Tag Archives: Cuba-Russia Relations

New Publication: CUBA: LOOKING TOWARD THE FUTURE

CUBA: LOOKING TOWARD THE FUTURE

William LeoGrande, Guest Co-editor; Arien Mack, Journal Editor

TABLE OF CONTENTS

William M. Leogrande, Introduction: Cuba Looks to the Future                235

 

PART I: UPDATING THE ECONOMY

Ricardo Torres Pérez, Updating the Cuban Economy: The First 10 Years                                                                                                                            255

Archibald R.M. Ritter,   Private and Cooperative Enterprise in Cuba’s Economic Future                                                                                                                           277

Richard E. Feinberg,  Bienvenida—Maybe: Cuba’s Gradual Opening to World Markets                                                                                                                          305

Katrin Hansing,  Race and Inequality in the New Cuba: Reasons, Dynamics, and Manifestations                                                                                                               331

 

PART II: FACING POLITICAL CHALLENGES

William M. Leogrande,  Updating Cuban Socialism: The Politics of Economic Renovation                                                                                                                     353

Margaret E. Crahan, Cuba: Religion and Civil Society                                          383

Rafael Hernández, Intellectuals, Civil Society, and Political Power in Cuban Socialism  407

Ted A. Henken, Cuba’s Digital Millennials: Independent Digital Media and Civil Society on the Island of the Disconnected                                                                                     429

 

PART III: ENGAGING THE WORLD

 

Philip Brenner And Teresa Garcia Castro,  A Long Legacy of Distrust and the Future of Cuban-US Relations                                                                                                    459

Carlos Oliva Campos And Gary Prevost,  Cuba’s Relations with Latin America   487

Mervyn J. Bain, Havana, Moscow, and Beijing: Looking to the Future in the Shadow of the Past                                                                                                                                          507

 

 

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CUBA, RUSSIA, TRUMP AND COMEY

William M. LeoGrande, Contributor, Professor of Government at American University

Huffington Post, 06/05/2017 07:50 am ET

President Trump has a knack for bad optics. The day after he fired FBI Director James Comey in hopes of taking the pressure off the investigation into whether his campaign colluded with the Kremlin during the 2016 election, Trump received Russian Foreign Minister Sergei Lavrov and Ambassador Sergei Kislyak in the Oval Office. Now, as Comey prepares to testify before Congress about Trump’s request that the FBI halt the investigation of former National Security Advisor Michael Flynn’s ties to Russia, the president is preparing to announce a Cuba policy that would clear the way for Moscow to re-establish itself as Cuba’s principal foreign patron.

President Trump and Russian Ambassador Sergei Kislyak

According to press reports, Trump is on the verge of reversing key elements of Barack Obama’s policy of engagement with Cuba, even though his own government’s review concluded it is producing positive results across a range of issues, including security. If the United States reverts to a policy of hostility, U.S. adversaries will once again reap the rewards, and Russia will be first in line—just like it was in 1960.

The end of the Cold War severed Cuba’s partnership with the Soviet Union, but Vladimir Putin has been restoring Russia’s global influence by repairing relations with traditional allies. Russia’s resurgence in the Caribbean dates to Putin’s 2000 trip to Havana, followed by Raúl Castro’s 2009 visit to Moscow—the first since the end of the Cold War.

In July 2014, Putin visited the island again and agreed to forgive 90% of Cuba’s $32 billion in Soviet-era debt. By the time Raúl Castro returned to Moscow in 2015, Russia had signed agreements to invest in infrastructure development and oil exploration, and agreed to lend Cuba 1.2 billion Euros to develop thermal energy. When Venezuela failed to meet its promised oil shipments to Cuba, Russia stepped in to cover the shortfall.

 Russian President Vladimir Putin and Cuban President Raúl Castro, July 11, 2014.

The linkages extend beyond commerce. Both sides refer to their revived relationship as a “strategic partnership” with diplomatic and military components. Russia is refurbishing and replacing Cuba’s aging Soviet-era armaments. Russian naval vessels visit Cuban ports, the most prominent being the ostentatious arrival of a large Russian surveillance vessel in January 2015, the day before U.S. and Cuban diplomats began talks on normalizing diplomatic relations. Russia reportedly wants to establish a military base on the island.

