Cash-strapped Cuba eyes Asian economies
Posted: 12 May 2007 1020 hrs

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HAVANA - Communist Cuba is stepping up contacts with Asian nations, most of which do not share its political views but have the potential to invest heavily in the communist-run island.

Just a few days ago, Chinese Defence Minister Cao Ganchuan and Singapore's Deputy Prime Minister S Jayakumar found themselves in Havana at the same time, a coincidence that reflected a recent flurry of diplomatic activity between Cuba and Asia.

"Asia is the area of the world that has the most recently successful economies, and Cuba needs to diversify its ties," said Marifeli Perez-Stable, a Cuba expert at the Washington-based Inter-American Dialogue think-tank.

She also believes the diplomatic activity could signal an eventual shift by Cuba toward a more open economy under acting president Raul Castro, who has officially led the country since his older brother Fidel Castro underwent surgery in July.

"I see it as a hopeful sign Cuba might slowly reorient its foreign policy toward its economic interest," said Perez-Stable.

Earlier this month, Japan's Vice Minister for Foreign Affairs Midori Matsushima held talks with senior Cuban officials during a rare visit by a Japanese official to the communist-run Caribbean nation.

And last month, Cuba's Foreign Minister Felipe Perez Roque travelled to India, Vietnam and China, returning to Havana in time for a visit by Wu Guanzheng, an influential member of China's Politburo.

While Chinese military visits to Cuba, like Cao's trip, are frequent, relations between the two countries are predominantly commercial.

China is Cuba's second largest trade partner after Venezuela, with trade close to two billion dollars in 2006. It is also a major source of credit.

"The Cubans and the Chinese have flourishing relations. The Chinese are in Cuba big time," said Brian Latell, a former CIA analyst.

Trade with China has grown steadily since the 1991 collapse of the Soviet Union deprived Cuba of its staunchest ally and financial backer.

The bilateral trade has been crucial in helping Cuba deal with its transportation crisis, with the supply of sorely needed locomotives and buses from China.

Yet, a major investment in Cuba's nickel industry, promised by President Hu Jintao during a 2004 visit to Cuba, never materialized, and both sides remain tight-lipped about the fate of the project.

"I think they Chinese are beginning to realize Cubans are not easy to deal with, they don't pay their bills on time," said Latell of the Washington-based Center for Strategic and International Studies.

Miami University's Cuba Transition projects estimates that Cuba owes China 1.77 billion dollars, while Japan is owed 2.2 billion dollars.

But potential investors are keeping a close eye on exploratory drilling just off the Cuban coast, that could one day turn the financially ailing regime into a flush oil exporter.

India's Videsh and Malaysia's Petronas are among the companies exploring for oil in Cuban waters of the Gulf of Mexico.

"It makes perfect sense for Cuba to be reaching out to Asia, particularly if Raul Castro opens up the economy from where it is now," said Perez-Stable. – AFP/ir