Restructured Debt to Mexico Could Precede Cuban Economic Change
Before Fidel Castro stepped down as Cuba's leader, Mexico signed a deal to restructure a $400 million outstanding debt owed by Cuba. This follows a six-year drought in trade and credit communications between the two countries.
The agreement could be the first step in repairing trade relations between the two countries, which reached nearly $500 million in the 1990s but fell to less than $200 million in 2007.
A statement from the Banco de Comercio Extreior de Mexico (Bancomext) expressed some hope that the agreement would be the catalyst in a process to return the commercial and financial relationships between the two countries to normal.
Not only could trade between Mexico and Cuba resurrect itself, but it could also lead to eventual economic changes in Cuba that would come from the absence of Fidel and the beginning of a new regime under Raul Castro. Cuba now has an opportunity to follow in China's footsteps to change economic policy to make it a more competitive country in the world market.
This could lead to Cuba choosing to distance itself from a continued close relationship with Venezuela. Currently, Venezuela supplies nearly 100,000 barrels of oil to Cuba on a daily basis. However, if Cuba were to open up to foreign trade, especially forging a relationship with the United States, it could move away from such a heavy reliance on Venezuelan oil and exploit the 2006 "big discovery" of 4.6 billion barrels of oil and 9.8 trillion cubic feet of gas offshore Cuba.
"There are signs that Raul Castro is looking to expand relations with other countries that could serve him as energy sources," analyst and author Eugenio Yanez said in an interview with the Miami Herald.
However if Raul Castro does take power, any economic changes will have to be made slowly to ensure financial stability after an extended period of economic stagnation. Also, any trade relations with the United States could only come after some adjustments to the U.S. embargo policy.
We want to hear from you. Questions, opinions and suggestions are all welcomed by the Rigzone Staff. Write us at email@example.com .