There Will Be Blood

The Cuban decision to expand its drilling operations in the Gulf of Mexico is a risky move for the regime in Havana.

As the Chinese-built “Scarabeo 9” platform began offshore drilling off the shores of Cuba, commentators in North America have tried to look past the grainy images and gauge what oil drilling will mean for Cuba. Some believe the move will bring the regime closer to the US, others that enriched by oil wealth, Cuba’s aged Communists might be able to re-entrench themselves.

This would be disconcerting to American officials who had hoped that Cuba under Raul Castro would embrace the “Market-Leninism” of China. While oil might give new life to the regime it is just as likely to cause greater instability.

For Cuba, the biggest unknowable is not the number of barrels in the ground – it’s the effect the find will have on the perceptions of the Cuban people. A Cuba that suddenly produces oil could lead to renewed calls for economic expansion. Cuba’s leaders have long blamed the ills of the country on America. This position may become less tenable if the communist party changes its slogan from “Viva La Revolucion” to “Drill, Baby, Drill.” In Egypt, during the rule of Mubarak, I met many Egyptians who believed that Egypt could quickly become a rich country if only the money from Egypt’s petroleum resources and Suez Canal tariffs were used fairly. Clearly the continued misappropriation of Libya’s oil wealth was a cause for the revolution which toppled the regime of Muammar Ghaddafi.

Another issue is the environment. Currently, tourism accounts for a third of Florida’s state economy. But tourism is also currently the primary source of hard currency for the Communist regime. The bad publicity that would follow even a minor oil spill means the environmental stakes are as high for Cuba as they are for the United States. This is why Cuba has allowed American safety officials to inspect the rig in transit.

The Castroite regime’s closest ally, Hugo Chavez, faces trouble in his country’s 2012 Presidential Election. Indeed, the Venezuelan opposition frequently claims that Venezuela should end its oil shipments to Cuba. Even a modest discovery of oil will put pressure on Hugo Chavez to end his subsidized provision of oil to the island. While the Cuban economy is perhaps better positioned than it was in 1989 to deal with the economic shock, the elderly political system is not.

Venezuela has also worked to improve Cuba’s refinery capacity and again it should also be pointed out that the Castro regime is already an oil producer. Cuba pumps roughly 50,000 barrels per day from onshore fields (a sum roughly equivalent to the oil exports of Bahrain or Turkey). Cuba’s rulers hope to find as much as 20 billion barrels offshore. But the US Geological Survey has estimated that Cuba is likely to find less than 4.6 billion barrels. This would put Cuba in roughly the same tier as Egypt and Indonesia in terms of total proven reserves. Adding Cuba’s name to a list that includes Egypt and Indonesia might be an ominous sign for Cuba’s government. Both Indonesia and Egypt of course have recent popular uprisings that toppled decades of one party rule. Either way, the discovery of oil for Cuba could easily prove a double edged sword.

Comments

comments powered by Disqus

More Voices

Wrong turn

Big_46b3806fc3

Tunsia is often cited as an Arab Spring success story. That is right from a political perspective – but not from an economic one.

Small_571f6574c1
by Joseph Hammond
24.10.2014

Under my umbrella

Big_3944d8bdd6

The ongoing protests in Hong Kong are about more than just politics. The very idea of Hong Kong itself is in the spotlight: impressions from within the peaceful demonstrations.

Small_9b403bfc1a
by Babita Sharma
23.10.2014
Most Read