At the Pentagon, the intrusion of extra-hemispheric powers in Latin America has been a serious concern since 2010 when the U.S. Southern Command’s annual Posture Statement first identified Russia, China, and Iran as challenging U.S. interests. Every year since, SouthCom has warned that Washington needs to increase its engagement with the region to counter the influence of outsiders.

Just this past April, Admiral Kurt W. Kidd presented the 2017 Posture Statement to Congress, declaring, “For Russia, China, and Iran, Latin America is not an afterthought. These global actors view the Latin American economic, political, and security arena as an opportunity to achieve their respective long-term objectives and advance interests that may be incompatible with ours.”

For some policymakers, this geostrategic challenge mandates support for engagement with Cuba, giving Havana less incentive to expand its economic relationships with Russia and China into politico-military ones. K. T. McFarland, who served briefly as Trump’s deputy national security advisor, succinctly summarized the argument for engaging Cuba before she joined the administration: “It would be foreign policy malpractice if we stood aside while our adversaries develop strong bilateral and economic — and possibly military relations.”

A few months after Donald Trump’s inauguration, 16 retired senior military officers, including a former commander of SouthCom, sent National Security Advisor H. R. McMaster an open letter urging the administration to maintain engagement with Cuba on national security grounds, citing successful cooperation on counter-terrorism, border control, drug interdiction, environmental protection, and emergency preparedness. “If we fail to engage economically and politically,” they warned, “it is certain that China, Russia, and other entities whose interests are contrary to the United States’ will rush into the vacuum.”

So why would President Trump reverse a policy that his own government judges to be largely successful, and that enjoys broad support with the general public, business community, and national security establishment—especially when that reversal would give adversaries like Russia, China, and Iran a new foothold in the hemisphere? According to the White House, the answer is human rights: “As the President has said, the current Cuba policy is a bad deal,” spokesman Michael Short claimed. “It does not do enough to support human rights in Cuba.”

The invocation of human rights is clearly an excuse rather than the real reason. The administration has shown no interest whatsoever in human rights in Saudi Arabia, Turkey, Egypt, or the Philippines. On the contrary, the president has gone out of his way to praise and encourage leaders whose human rights records are far worse than Cuba’s. Moreover, Secretary of State Rex Tillerson said explicitly that “America First” means human rights will take a back seat to U.S. national security and economic interests.

The real reason for changing Cuba policy is raw, naked politics. Cuban American Representative Mario Díaz-Balart (R-Fla.), one of the most vocal critics of Obama’s policy, reportedly extracted a commitment from the White House to be tough on Cuba as the price for his vote to repeal Obamacare. Senator Marco Rubio (R-Fla.), the other main proponent of turning back the clock, sits on the Intelligence Committee investigating the Trump Campaign’s Russian connections. Instead of draining the swamp, the Trump team has apparently decided that to swim in it, you have to feed the alligators.

It would be exquisitely ironic if Trump adopted Marco Rubio’s failed Cuba policy in order to curry favor with him in hopes of blunting the Senate’s Russia investigation— and by so doing ceded to Moscow a dominant geostrategic position on our doorstep in Cuba.

William M. LeoGrande is co-author with Peter Kornbluh of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana (University of North Carolina Press, 2015).

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Proyecciones macroeconómicas de una Cuba sin Venezuela

Pavel Vidal Alejandro

from the  Cuba Study Group, Desde la Isla; original source:  full article

Análisis de Pavel Vidal acerca del impacto a la economía cubana en el supuesto caso de una reducción importante en la cooperación económica con Venezuela.

New PictureDesde inicios de la década pasada la economía cubana ha venido incrementando sistemáticamente sus relaciones con Venezuela. Actualmente el comercio de bienes representa el 40% del intercambio total de la isla, muy por encima del segundo lugar ocupado por China con 12,5%. En este porcentaje pesa sobre todo la importación de petróleo venezolano; en 2011 la factura llegó a US$2.759 millones. La importación del crudo venezolano cubre el 60% de la demanda nacional y además permite la reexportación de una parte del mismo. Solo el 50% del pago de las importaciones de crudo venezolan se efectúa dentro de los primeros 90 días, el restante 50% se acumula en una deuda a pagarse en 25 años con un tipo de interés del 1% anual.

