Cuba Signs a Commercial Agreement with the Soviet Union Summary

  • Last updated on November 10, 2022

The commercial agreement negotiated between the Soviet Union and Cuba was a step toward integrating the Cuban economy into the Eastern bloc of nations dominated by the Soviet Union. To the United States, it symbolized the threat of communist encroachment in the Western Hemisphere.

Summary of Event

On February 11, 1966, representatives of the Soviet Union and Cuba signed a wide-ranging commercial treaty in Moscow. Announced the next day in a joint communique by the state press agencies of the two nations, the treaty called for a significant extension of trade between the signatories and new credit in the amount of $91 million for Cuba. The treaty represented an extension of the growing economic relationship between the two countries that began in 1960. Cold War;Cuba Trade agreements Soviet-Cuban commercial treaty (1966)[Soviet Cuban commercial treaty] Cuban-Soviet commercial treaty (1966)[Cuban Soviet commercial treaty] [kw]Cuba Signs a Commercial Agreement with the Soviet Union (Feb. 11, 1966) [kw]Commercial Agreement with the Soviet Union, Cuba Signs a (Feb. 11, 1966) [kw]Soviet Union, Cuba Signs a Commercial Agreement with the (Feb. 11, 1966) Cold War;Cuba Trade agreements Soviet-Cuban commercial treaty (1966)[Soviet Cuban commercial treaty] Cuban-Soviet commercial treaty (1966)[Cuban Soviet commercial treaty] [g]Caribbean;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [g]West Indies;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [g]Europe;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [g]Cuba;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [g]Soviet Union;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [c]Cold War;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [c]Diplomacy and international relations;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] [c]Trade and commerce;Feb. 11, 1966: Cuba Signs a Commercial Agreement with the Soviet Union[08820] Castro, Fidel Brezhnev, Leonid Patolichev, Nikolai

Cuban representatives requested the new credit to buy Soviet-made equipment to continue work on irrigation and drainage of Cuban farmland and modernization of agricultural production, especially in the sugar industry. Repayment of the loan was to be within twelve years, with interest of 2.5 percent on the unpaid balance. The loan was vital to the Cuban economy because government officials in the People’s Republic of China had reneged on a 1965 agreement to trade rice for Cuban sugar. Soviet officials, engaged in an ideological war of words against Mao Zedong’s China, had proved eager to shore up the Cuban economy yet again. The leaders of the Soviet Union apparently hoped that their actions would not only bring Castro more firmly into the Soviet bloc of nations but also make their Chinese rivals lose face in the international socialist community.

The agreement did not differ greatly from seven commercial treaties between the Soviet Union and Cuba that preceded it, dating back to 1960. Cuban economic involvement with the Soviet Union had begun on a large scale only after the United States government attempted to isolate Castro’s regime in 1960. During that year, Castro visited the United States at the invitation of the Society of Newspaper Editors to attend its convention in New York City. In New York and Washington, D.C., Castro received an enthusiastic welcome from large crowds. His meeting with Vice President Richard M. Nixon Nixon, Richard M. [p]Nixon, Richard M.;and Cuba[Cuba] , however, began a long-running feud U.S.-Cuban relations[U.S. Cuban relations] Cuban-U.S. relations[Cuban U.S. relations] with the United States government.

After the meeting, Nixon sent the State Department a memorandum in which he argued that Castro’s government threatened unnamed American interests in Cuba. He also recommended that the Central Intelligence Agency Central Intelligence Agency;Cuba (CIA) begin arming a rebel force to overthrow Castro. Nixon was joined in his anti-Castro advice to President Dwight D. Eisenhower by the Dulles brothers, Allen and John Foster. Allen Dulles Dulles, Allen was the head of the CIA, and John Foster Dulles Dulles, John Foster [p]Dulles, John Foster;United Fruit Company was the secretary of state. Both owned large blocks of stock in the United Fruit Company United Fruit Company , which controlled more than 400,000 acres of agricultural land in Cuba that were eventually nationalized and redistributed to Cuban peasants. The Dulles brothers pressed Eisenhower to begin an effort to overthrow Castro. They were supported by General Robert Cutler Cutler, Robert , chairman of Eisenhower’s National Security Council and a member of the board of directors of the United Fruit Company.

Bowing to the recommendations of these men, Eisenhower, on March 17, 1960, authorized the CIA to begin arming and training a group of Cuban exiles to invade Cuba. Some members of the CIA, probably without the knowledge of the president, also began planning Castro’s assassination. Eventually, they offered $150,000 plus all expenses to members of organized crime in the United States as payment for killing the Cuban leader. Eisenhower also ordered the first of many economic sanctions against Cuba. These actions perhaps resulted from the first Soviet-Cuban economic agreement, signed on February 13, 1960. The agreement gave Cuba a credit of $100 million for the “construction of enterprises to be decided at a later date.” Repayment was to be in the form of Cuban sugar and tobacco.

