Soviet-era debt bogs down Cuba-Russia ties

The stained-glass image of Lenin still dominates the reception hall of Russia's embassy in communist Cuba.

But little else recalls the heyday of Soviet-era ties with Havana in the empty corridors of the massive concrete building that once was teeming with diplomats.

Its tower stands out starkly in the leafy neighbourhood of Miramar like a monument to past Soviet presence on the Caribbean island, along with the shell of a ballistic missile at Havana's fortress museum.

For a decade, capitalist Russia has sought to rebuild ties with one of the world's last Marxist states that survived the collapse of its Soviet benefactor.

Moscow's efforts to revive trade with its oldest partner in Latin America have made scant headway, bogged down by Cuba's large debt to the former Soviet Union and persistent Cuban acrimony over the demise of Eastern bloc communism.

"We have good political and diplomatic relations. What is failing is trade," Russian Embassy counsellor Eugenio Gliok said in an interview.

Bilateral trade amounted to little more than $200 million last year, a far cry from the billions of dollars in subsidised commerce - mainly sugar-for-oil barter at preferential prices - that benefited Cuba until 1991, when the collapse of the Soviet Union plunged the island into deep economic crisis.

Cuba wants to buy Russian goods, such as new Ilyushin planes to renew its aging airline fleet including a last generation IL-96 for use by President Fidel Castro, but the cash-strapped nation's debts have been a hurdle to signing deals.

Moscow claims Havana owes 20.8 billion transferable rubles, or $23 billion. Havana does not recognise this debt and has presented a counter claim of $40 billion in damages caused by the demise of the Soviet Union, such as unfinished work on a nuclear power plant, an oil refinery and a nickel facility.

"The problem is very complicated. Russia has forgiven many Third World debts. Talks are under way to resolve this but no agreement has been reached with Cuba," Mr Gliok said.

Cuba has also run up post-Soviet debt and is in arrears on a credit line opened in 1993 to pay for imports from Russia. Mr Gliok said the new debt has become a problem for Russian companies trying to do more business with Cuba.

Since the mid-1990s, Russian diplomats have sought to develop what they call "non-ideological" relations with Cuba.

Russian President Vladimir Putin visited Cuba in December 2000 to turn the page on the past.

But 10 months later he pleased Washington and infuriated Havana by announcing that Moscow was closing its electronic espionage base on the island.

The Lourdes listening post was built in 1964, two years after the Cuban missile crisis that brought the world to the brink of nuclear war. The eavesdropping station allowed Moscow to monitor US communications throughout the Cold War.

For Cuba, the loss of $200 million in annual rent was seen as a stab in the back by a former ally that had betrayed the cause of socialism.

The acrimony has not cleared. Castro accused Russia of abandoning Cuba by severing Moscow's agreements with Cuba and drawing close to his ideological archenemy.

"Russia, allied with the United States, broke all the accords and betrayed Cuba," President Castro said in a June 2002 speech.

Russian diplomats are looking to the future, hoping to build long-term ties based on the friendship of the Cuban people, if not their leaders.

Many Cubans studied in the Soviet Union and speak Russian. Some 1,500 Russians reside in Cuba, mostly women who married Cubans and settled for good on the island.

But the key to the future is trade, and that is up to the businessmen now that Russia's economy has been privatised wholesale, Mr Gliok stressed. "The state can no longer tell companies to do business with Cuba. The Soviet command economy no longer exists," the diplomat said.

Russia is still a big consumer of Cuban raw sugar and bought 1.5 million tonnes last year but did so through traders on world commodity markets with no government involvement. Meanwhile, with just a dozen diplomats stationed in Havana, the monumental embassy inaugurated in 1987, and visited by Soviet leader Mikhail Gorbachev in 1989 when the winds of Perestroika were blowing strongly, is looking very empty.

There is so much free space that apartments in the diplomatic compound are being rented out to Russian businessmen.