 Continue reading: Vidal,  Cuba sin Venezuela

New Picture (11)

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Exclusive: Russia signs deal to forgive $29 billion of Cuba’s Soviet-era debt – diplomats

By Marc Frank;  HAVANA Mon Dec 9, 2013 3:55pm EST

HAVANA (Reuters) – Russia and Cuba have quietly signed an agreement to write off 90 percent of Cuba’s $32 billion debt to the defunct Soviet Union, a deal that ends a 20-year squabble and opens the way for more investment and trade, Russian and European diplomats said.

The two sides announced an agreement to settle the debt dispute earlier this year and finalized the deal in Moscow in October. It would have Cuba pay $3.2 billion over 10 years in exchange for Russia forgiving the rest of a $32 billion debt – $20 billion plus service and interest, the diplomats said. It must still be approved by the Duma, Russia’s lower house of parliament.

800px-Embassy_of_Russia_in_Havana_-_Nick_De_MarcoRussian Embassy, Havana

Negotiations on the form in which Cuba will pay the remaining debt are ongoing, the diplomats said, as even $320 million per year represents a large sum for the cash-strapped country, which has labored under a U.S. economic embargo for decades.

Cuba’s total export earnings are around $18 billion, including tourism and medical and educational services.

Neither Cuba nor Russia has made any official comment on the debt agreement. Cuban officials were not immediately available for comment.

Cuba defaulted on its debt in the late 1980s but recently has been trying to restructure the old debts to improve its international credibility.

Russian Prime Minister Dmitry Medvedev, during a visit to Cuba in February, signed a general agreement to work out a formula and settle the old debt by next year. The decision rankled other countries grouped in the Paris Club of creditor nations because it broke ranks with the collective approach of the organization.

PARIS CLUB CONTACTS

The Paris Club is an informal group of creditor governments including Canada, France, Germany, Japan, Russia, the United Kingdom and the United States as well as a number of smaller European nations. The Paris Club reported that Cuba owed its members $35 billion at the close of 2012, now estimated at around $37 billion, which would leave the island owing $5 billion to $6 billion of non-Soviet debt to the club’s members.   The organization has a Cuba working group, which does not include the United States.

Russia pledged to work with Cuba towards reaching an agreement with the Paris Club as part of the October settlement, one Russian diplomat said. “The Paris Club should be grateful as it removes a huge amount of money from the table and makes an eventual agreement more likely,” he said.

While some Paris Club members clearly preferred a united front, one European diplomat said Russia’s help in settling Paris Club debt could prove important and that a reduced debt would indeed be more easily negotiable.

Since the Medvedev visit, the Paris Club has put out feelers to the Cubans and a few months ago two representatives traveled to the Caribbean island to meet with the central bank, the first such visit in over a decade. Unlike the International Monetary Fund and World Bank, from which Cuba is excluded under the longstanding U.S. trade embargo, the Paris Club does not issue multilateral loans.

Cuba releases very little information about its foreign debt. Last month the government reported its “active” foreign debt, accumulated after it declared a default in the late 1980s, as $13.6 billion in 2010. The government no longer reports its “passive” debt from before the default and estimated at around $8 billion. The Communist-run island has never included debt to the Soviet Union in its figures, claiming the amount was in overvalued convertible rubles and that the country sustained massive damage from broken contracts when its former benefactor collapsed.

Cuba has post-1980s default debt of hundreds of millions of dollars to Russia. “The final deal recognizes some of the Soviet debt, and that’s politically important for Russia. It also opens the way for more credit which is important for Cuba,” a Russian diplomat said, like others requesting anonymity.

