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Mess in Venezuela Is One Reason Cuba Turned to the U.S.

December 17, 2014

Cuba’s decision to agree to a prisoner exchange with the U.S. in return for easing a five-decade embargo comes as the Caribbean island's key benefactor, Venezuela, struggles to avoid default.

With Venezuelan President Nicolas Maduro unable to contain the world’s fastest inflation and the country’s bonds trading at default levels, Cuban President Raul Castro has been working to diversify the Communist country’s economy away from Venezuela, which provides about 100,000 barrels of oil a day in exchange for medical personnel.

“You only need to look at the economic disaster that is Venezuela and clearly it’s a bad bet to have all your chips in one basket,” Christopher Sabatini, policy director at Council of the Americas, said in phone interview from New York. “That 100,000 barrels per day gift of oil is going to end very soon....”

Cuba’s leaders are well aware of the risks of dependency after the economy collapsed in the early 1990s when the Soviet Union collapsed. Since early 2013, Castro has eased travel restrictions, increased incentives for foreign investment and tried to reduce public payrolls....

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