In a clear signal of their strengthened alliance, Cuba will grant preferential treatment to investors from Russia, allowing them to lease land for 30 years, an unprecedented step in the history of the island’s communist government, a Russian official told Russian business representatives in Havana.
Boris Titov, Russia’s presidential commissioner for entrepreneurs’ rights and chairman of the Russia-Cuba Business Council, told representatives of more than 50 Russian companies on Thursday that Cuban authorities “are ready to provide special conditions for Russian businessmen,” Russian news outlet Sputnik reported .
According to Sputnik and the Reuters news agency, the Russian official said the concessions include the right to make use of Cuban land for 30-year terms, duty-free importation of agricultural machinery and the right to repatriate profits in foreign currency, which the Cuban government currently restricts.
In a separate announcement, Russian Deputy Prime Minister Dmitry Chernyshenko, who arrived on the island on Thursday on an official visit, said the Cuban government has also green-lighted Russian banks to open subsidiaries to finance Russian businesses on the island and that of the countries ” will transition to ruble-based investment in our joint projects,” according to a Russian government statement.
On Friday, Chernyshenko announced that Russian state airline Aeroflot will resume regular flights to Cuba on July 1, the Russian news agency Tass reported.
“Relations between Russia and Cuba have historical significance,” Chernyshenko said upon arrival on the island, adding that he carried instructions from Russian President Vladimir Putin, a Russian government statement said. “We intend to do everything possible to help the Cuban economy reach a decent level.”
The flurry of announcements is the clearest sign yet of the Cuban government’s decision to move further away from opening its economy to US investors, especially Cuban Americans, in favor of its old political ally as the island seeks a lifeline out of its economic crisis. It might also add tension to Cuba’s already strained relationship with the United States at a time when the Biden administration is moving to further expand sanctions against Russia for its invasion of Ukraine.
“Nothing and no one can stop it,” Cuba’s minister of foreign commerce, Ricardo Cabrisas, said of the economic ties with Russia, Reuters reported.
In contrast, the Cuban government has yet to respond to the Biden administration’s authorization to a US company to offer a loan and invest in a small private business in Cuba last year, a first in several decades.
Cuba blames the island’s economic crisis on the US economic embargo and the impact of the COVID-19 pandemic while refusing to make substantial reforms to its inefficient centrally planned economy, which restricts private property, market competition and investments. The government authorized Cubans to own small and medium-sized private businesses in 2021 for the first time in several decades. But factions within the government are divided on how far they want to go to boost the private sector, which Communist Party hardliners see as a threat to their grip on the population.
Officials from the Ministry of Foreign Affairs have tried to assure potential US investors, in particular Cuban Americans, that they can do business on the island. Still, the lack of Cuba’s response to the US license and the increased ties with Russia signaled that hardliners are winning for now.
Allowing Russian companies to lease land might be particularly controversial because American citizens and companies still hold certified property claims over lands confiscated by Fidel Castro shortly after he took power in 1959.
The land-lease measure, which was not reported in Cuban state media, might also add to the population’s discontent with the government of Miguel Díaz-Canel.
The Cuban government is the country’s largest land owner after Castro ordered the confiscation of most lands through a so-called agrarian reform. Excessive government control over lands, farming, food distribution and prices has caused agricultural production to plummet, and economists have advised the government to let more Cubans own or lease land for agriculture.
For Russia, finding new markets for its products has become more crucial after its invasion of Ukraine led to financial and economic sanctions by the US and the European Union. Several officials have traveled in recent months to the island, which Putin sees as a key ally only 90 miles away from US shores.
Russian officials in Havana touted a number of deals in the works, including Cuban hotels accepting Russian Mir payment cards, increasing the number of charter flights connecting the two countries, opening a trading house in Havana and establishing a direct route for freight transportation. Officials also said Russian trade with Cuba has grown to $452 million, three times the amount in 2021, with oil accounting for most of it.
But some experts doubt Russian companies’ real appetite to invest on the island and take advantage of the promised benefits, given Cuba’s long history of defaulting on creditors and fears of litigation over property rights.
These concessions “are not representative of a robust government-run economy; it is almost a message of desperation,” said John Kavulich, president of the US-Cuba Trade and Economic Council, whose company received the US government license to invest in a private business in Cuba.
“Given Cuba’s financial history, it is quite likely that the Russian experience may not be long-lived,” he added.