SEARCH FOR CREDIBILITY

Three years ago Cuba restructured its active government and commercial debt with China, estimated at around $6 billion. Last year Cuba settled a dispute with Japanese commercial creditors dating back to the 1980s. Under the Japanese agreement, 80 percent of the 130 billion yen debt (about $1.4 billion) was forgiven, with the remainder to be paid over 20 years. Mexico recently forgave 70 percent of a $478 million debt Cuba accumulated in the late 1990s, in exchange for the remaining $146 million being paid over 10 years.

“The agreements with China, Japan, Mexico and Russia ease some outside financial restrictions on the Cuban economy and should facilitate trade ties with these countries,” said Pavel Vidal, a former Cuban Central Bank economist now teaching at Colombia’s Javeriana University. “The austerity measures adopted by the government in 2009, and these accords to lower the foreign debt, help stabilize the island’s finances at a very important moment when a significant monetary reform over three years (devaluation and elimination of the dual currency system) has begun,” he said.

Raul Castro, who replaced his ailing brother Fidel as president in 2008, has drastically reined in imports and cut state payrolls and subsidies while insisting the near-bankrupt government get its financial house in order.

In 2011, the Communist Party approved a five-year economic plan that called for efforts to “enhance Cuba’s credibility in its international economic relations by strictly observing all the commitments that have been entered into,” before and after the default. The plan also called for expediting the rescheduling of Cuba’s foreign debts and implementing “flexible restructuring strategies for debt repayment” as soon as it is practical.

(Editing by David Adams and Jim Loney)

Soviet Spy Ship, havana Harbour, 1971; Photo by Arch RitterSoviet Spy Ship, Havana Harbour, 1971; Photo by Arch Ritter

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Cuban oil hopes sputter as Russians give up for now on well

By Jeff Franks

Original Here: Cuban Oil Hopes Sputter…

HAVANA, May 29 (Reuters) – Russian state-owned oil company Zarubezhneft said this week it was giving up for now on a problem-plagued exploration well off Cuba’s north-central coast, which brings to an end the communist-led island’s only active project in its search for offshore oil fields.

The news was not all bad because the company said it would return to the same spot next year. But it was another blow to Cuba’s hopes for energy independence, which have acquired new urgency with the March death of Venezuelan President Hugo Chavez, the communist-led island’s top ally and benefactor.

The Russians’ plan to drill 6,500 meters (21,325 feet) below the sea floor and hopefully find oil appears to have been derailed by the same issue that others have encountered in Cuban waters – difficult geology – as well as problems with its rig, the Songa Mercur, which at one point lost its blowout preventer.

The Songa Mercur Drilling Platform

“Taking into consideration geological complications, Zarubezhneft and (Cuban state oil company) Cubapetroleo have jointly decided to make changes in the initial drilling program by dividing it into two stages,” the company told Reuters this week.

“The second stage of exploration work on Block L is due to be launched in 2014,” it said, declining to comment further. The well, begun five months ago, was in shallow water about 200 miles (320 km) east of Havana, near the popular tourist destination Cayo Santa Maria.

The premature end of the Zarubezhneft well was not totally unexpected because Songa Offshore, owner of the Songa Mercur, earlier said the rig would leave by June 1 for a project in Southeast Asia. It had originally been scheduled to stay in Cuba until July 1.

There was a Russian press report that the rig would come back for another attempt by Zarubezhneft, but Songa Offshore Chairman Jens Wilhelmsen told Reuters the report was “completely without foundation.”

“We have not any agreement that Mercur will return and we have not received any inquiries from Zarubezhneft that they want it back,” he said. “So I can just deny that Mercur will return.”

BACK TO SQUARE ONE

All of which means that Cuba is back to square one in its quest to tap into fields off its northern coast that it says may hold 20 billion barrels of oil. The U.S. Geological Survey has estimated a more modest 4.6 billion barrels.

In the last year, Spain’s Repsol SA, Malaysia’s Petronas and Venezuela’s PDVSA sank wells in waters more than a mile deep off Cuba’s northern and western coasts. They all came up dry, and encountered a thick layer of dense rock difficult to drill through.

The Caribbean island’s hopes now lie with projects under consideration that may or may not come to fruition and are likely at least a year or more away if they do. Should oil be found, it would take another three to five years to put it into production, experts say.

