Monday, February 26, 2024
Homelatin americaCuba is Venezuela's biggest loser

Cuba is Venezuela’s biggest loser

In the midst of chaos in Venezuela, a dependent Cuba and its economic future is walking on a tight rope.

As Venezuela's economic woes deepen, with an annualized inflation rate reaching 57 percent, and violent clashes between pro- and anti-government protesters escalate, the probability of a new government is high, making Cuba's future uncertain. Even if Nicolas Maduro, who succeeded the late Hugo Chavez as president, stays in power, he could be forced to cut aid to Cuba to help alleviate Venezuela's imploded economy, which suffers from stagnation, inflation and shortages.

For the last decade, Venezuela's oil has helped fuel Cuba's economy, providing 60 percent of the communist-ruled island's demands. In exchange, Cuba sends about 30,000 doctors to Venezuela, according to an analysis by Pavel Vidal, a former official at Cuba's central bank and now an economics professor at the Universidad Javeriana in Cali, Colombia.

The commercial relationship with leftist Venezuela accounts for 40 percent of Cuba's trade—or 18 percent of Cuba's gross domestic product, Vidal said. If Venezuela were to cut Cuba loose, completely or partially, it could cause Cuba's economy to contract anywhere from 4 percent to 7.7 percent.

"Cuba depends on Venezuela's political situation," Vidal said. "And right now, Venezuela is unpredictable."

(Read more: Venezuelan turmoil poses little oil threat—for now)

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