Brazil eases Cuba into free market economy

Feb. 2, 2012 at 7:00 AM
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RIO DE JANEIRO, Feb. 2 (UPI) -- Brazil is easing Cuba into the free market economy with a generous package of aid in cash and kind and joint projects that give the Latin American country a pre-eminent position in Havana's heady mix of communism and experimental capitalism.

Brazilian President Dilma Rousseff appeared to be in the right place at the right time when she flew into Havana in a spirit of revolutionary camaraderie and clinched deals that secured Brazil's status as the senior partner in a long-term, multifaceted relationship.

Current bilateral trade exceeds $642 million a year.

In talks with Fidel Castro, his brother President Raul Castro and senior Communist Party leaders, Rousseff readily invoked her own revolutionary credentials as a former left-wing guerrilla fighter and chided the United States for continuing to operate its Guantanamo Bay prison.

Her meeting with Fidel Castro was described in the media as an emotional encounter for the Brazilian president, who as a young militant was one of many Latin Americans who admired the Cuban leader after the 1959 communist takeover.

Rousseff followed in the footsteps of populist former President Luiz Inacio Lula da Silva. But reports said she appeared quickly to have established rapport with the Castro administration.

The "excellent" ties secure Brazil an advantageous position in Cub's hugely porous economy, hungry for basic consumer goods, investment and modernization. Economic upgrading in all sectors and a phased end to Cuba's international isolation offer lucrative opportunities for Brazil's state and private sectors.

Brazil will invest $640 million in a $900 million modernization of the Mariel container port, west of Havana, led by the Brazilian firm Odebrecht.

Brazil is also giving Cuba $400 million in credits for food imports and investing $200 million in modernizing Cuban agriculture. Rousseff pledged Cuba a long-term commitment to help its economic regeneration.

A Brazilian role in reviving the sugar industry will mean more investment and more private and public sector involvement.

Odebrecht and Cuba's state sugar company Grupo de Administracion Empresarial del Azucar are in talks to help revive the industry and may jointly operate available capacity, including the 5 de Septiembre sugar mill on the southern coast.

Cuban sugar production plummeted after the communist takeover and is reported to be about 1.2 million tons compared with 8 million tons in the first decade of Castro's rule.

Critics blame an inefficient state administration and lack of accountability among causes of the drop in production.

Brazilian interest in the modernization of Cuban sugar industry is linked to Brazilian plans to promote its pioneering production of cane-derived ethanol, which has led to most new cars in Brazil being fitted with flex-fuel technology to run on ethanol or gasoline or a mixture of both.

The port modernization program also fits in with Brazil's plan to forge fruitful partnerships that will benefit its aim of making its exports of both commodities and manufactured goods more competitive in the international markets.

Cubans say they need the Mariel port to be ready for expanded trade with the United States, whenever the U.S. embargo is lifted. The embargo, begun in 1960, is the longest on record.

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