WHAT DILMA ROUSSEFF'S FALL MEANS FOR CUBA

WHAT DILMA ROUSSEFF'S FALL MEANS FOR CUBA
BY REUTERS ON 5/13/16 AT 1:08 AM

HAVANA/BRASILIA (Reuters) - Brazilian President Dilma Rousseff's
suspension from office is bad news for newly trendy Cuba, which despite
a detente with Washington is feeling the pinch from a downturn ravaging
allies' economies and political fortunes in South America and Africa.

Friends such as Venezuela, Brazil and Angola for years used revenue from
a commodities boom to pay for Cuban medical and educational services,
turning it into the communist-run island's main source of hard currency.

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President Raul Castro's detente with the United States has helped drive
up tourism to record highs but income from the influx of foreign
visitors were only about one-third of the $7 billion from health and
education exports in 2014.

Over the last 13 years, Brazil's leftist governments also provided at
least $1.75 billion in credit on favorable terms, drawing fire from
opponents who are also angered by a program that put 11,400 Cuban
doctors to work in Brazil.

Those projects will now be re-examined after Brazil's Senate voted on
Thursday to put Rousseffon trial for breaking budget laws. She is now
suspended from office while the trial takes place in coming months, and
a likely conviction would end her presidency.

"There will be a short-term review of our Cuba policy, because the money
has run out and because there are some serious governance questions
regarding the loans. Everything will be put on hold," said a Brazilian
diplomat who served in Havana.

Some of Brazil's loans bankrolled a major expansion project at Cuba's
Mariel port with 25-year repayment periods and rates of between 4.4
percent to 6.9 percent, Brazilian data shows. Critics say the terms are
too generous given Cuba's poor credit history.

Support from a bloc of leftist governments in Latin America since the
turn of the century helped Cuba get back on its feet after the collapse
of the Soviet Union caused a massive economic crisis in the 1990s.
Improving relations with the United States and Europe hold the promise
of new revenue, but for now Cuba's economy will suffer as the tide turns
against allies.

Centrist politician Michel Temer took over as interim president in
Brazil on Thursday. His government is not expected to send home the
Cuban doctors working in Brazil since 2013-14 but it will not hire any more.

"Obviously there will be no more Cuban doctors coming here in the
future, because this model of assistance is questionable and there won't
be support for it, but I doubt any Cubans doctors will be booted out,"
said the diplomat, who asked not to be named because he was not
authorized to speak on the matter.

Senator Ronaldo Caiado, a leader of the Democrats party inside Temer's
coalition government, said the doctors should stay, but money paid to
Cuba, approximately $500 million in 2015, should stay in Brazil and be
paid directly to the medics.

Last month, Rousseff extended the medical services contract for another
3 years, but it has to be approved by Congress and might run into
trouble with lawmakers critical of the terms first signed in 2013.

The doctors work in some of Brazil's remotest regions, winning support
of local mayors. That support, and municipal elections in October, might
make Congress think twice about abruptly ending the program.

Cuba's biggest doctors abroad program is with oil exporter Venezuela in
exchange for crude and money, where collapsing crude prices have
triggered economic chaos. Those shipments are stable at around 90,000
barrels a day.

CASH FLOW

Cuba has already tightened its belt. The government began cutting
imports and asking for longer payment terms from foreign suppliers last
year and has been late meeting its obligations this year, according to
Western diplomats and businessmen.

"They clearly have a cash flow problem. Some of our companies are being
paid and others are not," a European ambassador said on Monday.

The government has said it expects economic growth to slow in 2016 from
4 percent last year.

Brazil's government says it paid Cuba more than $500 million for the
doctors' services in 2015, and another $100 million went to the doctors
themselves.

Rousseff is not the first leftist ally Cuba has lost in the past year.
Argentina's leftist Peronists lost power at the last election in
November. And there are deep concerns in Cuba over political stability
in Venezuela, where President Nicolas Maduro is struggling with a deep
recession and a stronger opposition.

"Latin America and the Caribbean are feeling the effects of a strong and
well planned counter offensive by the imperialists and oligarchy," Cuban
President Raul Castro charged last month at a gathering of Communist
Party leaders.

Nevertheless, he has worked in recent years to broaden Cuba's circle of
friends by putting behind decades of hostility with Washington and
improving its reputation with creditors.

"The crises in these Latin American countries just underscores Raul's
decision to normalize relations with the United States, to come to terms
with Western creditors and sign a cooperation agreement with the
European Union," said Bert Hoffman, a Latin American expert at the
German Institute of Global and Area Studies.

Source: What Dilma Rousseff's Fall Means for Cuba -
http://europe.newsweek.com/brazil-dilma-rousseff-cuba-raul-castro-havana-impeachment-senate-vote-temer-459454?rm=eu