July 11 (Bloomberg) -- Russia agreed to write off 90 percent, or almost $32 billion, of Cuba’s Soviet-era debt as President Vladimir Putin visited the Caribbean island to broker energy deals and renew ties with Raul and Fidel Castro.
Russia’s Rosneft OAO, Inter RAO and RusHydro all signed accords with Cuban counterparts at a ceremony in Havana today. The Inter RAO deal on four energy generation units with Cuba’s Union Electrica is valued at 1.2 billion euros ($1.6 billion), Putin said. The accords came after Putin signed a law waiving 90 percent of Cuba’s Soviet-era debt. The accord was passed by Russia’s lower house on July 4 and approved by the upper chamber two days ago.
“We are proud of our rich experience in bilateral cooperation,” Putin said alongside President Raul Castro at the Palace of the Revolution in Havana. Earlier, Putin discussed global events with Fidel Castro for about an hour.
With Russia mired in a standoff over Ukraine, Putin is kicking off a six-day tour of Latin America by offering joint ventures and throwing a lifeline to former Cold War ally Cuba, where economic growth has ground to a halt. In March, Cuba became one of 11 countries in the 193-member United Nations General Assembly to reject a U.S.-backed resolution declaring invalid Crimea’s referendum to secede from Ukraine.
“Cuba is one of Russia’s leading partners in the region” with which “we closely coordinate our foreign policy,” Putin said in an interview with Itar-Tass and Prensa Latina yesterday. While “our bilateral trade has slowed somewhat since the 1990s,” Russia is “ready to make up this lost ground.”
Russia has been accused by Ukraine of stoking a three-month rebellion by pro-Moscow rebels in the east of the country after its annexation of Crimea in March. Fellow ex-Soviet republics Ukraine, Moldova and Georgia signed association agreements with the European Union last month, choosing closer ties with the 28-nation bloc in the face of possible economic measures from Russia.
Putin, who will also visit Argentina and Brazil in the coming days, is making the second high-profile visit by a Russian official after Prime Minister Dmitry Medvedev was in Cuba last year.
Having outlasted 10 U.S. presidents so far, the Castros are approaching their 90s. Raul Castro, 83, has vowed to step down after his term ends in 2018, while 87-year-old Fidel is seldom seen in public anymore.
Raul Castro has worked to diversify Cuba’s economy as its ally and benefactor Venezuela struggles with a faltering economy and anti-government protests. Cuba received about 90,000 barrels a day of subsidized oil from Venezuela in 2013, according to state-owned oil company Petroleos de Venezuela SA.
Under the terms of its agreement with Russia, Cuba will pay back the $3.5 billion remainder of its debt during a 10-year period, transferring money to a special account opened by Russian state development lender Vnesheconombank, known as VEB, at the National Bank of Cuba. VEB plans to use the funds for projects in Cuba.
Two years ago, Russia struck a similar agreement with North Korea, writing off 90 percent of its $11 billion debt that dated back to the Soviet period. The remaining 10 percent will be settled via joint projects in health care, education and energy, according to the Russian Finance Ministry.
Russia is the latest suitor drawn to Cuba. Brazilian construction company Odebrecht SA is upgrading the port at Mariel, China’s Xinjiang Goldwind Science & Technology Co. is building 34 wind turbines for the government and the European Union is in talks over a political accord with the Castro government.
Putin today said Russia plans to install a ground station for its GLONASS satellite navigation system in Cuba, which is about 90 miles (145 kilometers) south of Florida.
A senior military official in Moscow said two years ago that Russia was in talks to set up resupply bases in Cuba after undertaking its biggest military overhaul since the Soviet era.
Under the deal that ended the 1962 Cuban crisis, the Soviet Union withdrew its missiles on the island and pledged not to station offensive weapons. Russian military cooperation with Cuba ended in 2002 after Russia closed its radar base at Lourdes, Russia’s only intelligence-gathering center in the Western Hemisphere, which had been operating since the 1960s.