It seems as though cruel geology, and not economics, is the true dismal science. Whether one believes Cubapetroleo's announcement this weekend that Cuba may have oil reserves of 20 bn barrels (about the same as the US, or almost a quarter of Venezuela's reserves) or the US Geological Survey's more conservative estimate of close to 9 bn barrels (putting it between Norway and Mexico), it seems as though Cuba might one day become an oil exporter instead of an importer. There is plenty of talk of Venezuela becoming another Cuba, but can the converse soon be true (without, of course, any redeeming characteristics such as democratic elections)?
If these announcements do prove to be true (and that is a big "if"), and Cuba eventually takes its place among the pantheon of authoritarian regimes that finance their repression through oil, the prospect of liberty and democracy in Cuba will be the biggest casualty. Sure, with increased government income, the regime might afford buying off more of its citizens with an increased standard of living, but it will also strengthen its repressive hand and corrupt institutional hold. And those who struggle for freedom and reform, whether inside of Cuba or in exile, will surely have to adapt their tactics to face the reality of a more formidable tormentor.
But like anything else coming out of Cuba's state controlled propaganda machine (or as it's some times mistakenly characterized: the "press"), these announcements must be taken with a grain of salt. By its own account, Cubapetroleo arrived at these figures by extrapolating data of "very similar" undersea geology with Mexico's Bay of Campeche, as well as their own data and "inside knowledge" of Cuba's off-shore geology (hardly very convincing stuff). And regardless of its true size and Repsol's well (planned for 2009), they are still many years away from any significant amount of oil coming online and shifting the current equation, and these years might be full of challenges that cannot await for a potential oil bonanza off in the future. Besides, we've heard these type of announcements before (although of a different scale), and they didn't prove to be "game changers" in Cuba either.
And the timing is also suspicious. Is it really sheer coincidence and mere fortune that just when the credit crunch and impeding global economic slowdown, the hurricane devastation, and rising food and commodity prices, tighten the vise around the Cuban regime, it suddenly announces a newly discovered source of collateral and investment opportunity? Also, a couple of months before the 111th Congress is sworn in, this move seemingly creates a new anti-embargo constituency, inside the beltway, of "drill baby drill" congressmen and their oil industry lobbyists who will push for unconditional easing so as to not miss out on a cut (although in reality, as a fungible commodity, we can still benefit from the increased global supply of oil while still not importing it from Cuba).
What's your take on the validity of these claims? If there's more than just a semblance of truth to this, what fate do you think awaits Cuba? Will this perpetuate the regime's lifespan much longer after Castro(s) (how much farther in A.C.?) or is this too small a bulwark against the tide of forces pressuring Cuba, both from outside its borders and increasingly within them?
The price of gas might be dropping as demand plunges, but maybe these are still high times for South Florida Toyota Prius dealers.
Here are some of the articles:
BBC
Guardian (UK)
In other Cuba news:
- Due to the aforementioned "discoveries" and their possible implications to the regime, you might expect Raul Castro to be somersaulting the entire length of El Malecon. Instead, he was busy introducing his latest reform aimed at helping the Cuban people, since none have been uttered for quite some time. So in the wake of the utter destruction of the hurricanes, in which tens of thousands of homes were severely damaged or destroyed, Raul was helping to open up a Russian Orthodox church in the officially atheistic country's capital. He's not one to miss an opportunity to rekindle a strategic romance with an old comrade or maybe, now, to pray for more oil.
- Cuba dropped in rankings of infant mortality from 1960 to 2004, as reported by the New York Times. Hong Kong (now #2), Greece, Spain and Portugal, using "different" (i.e. less repressive) development models, are among those who leap-frogged Cuba (and us).
- With growing food and commodity prices, and the devastation of two hurricanes, Cuba faces a food crisis. Does it respond by taking the advice of a Nobel Prize-winner like Amrtya Sen, and just about every other economist in the free world, by liberalizing production, distribution and the market, or does it borrow a page from the ol' socialist planner playbook? Would you like to hazard a guess? So much for all the highly celebrated "reform" talk this summer...
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3 comments:
World capitalism is in such trouble that Washington has to virtually nationalize the banking system, yet you only have time for attacking Cuba.
Cuba offers US companies a chance at being welcomed. They could invest in Cuba if Washington would only get in the way.
At a time when US business is already in deep trouble, revolutionary Cuba offers an open door, but the exile militants like yourselves don't want to take it.
After Obama's speech to the CANF, there's no change in your tune. Why don't you wake up and smell the cafecito, chicos y chicas?
Walter:
Standing up for the right that Cubans have to a government that they freely elect is not attacking Cuba, it is defending it. That is what we do and it is born out of our love for Cuba and for our brothers and sisters on the island. On the other hand, defending, as you do, a government that that holds power by force and tramples upon the human rights of the Cuban people does not constitute a defense of Cuba, it is an affront to it and constitutes being an accomplice to tyrants.
If the energy that you and others like you spend making excuses for the Cuban government were spent defending the human rights of the Cuban people you could perhaps someday look back with pride at how you have focused your efforts.
With regards to your other arguments:
1. It is fairly clear you dislike capitalism and that thus you feel that the current global credit crisis and economic slowdown provides an opportune avenue to attack it as a model altogether. However, do not miss the big picture, the communist / command economy models that you seem to identify with has yet to create a single case of economic prosperity. Meanwhile, every developed country in the world runs based on a free-market economic system. As the largest economy in the world at approximately $14 trillion dollars, the U.S. economy will enter its next period of robust economic growth irrespective of whether or not it trades with a tyrannical government that, through its absolute control of Cuba's economy, has brought Cuba's per capita GDP to the lowest levels in Latin America (just about tied with Bolivia) and has only been able to take Cuba's total economic output to $50 billion per year (less than a third of the annual revenues of General Electric or about the same as the annual revenues of Sears). One day, Cuba will be a great trading partner to the U.S. as it once was, but that day will come when the Cuban people can realize their full potential in a free society.
2. It is not smart foreign policy or trade policy to unilaterally lift the embargo and trade with the very same tyrants who nationalized all private businesses in Cuba, oppress the Cuban people and who over 50 years have destroyed so much economic value in their quest to maintain power indefinitely by force.
3. In his speech to the CANF, Senator Obama mentioned clearly his support for not unilaterally lifting the embargo, a position consistent with ours, so there is no tune to change. He also agreed with CANF's policy recommendations to allow more direct aid to dissident groups who are working to build a free civil society in Cuba and to lift the current restrictions on Cuban-American travel to the island in order to facilitate more direct interactions between all Cubans so that, working together, we may peacefully resolve our country’s problems.
Pablo, excellent post.
I share your mistrust of predictions by the Cuban government, specially self-serving ones, and agree that an oil-exporting Cuba would be a "game-changer" in multiple ways.
I do wonder whether Cuba will benefit from this, even if true. They have no technological skill to speak of, and none of its freinds do either. How will they get the stuff out?
Also, the US has embarked on a long-term oil-reduction program which is not likely to be reversed. Investments in wind and biofuels are growing at double-triple digits, states are implementing RPS standards, americans are buying smaller cars, and new building materials are being used.
Long-term, the US is moving away from oil, so prices are not likely to stay at current levels. Any future revenue stream will likely be much less than currently estimated.
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