Cuba Is Hoping To Replace Venezuelan Oil With American Tourists

http://fivethirtyeight.com/features/cuba-is-hoping-to-replace-venezuelan-oil-with-american-tourists/


Cuba’s strategic pivot toward the United States got specific on Thursday, as the White House announced new regulations easing travel and other restrictions for Americans wishing to go to the island. This same week, oil prices flirted with levels of $40 per barrel. Americans don’t usually think of these stories as being in any way related. But Venezuelans do.

When the historic thaw between Cuba and the U.S. was announced last month, one detail jumped out at Venezuelans. Secret negotiations had begun, we were told, a year and a half before. In Caracas, everyone could do the math: The talks started right after Hugo Chávez, the leader of Venezuela’s socialist revolution and Cuba’s staunchest ally, died.

Few could mistake the timing for a coincidence, or be confused about the message being sent: Havana had sized up Venezuela’s untested new leadership and hedged against the possibility the countries’ close relationship wouldn’t last much longer.

But it took the recent freefall in oil prices for Havana to take the plunge and finalize the deal. The reason is that the considerable help Venezuela sends Cuba is in the form of barrels, not dollars. As oil prices fall, the value of Venezuela’s aid falls. In the final quarter of last year, Cuba’s state finances began to look worse and worse.


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Great article covering the impact of low oil prices to Cuba and Venezula along with how it is changing relations between countries.