These United States policies almost certainly would have driven Castro from power had it not been for the international situation. Since 1947, the United States and the Soviet Union had been involved in the ideological struggle known as the Cold War that threatened to engulf the entire world in nuclear holocaust. Castro learned of CIA plans against him and his regime. He accused the U.S. government of plotting to kill him and overthrow the Castro government during a news conference with representatives of the world press and at a meeting of the U.N. General Assembly in September, 1960.

By this time, Castro apparently had concluded that his regime could survive only with the aid of a nation powerful enough to defy the United States government. Soviet Premier Nikita S. Khrushchev Khrushchev, Nikita S. [p]Khrushchev, Nikita S.;and Cuba[Cuba] , who also attended the U.N. meeting, proved more than willing to become Castro’s patron. Despite the skepticism of other Soviet leaders concerning his Cuban policy, Khrushchev initiated policies designed to bring Cuba into the Soviet bloc. U.S.-Cuban relations deteriorated after Castro’s agreement with Khrushchev. In October, Eisenhower ordered an embargo of all U.S. exports to Cuba, with the exception of medical supplies. Castro responded by nationalizing most remaining U.S.-owned businesses and banks in Cuba. Eisenhower then ended Cuban sugar sales in the U.S. market and withdrew the U.S. ambassador to Cuba.

After the Bay of Pigs fiasco in 1961, newly elected President John F. Kennedy convened a meeting of representatives from all the American states and inaugurated a new program he called Alliance for Progress. Kennedy offered U.S. loans and grants to all Latin American nations that would join his economic boycott of Cuba. Most Latin American nations joined the Alliance for Progress. In response, Castro declared Cuba to be a socialist state and began seeking trade agreements with Soviet bloc countries.

The Soviet Union responded to Castro’s appeals with another $100 million loan in 1961, another for the same amount in 1962, a smaller “credit” of $14 million in 1963, two new agreements in 1964 worth a combined $84 million, and a further $12 million in 1965. The 1966 agreement was thus a continuation of a policy begun much earlier.

Castro used much of the Soviet aid to increase the material well-being of the Cuban people, but he also used a large portion of the funds and materials to build up the Cuban military forces, apparently with the knowledge and encouragement of Soviet leaders. Castro justified the military buildup as necessary to safeguard Cuba from aggression by the United States. He used his new military forces in offensive operations to sponsor and support revolutionary movements in Africa and Latin America. Some United States analysts suggest that the Soviet Union sponsored Cuba’s military buildup and aggressive foreign policy as a surrogate for its own foreign policy ambitions. If that was the case, the plan failed. Castro became an independent force in world politics, only slightly harnessed by Soviet policy makers and never dominated.

Significance

The Cuba-Soviet economic treaties had far-reaching effects on world trade. The short-term results for Castro and Cuba were very beneficial. Cubans received much-needed technical and financial assistance in modernization as well as markets for their products. With the help of the Soviet Union, Castro began building a modern educational system in Cuba that became arguably the best in the Western Hemisphere. He was also able to introduce a health care system that succeeded in guaranteeing basic medical services to most Cubans.

Castro’s building programs, financed largely with Soviet loans, brought adequate housing and modern sanitary facilities to most Cubans for the first time. Soviet aid also enabled Castro to pursue an aggressive foreign policy, sponsoring revolutionary movements throughout the developing world and becoming a hero to many in the process. However, none of the countries where Cuban forces served as proxies for Soviet foreign policy ultimately remained in the Communist camp, and the Soviet expenditures in unsuccessful ventures in Angola, Ethiopia, and Central America eventually contributed to a sapping of its increasingly limited resources. As long as Soviet aid continued, though, the Cuban economy prospered and Castro remained popular with the Cuban people.

The trade agreements were less beneficial for the Soviet Union, even in the short run. As partial payment for the economic support they supplied, Castro allowed the Soviets to turn Cuba into a base for their military in the Western Hemisphere. Ostensibly there to protect Cuba from U.S. aggression, Soviet military forces began as early as 1961 to plan the deployment of nuclear weapons on the island. The Soviet plan and the U.S. response to it almost triggered a nuclear war between the superpowers during the Cuban Missile Crisis. The crisis almost certainly was a factor in Khrushchev’s eventual demise as leader of the Soviet Union. In addition to causing a foreign policy embarrassment, the Cuban connection became a perpetual drain on the Soviet economy. The Cubans were never able to repay the large loans made by the Soviets.

In the long run, the decision to join economic forces with the Soviet Union was a central factor in later problems in Cuba. Castro was not able to prevent economic calamity in Cuba as the Soviet aid, which had provided oil to Cuba at below global market prices and purchases of sugar at above global market prices, and on which he depended, atrophied and disappeared in the 1980’s. Beginning in 1990, Cubans experienced shortages of almost everything. Housing construction virtually ceased, leaving a new generation of Cubans to live with their parents. Although they were the best-educated generation in Cuban history, young, college-educated Cubans could not find work related to their educations. Castro’s enormous popularity with the older generation of Cubans was not evident among those born after 1970. Castro found himself virtually isolated in the international community and increasingly criticized at home.

