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Russia forgives Cuba’s $32 billion debt

December 11, 2013, 11:47 UTC+3
Moscow has reached an agreement on debt settlement with Havana, under which it will write off 90% of Cuba’s Soviet debt equaling $32 billion
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MOSCOW, December 11. /ITAR-TASS/. It became known on Tuesday that Russia would forgive 90% of Cuba’s Soviet-era debt of $32 billion. Havana will pay another $3.2 billion of its debt within ten years.

Moscow has reached an agreement on debt settlement with Havana, under which it will write off 90% of Cuba’s Soviet debt equaling $32 billion, Nezavisimaya Gazeta writes. According to Russian and European diplomats, debt restructuring plans were discussed during Russian Prime Minister Dmitry Medvedev’s visit to Cuba last February, while the document itself was signed in Moscow in October, without being given publicity. The talks on how the rest of the debt will be paid continue. At the same time diplomats say annual payments of $320 million will be a significant burden on Cuba’s economy.

Novye Izvestiya published an article titled “Who pays for this friendship?” The Finance Ministry said over the past ten years Russia had written off debts, mainly those inherited from the Soviet era, equaling dozens of billions of dollars. Russia forgave around $20 billion in debts to African countries alone. After the overthrow of “friendly regimes” of Gaddafi (Libya) and of Hussein (Iraq), Russia found around dozens of billions of dollars missing, mainly in payments for arms supplies. Heavy funds were written off to Syria. Against this backdrop Russia provides generous “integration discounts” for fuel supplies to its closest neighbors — Belarus and Armenia, the daily writes.

“Of late Russia has become a leader among G8 member-states by the number of cancelled debts. The breadth of the Russian soul can be considered as an attempt of getting new geopolitical allies, but often this stake placed on some or other country costs our budget a pretty sum of money,” first vice-president of the Russian Club of Financial Directors public organization Tamara Kasyanova was quoted by the daily as saying.

 There also other opinions. “The strengthening of Russia’s influence with inevitable losses in the beginning of this process promises significant economic benefits in the future thanks to cooperation with the countries, on which we now spend some of our personal revenues,” says Pavel Zarifullin, head of Lev Gumilev Institute in Moscow.

Alexander Mikhailenko, professor at the Department of National Security of the Russian Presidential Academy of National Economy and Public Administration, expressed a similar opinion. “Over the past twenty years of its independence Russia has lost its influence in the world and now it is restoring it. Such a policy requires investments. These funds will probably pay back both politically and economically. All great powers act in such a way,” he said. “As concerns integration measures in relation to Kyrgyzstan, Armenia and Ukraine, all these countries (the first two already in reality and the third one — potentially) may actively participate in the formation of the Eurasian Economic Union. The development of regional integration is the objective need in the modern world. Among other things it envisages more thrifty and efficient use of common resources.”

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