange for adopting policies that drained Venezuela’s education and healthcare systems of critical financial resources, the then corrupt and narrowly focused Carlos Andrés Perez’s government received billions of dollars from the IMF and as well as loans from the major private international banks. But such loans only served to dramatically increase the country’s foreign debt to over $22 billion in 1999, meaning even fewer funds could be earmarked for schools and medical facilities. By the end of the 1990s, the quality of life in Venezuela had fallen considerably as the education and healthcare systems had declined under the financial strains of neoliberal economic policies.

Chávez who came to consider himself a “new socialist,” won the vast support of Venezuela’s poor in his 1998 electoral victory and soon embarked on an ambitious campaign to implement social reforms, most notably to eradicate illiteracy. From early in his presidency it was clear that Chávez’s first priority was to improve the lot of Venezuela’s economically disadvantaged. After his convincing 2000 reelection victory, Chávez was even more emboldened to aggressively attack his country’s social failings – he further initiated a series of reforms, known as “missions,” to make medical care, for example, more readily accessible to Venezuela’s poor and continued his campaign against illiteracy and to better feed Venezuelans living below the poverty line.

However, Venezuela lacked both the medical and educational skills and professionals necessary to guarantee the success of his reform program. However, Castro’s Cuba has been remarkably successful in providing quality education and healthcare to all Cubans (Cuba has a near 100 percent literacy rate and universal health care). Thus, given that Chávez and Castro are both ardent socialists, it made eminent sense for Chávez to appeal to Castro for the necessary expertise to carry out his reform package on the basis of a barter arrangement. In 2000, Chávez and Castro reached an agreement in which Castro supplied Chávez with healthcare experts and teachers to assist underprivileged Venezuelan neighborhoods in exchange for oil at preferential prices. Chávez’s collaboration with Cuba represented a bold move to improve the life of the average Venezuelan.

Chávez also had a political motivation for cozying up to Castro. Chávez’s “new socialist” revolution, or as he calls it Bolivarism, named after South American revolutionary leader Simón Bolívar, promotes state intervention in the economy yet tolerates private business, and mobilizes society through his revolutionary party, but allows political opposition the necessary vehicles to proselytize as well. The goal of this medley of policies is to make Venezuela as self-sufficient as possible and to make it, in Chávez’s words, a “small major power.”

Chávez sees Cuba as, in a certain respect, a role model for his Bolivarian dream. He stated that in 1999: Venezuela should head “toward the same sea as the Cuban people […] a sea of happiness, true social justice and peace.” Chávez wants to partially emulate the success of Castro’s Cuba – a highly literate, relatively healthy society with a strong sense of revolutionary spirit and fundamental patriotism though plagued by low domestic living standards due to a derelict economy. Accordingly, he has welcomed Cuba’s assistance in helping to transform Venezuela into a more self-reliant society. Chávez has also replicated many of Castro’s societal ideas, creating Bolivarian Youth Brigades and Bolivarian Circles, which are similar to Castro’s Young Pioneers and Committees for the Defense of the Revolution, in order to build support among the poor for Bolivarianism. Chávez’s open admiration for Castro’s perceived success in transforming Cuba into a socialist society has influenced the Venezuelan president to see him as being able to help Venezuela achieve his vision of a Bolivarian state, and has admired the Cuban leader’s accomplishments, with relatively few resources and in spite of unremitting U.S. hostility

Chávez’s Bolivarian vision, much like Bolívar’s own, is continentalist in nature and emphasizes the creation of a unified South America that can operate as an independent power in the hemisphere and the world; i.e. free to thwart Washington’s goals for a dependent Latin America. Castro and Chávez’s shared opposition to the U.S.-domination of the global political system partially explains Chávez’s pursuit of a close relationship with Castro after he came to power in 1998.

Chávez’s anti-U.S. rhetoric in the late 1990s at first isolated him from other Latin American leaders who openly supported U.S. interests and policies. With the recent emergence of the New Left in Latin America – Argentina, Brazil and Uruguay, and with prospects that Mexico, Ecuador and Bolivia will soon join the list of left-leaning presidents, – Chávez’s vision of a Latin American coalition of nations may be near. However, any such coalition will probably not be as unified as Chávez would prefer, but certainly it will be a powerful force that could somewhat act as an antidote or counterweight, or even as a possible alternative in the future to U.S. power being unqualifiedly projected on the hemisphere and the international system.