The Soviets also paid heavily for the propaganda victory won by drawing Cuba into the Soviet bloc. Financial support of Cuba drained badly needed resources from the Soviet economy, and Castro became not the tame puppet some Soviet leaders expected but a major rival of the Soviet Union among developing nations. Shortly before signing the 1966 trade agreement, Castro hosted the first Tricontinental Congress of delegates from developing countries. His popularity in those nations grew steadily until, in 1979, he became chairman of the organization of developing governments. As Castro’s influence in the former colonial areas of the world increased, that of the Soviet Union diminished. Before the collapse of the Soviet Union, its government and the international communist movement it controlled had lost much of their credibility in the eyes of most of the leaders of the developing world.

Nor did the United States emerge as a clear winner in the wake of its reaction to the Soviet-Cuban economic treaties. In the short run, American consumers suffered from the absence of Cuban sugar and tobacco from the U.S. market. A number of American businesses and banks lost large amounts of property and investments in Cuba when Castro instituted nationalizations in retaliation for the U.S. boycott. Perhaps more important, the U.S. government lost some credibility with other Latin American governments because of its actions toward Cuba. The decline of U.S. influence became obvious in 1975, when the Organization of American States voted to lift all sanctions on Cuba. Cold War;Cuba Trade agreements Soviet-Cuban commercial treaty (1966)[Soviet Cuban commercial treaty] Cuban-Soviet commercial treaty (1966)[Cuban Soviet commercial treaty]

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bourne, Peter G. Fidel: A Biography of Fidel Castro. New York: Dodd, Mead, 1986. A readable and accurate account of the life of the Cuban dictator that pays particular attention to his relationship with Nikita Khrushchev, Leonid Brezhnev, and the Soviet Union. Discusses the importance of Soviet economic aid to Cuba in some detail.
  • citation-type="booksimple"

    xlink:type="simple">Leonard, Thomas M. Fidel Castro: A Biography. Westport, Conn.: Greenwood Press, 2004. Monograph on Castro that devotes significant space to his relationship with the Soviets and their role in his rise to power. Bibliographic references and index.
  • citation-type="booksimple"

    xlink:type="simple">Levesque, Jacques. The USSR and the Cuban Revolution. Translated by Deanna Leboeuf. New York: Praeger, 1978. Exhaustively explores the relationship between the Communist International and the revolution in Cuba. Concludes that Castro was not initially a communist but was driven into the Soviet camp by the economic policies of the United States. Sees the economic aid given to Castro by the Soviet Union as beneficial to the international goals of both countries, and as indispensable to modernization in Cuba.
  • citation-type="booksimple"

    xlink:type="simple">Madden, Paul. Fidel Castro. Vero Beach, Fla.: Rourke, 1993. Contains an account of Castro’s alienation from the United States and subsequent détente with the Soviet Union in language accessible to all readers. Offers a simplified overview of the influence of Soviet aid on the Cuban economy.
  • citation-type="booksimple"

    xlink:type="simple">Mesa-Lago, Carmelo, ed. Revolutionary Change in Cuba. Pittsburgh, Pa.: University of Pittsburgh Press, 1971. Contains several articles relating directly to Soviet-Cuban economic relations. See especially Eric Baklanoff’s “International Economic Relations” and E. Gonzalez’s “Relationship with the Soviet Union.” Both contain specific information about all the economic agreements between the Soviet Union and Cuba, including their influence on Cuban economic development.
  • citation-type="booksimple"

    xlink:type="simple">Quirk, Robert E. Fidel Castro. New York: Norton, 1993. The most exhaustive biography of the Cuban dictator. Quirk devotes considerable space to Castro’s relations with the Soviet Union and to the various economic agreements between the two countries. Concludes that Castro could never have survived without Soviet aid. Also suggests that Castro accomplished much for the benefit of Cubans with the help of loans from the Soviet Union.
  • citation-type="booksimple"

    xlink:type="simple">Thomas, Hugh. Cuba: The Pursuit of Freedom. New York: Harper and Row, 1971. Places Castro and his economic policies in the larger perspective of Cuban history. A good account of the economic and social forces that brought Castro to power and virtually ensured that he would break with the United States. Essential for an understanding of the Cuban economy in an international and historical perspective.
  • citation-type="booksimple"

    xlink:type="simple">U.S. Congress. Senate. Select Committee to Study Governmental Operations with Respect to Intelligence Activities. Alleged Assassination Plots Involving Foreign Leaders. 94th Congress, 1st session, 1975. Senate Report 94-465. Details secret U.S. plans to invade Cuba and assassinate Castro. Essential for understanding the rift that developed between the two nations and Castro’s uncompromising attitude toward the United States.

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