MOSCOW, December 10 (RIA Novosti) – Russia is to write off $29 billion of Cuba’s Soviet-era debts under an agreement to end a 20-year dispute between the two countries, according to a Reuters report.
Moscow agreed to forgive 90 percent of Cuba’s $32 billion debt to the former Soviet Union under deal that paves the way for fresh trade and investment. The agreement was finalized in Moscow in October but must still be approved by the State Duma, Russia’s lower house of parliament.
Cuba will still have to pay $3.2 billion of the debt over 10 years, Reuters reported Monday, citing Russian and European diplomats. Negotiations were continuing over how the Caribbean island nation, which remains under an economic embargo by the United States, would settle the debt.
Diplomats noted that even an annual payment of $320 million would be difficult for Cuba, which earns around $18 billion per year from exports, including tourism and medical services.
Cuba, still formally a Communist state, defaulted on its debt in the late 1980s, but has sought to boost its international reputation recently by restructuring old obligations.
Dmitry Medvedev, Russia’s prime minister, signed a general agreement during a visit to Cuba in February to settle the issue of the Soviet-era debt by 2014. The unilateral move irked members of the Paris Club of creditor nations, which prefers a collective approach to debtor states.
Cuba owes some $5 billion to $6 billion of non-Soviet debt to other Paris Club members. The informal grouping includes Canada, France, Germany, Japan, Russia, the United Kingdom and the United States as well as a number of smaller European nations.