Russia and Cuba ink deals to revitalize communist-run island's ailing economy

[May 20, 2023]  By Nelson Acosta and Dave Sherwood

HAVANA (Reuters) - Russian officials and business leaders have signed multiple deals with Cuban counterparts at a forum in Havana this week, agreeing to work together to boost sugar and rum output, assure wheat and crude oil supply to the communist-run island, and overhaul crumbling tourist facilities.

The longtime political allies - both subject to U.S. sanctions - are seeking to cement economic ties by facilitating trade and investment.

"(The deals) constitute a milestone in the history of our bilateral and business ties," said Ricardo Cabrisas, Cuba's foreign trade minister, in a speech closing the forum on Friday.

The agreements include a contract for Russia's Prodintorg to supply wheat to Cuba's state-owned Alimport, aimed at "guaranteeing the stability" of supply to the Cuban population, according to a document from the Cuban-Russian Business Committee viewed by Reuters.

Another deal will create a Cuba-based marketplace for Russian goods, including food and home goods, called Rusmarket, which will also help spur development of more direct and fluid shipping routes between the two countries, the document said.

A third deal states Russian and Cuban intention to revive the decrepit residential beach community of Tarara, whose white sand beaches just minutes from Havana, the document says, are "ideal for enjoying the ocean, fishing and diving."

Russian deputy prime minister for tourism, sport, culture and communications Dmitry Chernyshenko announced separately on Friday a presidential order to reinstate by July regular flights between Russia and Cuba, suspended since March 2022 due to the conflict in Ukraine.

Other agreements announced this week include one aimed at developing a Russian-Cuban rum company, which would seek to boost exports of Cuba's prized rum. Russia also provided funds, know-how and technology to restart a steel mill in Cuba to supply construction materials on the island, according to Cuba state-run media reports.

Top Russian business leaders lauded Cuba earlier this week for opening the door to Russian investors and for providing them with "preferential treatment," including tariff exemptions, long-term land concessions and ease in repatriating profits.

Cuba's President Miguel Diaz-Canel, Cuba's Foreign Trade and Investment Minister Ricardo Cabrisas and Deputy Prime Minister of the Russian Federation Dmitry Chernyshenko chat during a forum of Russian entrepreneurs in Havana, Cuba, May 19, 2023. REUTERS/Alexandre Meneghini

More than 150 Russian businesspeople attended the forum in Havana, according to Cuban officials.

SUGAR DEAL

Russia this week also promised to help revive Cuba's once-vaunted sugar industry, which has nearly collapsed in recent years as its production has plunged to historic lows.

Aleksandr Bogatyr, of Russia's Progress Agro, told Reuters on the sidelines of the forum that his firm and Cuban state-run sugar company Azcuba would begin a joint venture as early as next year to overhaul the obsolete "Uruguay" sugar mill in Sancti Spiritus province.

The firm hopes to eventually export as much as 150,000 tons of sugar per year, about one-third of this year's countrywide target.

"Cuba was once one of the top producers (of sugar) on the international market and with this project, working together, we hope to gradually lift levels of output," Bogatyr said.

He called the project a Russian investment, but declined to give figures.

"It would be a significant investment because we'd bring all of the new equipment and organize the supplies necessary to produce cane, such as fertilizer, and specialized technology," he said.

Bilateral trade between Cuba and Russia reached $450 million in 2022, three times that of 2021, and soared to $137.6 million in the first four months of 2023, nine times that of the same period the previous year, Russian officials said.

(Reporting by Nelson Acosta and Dave Sherwood in Havana, Editing by Rosalba O'Brien)

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