Castro’s Reasons for Cooperation
For Castro, close ties with Chávez’s oil-rich Venezuela represents a strong remedy for the island’s perpetually hamstrung economy. With the 1989 downfall of the U.S.S.R., Cuba lost its largest trading partner and its economy grievously suffered. Despite the significant hardship caused by the loss of US $6 billion annually in subsidies from Russia, Cuba began the early phases of its recovery in the mid 1990s when the economy was restructured to encourage more foreign investment, leaving behind an entirely bleak few years known as the “special period.” As a result, the sugar industry, if only briefly, began to improve and Cuba became a popular tourist destination. However, Cuban standards of living still remained lower than they had been during the Cold War era. In many ways, Chávez’s 1998 victory and the subsequent 2000 trade agreement between the two countries was an absolute godsend for Castro, with Venezuela helping to prop up a still ailing Cuban economy. Despite limited improvements, some Cubans still lived in near poverty living conditions, especially after the 2004 drought which the Cuban government estimated cost the Cuban economy $1 billion. Venezuela’s daily oil shipments together with Cuba’s booming tourist industry provided Havana with the boost that significantly improved Cuba’s economy and enhanced Castro’s worldwide stature. The increase in daily oil imports allowed Castro in May of 2005 to double the minimum wage for 1.6 million workers, raise pensions for the elderly and deliver cooking appliances to poor Cubans. The daily 90,000 barrels subsidy has had a significant and marked effect on the Cuban economy, as even an anti-Castro researcher like Damian Fernandez, director of the Cuban Research Institute at Florida International University, observed: “Without this artificial lifeline the Cuban economy would be dead in the water.” Castro needed a close relationship with Chávez to raise the country’s declining standard of living, at the very time the Bush administration was single-mindedly tightening the screws on the Cuban economy.

As Chávez was drawn to Cuba, Castro was also politically motivated to pursue a close working relationship with Venezuela. For ten years, after the collapse of the U.S.S.R and as the U.S. came to dominate the hemisphere’s political agenda through heavily sold free trade agreements and economic reforms in the 1990s, aimed at coronating the private sector in the hemisphere, Castro’s Cuba was the target of Washington’s political isolation not only in the hemisphere but in the wider global community as well. The 1998 presidential victory of his close friend Chávez and the subsequent strengthening of relations between the two nations, along with dramatic shifts in attitude throughout the hemisphere, allowed Castro to end his political isolation and triumphantly emerge as a credible hemispheric leader.

Castro’s “Real Socialism” vs. Chávez’s “New Socialism”
Despite appearances to the contrary, Chávez and Castro differ on several critical ideological issues. Castro believes in traditional “real socialism,” in which the economy is controlled by the state and it exerts a strong influence over the economic affairs of its citizens and foreign trade. However, Chávez thinks “real socialism’s” time has passed, saying: “[w]e have to re-invent socialism. It can be the kind of socialism that we saw in the Soviet Union, but it will emerge as we develop new systems that are that are built on cooperation, not competition,” with this being seen as “new socialism.” One manner in which “new socialists” differentiate themselves from “real socialists” is that they are significantly more tolerant of private economic enterprise and considerably more experimental in the approaches they are willing to take to achieve their socialist goals. Evidence suggests that Latin America might be returning to its traditional “mixed economy” where an important role is assigned both to the public and private sectors.

The U.S. Reaction
It is no exaggeration to say that the Bush administration has been greatly exercised by Chávez’s budding relationship with Castro. In part, this stems from the administration’s renewed efforts to isolate and marginalize Castro by limiting the flow of dollars to Cuba by capping the number of times Cuban-Americans can visit their relatives on the island and by supporting Cuban dissidents in the hopes that the economy and Castro’s political support would deteriorate to the point where there would be a budding movement to remove him from office. However, the massive oil subsidy that Castro now receives from Chávez has allowed Cuban planners to take steps to improve the economy’s performance and has increased both living conditions on the island along with Castro’s popularity. Chavez’s policies have seriously undercut U.S. efforts to strangle the island’s economy in order to force Castro from power.

U.S. policymakers, and in particular, Secretary of State Condoleezza Rice are concerned that Chávez and Castro’s partnership could be the beginning of a new direction for the burgeoning New Left coalition in Latin America that is hostile to fundamental U.S. security interests in the region and Washington’s trade priorities for the hemisphere. During her recent Latin American trip, Rice expressed her concerns about Chávez, pointedly terming him a “destabilizing” influence in the region. Chávez, concerned that Washington’s increasingly hostile rhetoric toward him was the lead up to a possible invasion of Venezuela, threatened the U.S. with a “100-year war” if his country was ever invaded. However, the two nations are so economically dependent on each other – Venezuela sends 60 percent of all of its oil exports to the U.S. and the U.S. receives 15 percent of all its oil imports from Venezuela – that neither nation is likely to seriously consider outright military confrontation with the other. In fact, Chávez recently said of the U.S.: “Okay, we have differences, but let’s talk about them.”

The Future
As the New Left movement continues to gain strength in Latin America, Chávez and Castro will almost certainly continue to engage in economic and political cooperation to improve living conditions in their respective countries and to increase their influence in the international political system. This cooperation is one of the more interesting developments in the region and could reflect a giant leap in the direction of regionalism without the U.S. participating, and the recognition that the asymmetrical relationship of the U.S. and the rest of the hemisphere is so out of scale, that each might have to consider going their own independent ways.

This analysis was prepared by COHA Research Associate Hampden Macbeth.

June 21, 2005

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