Monday, February 2, 2009

Russian Aid to Cuba

Russian aid to Cuba suddenly balloons in size

All loans and aid to Cuba, agreed on Friday between Dmitry Medvedev and Raul Castro, now total $354 million rather than the planned $20 million.

Deputy Finance Minister Sergei Shatalov reported that a state loan to Cuba to purchase Russian agricultural and construction equipment as part of an agreement endorsed together with his Cuban counterpart, amounted to $150 million, which Cuba will get over a period of nine years at 7% p.a. (the first two years will be a grace period, while during the next seven years the body of the debt will be repaid).

Another agreement is expected to allocate $20 million for 10 years at 5% p.a. (with four grace years), Shatalov said. He said agreement had been reached for Cuba to get another $100 million to lease Russian equipment. The deal will be formalized shortly.
According to a Foreign Ministry source, it was planned previously to grant Cuba only a $20 million loan, but unexpectedly, a few hours before the deal was signed,

Medvedev and Castro agreed on the allocation of a further $150 million and $100 million.

The sides also agreed on a VEB export loan worth $47 million, to be used by Ilyushin Finance Co. (IFC) to supply a Tu-204SE cargo airliner to Cuba's Aviaimport SA.

According to Andrei Lipovetsky, an IFC spokesman, this is the fourth Tu-204 being exported to Cuba. Russia has already delivered three Il-96 passenger jets there. This pre-export loan is a way of assisting Russia's aircraft industry, said Andrei Mazurov, a VEB spokesman.

Free food aid for Cuba will total another $37 million, Shatalov said. There are two tranches of 25,000 metric tons and 100,000 metric tons of grain ($7 million and $30 million, respectively). The first is ready for shipment.

The previous Russian loan allocated to Cuba under the 2006 agreement amounted to $335 million. According to Deputy Prime Minister Igor Sechin, who heads the Russian delegation on the intergovernmental commission, it has virtually all been spent.

A $20 million loan is being granted to repair and buy spare parts for military equipment supplied during the Soviet era, said a Defense Ministry source.

Vyacheslav Davidenko, a Rosoboronexport spokesman, said military technical cooperation with Cuba is small scale, but steady.

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