Cuba Turns to Asia for Friends and Capital

By Anthony Boadle

HAVANA (Reuters) - Short on cash and squeezed by U.S. sanctions, Communist Cuba is turning to Asia for trade, credit and friends and has received visits this week from the leaders of China, Vietnam and Malaysia.

Chinese President Hu Jintao brought timely political backing for Cuban leader Fidel Castro and a delegation of 200 businessmen looking for investment opportunities on the Caribbean island nation.

China's state-owned Minmetals Corp. agreed to invest $500 million in Cuba's nickel industry with Chinese government finance and investment guarantees.

Chinese appliance king Haier will produce television sets, refrigerators, washing machines and air conditioners in Cuba.

Hu was followed by Malaysian Prime Minister Abdullah Ahmad Badawi, who is looking to expand cooperation with Cuba's biotech industry which has joint ventures to produce low-cost vaccines in China, India and Malaysia.

Vietnam's President Tran Duc Luong, whose country supplies Cuba with about 250,000 tonnes of rice a year on cheap terms, made two brief stopovers in Havana on his way to and from the APEC summit that gathered the Asian leaders in Chile a week ago.

Castro, 78, recovering from a knee fracture, received Hu in a wheel-chair and praised China as the "new motor of the world economy" that would supplant the United States.

Since Cuba sank into economic crisis in the early 1990's, China has provided some $800 million in soft loans and credit lines, mainly to import televisions and telecommunications equipment.

"After the fall of the Soviet Union, China has been the only country to provide a substantial amount of loan financing to the Castro government with highly concessional terms," said Paolo Spadoni, a Cuba expert at the University of Florida.

Help from Asia comes at a good time for Cuba. Relations with its largest trading partner, the European Union, are at a standstill over human rights issues and Latin American neighbors are more focused on other markets, with the exception of Venezuela.


Western investment in the ailing Cuban economy has slowed to a trickle, while President Bush this year stepped up enforcement of financial sanctions against Castro.

"Cuba is feeling choked by Bush, and it was a relief that China extended a helping hand with its growing economic power," said an Asian diplomat in Havana.

Though Asia still accounts for less than 10 percent of Cuba's trade, business with Asian countries is growing and politics does not get in the way.

"We have no contradictions of any kind with these countries, and our economies are complementary," Cuban deputy Foreign Minister for Asia, Jose Guerra Menchero, said in an interview.

Asian oil companies are interested in Cuba's potential oil deposits in the Gulf of Mexico, where Spain's Repsol YPF found non-commercial quantities of good quality crude in July.

China's Sinopec Corp and Malaysian state oil company Petroliam Nasional Bhd (Petronas) are in preliminary talks with Cuba, Guerra Menchero said.

Cuba's market is small, but it stands to benefit from Asian economic muscle.

"Expanding Asian economies are shopping the world for raw materials to feed their factories," said Richard Feinberg, who was national security advisor on Latin America during the Clinton administration.

"Sitting on very large and growing foreign exchange reserves they are testing the waters for foreign investment possibilities, including joint ventures," he said.

Widening the scope of its international linkages will help Cuba circumvent U.S. sanctions, Feinberg said.


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