Time is of the essence for Cuba because, under a generous deal made with Chavez, it gets 110,000 barrels per day, or two-thirds of its oil, from Venezuela in exchange for the services of more than 40,000 Cubans, most of them doctors and other medical personnel.

Chavez’s successor, President Nicolas Maduro, vowed during a recent visit to Havana to keep the oil flowing, but he faces mounting economic problems and political pressure from opponents to stop shipping oil to Cuba.

Repsol, which also drilled an unsuccessful well in deep water near Havana in 2004, pulled out of Cuba, but some of the other oil partners are still around.

Petronas is continuing to conduct seismic studies in the four blocks it leases with Russian partner Gazprom and is considering another well, as is Venezuela’s PDVSA, which has four blocks at Cuba’s western tip, industry and diplomatic sources said.

A unit of India’s Oil and Natural Gas Corp, which had a share of the Repsol wells, has two offshore blocks of its own and has been looking for a partner to drill a well.

GARDENS OF THE QUEEN

In a development that is potentially both interesting and controversial, Norway’s Statoil ASA, which also partnered with Repsol, appears to be looking at possibilities on Cuba’s mostly unexplored Caribbean side.

A Cubapetroleo map on display at a recent geosciences conference in Havana indicated that as of last November, Cuba was in negotiations with the Norwegian oil giant to lease three large blocks along the central and southeastern coast, between the archipelago of the Gardens of the Queen and the coast in the Gulf of Ana Maria and the Gulf of Guacanayabo.

Statoil does not comment on pending projects, but industry sources said it may just be sniffing around as it does all over the world looking for oil prospects and that its level of interest remains to be seen. The company has not mentioned Cuba in its drilling plans for the next two years.

It is likely also mindful of the sensitivity and potential dangers of drilling near the Garden of the Queens, which is regarded as one of the world’s most pristine coral reefs and whose preservation as such has become a cause for international environmental groups.

The same Cubapetroleo map showed that a Brazilian firm, Synergy Corp, was in negotiations for a near-shore block on Cuba’s north coast that state-owned Petrobras abandoned two years ago, citing poor prospects.

Attempts to reach Synergy for comment were unsuccessful.

A number of factors are working against Cuba’s oil hopes, among them the political and logistical difficulties imposed by the long-standing U.S. trade embargo against the island.

The embargo makes it difficult to find rigs that do not violate its limitations on the use of U.S. technology in Cuba and, according to experts, adds an estimated 20 percent to costs because everything in the project has to be shipped in from distant, non-U.S. sources.

There is also Cuba’s history of failed wells, which makes it hard to compete for the oil industry’s interest in a world where there are many other areas with proven oil reserves.

“It is very difficult today with other opportunities out there for a major oil company to justify going to Cuba and spending what will certainly be over $100 million in areas where it is yet to be proven they have recoverable reserves,” said Jorge Pinon, an expert on Cuban oil at the Center for Energy and Environmental Policy at the University of Texas in Austin.

“It is going to be extremely challenging (for Cuba),” he said.

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Cuba-Russia Debt Write-Off and Aircraft Leasing: Win-Lose or Win-Win?

By Arch Ritter

Great!  Canadian tourists will once again fly on Tupelov and Ilyushin aircraft on their low-cost snow-bird visits to Cuba – just like in the 1970s to 1990s. I remember one partially half-empty flight in the early 90s when the stewards requested in mid-flight that half the passengers move to the back part of the plane to balance the load, somewhat like I often do in my 14-foot boat.

Cuba looks like the big winner in the debt-write-off and aircraft leasing agreement with Russia reached yesterday, February 21, 2013. But Russia gets a small reprieve for its civilian aircraft sector.

Over and above the massive hidden subsidization provided to Cuba back in the golden age of Soviet-Cuban relations, (amounting to 15 – 30 % of Cuba’s quasi-GDP depending on the year in the 1980s), Cuba also built up a debt to the Soviet Union that amounted to around $28 billion as on 1989.  It looked as if this debt would never be repaid and that Russia had given up all hope of repayment.

The debt write-off deal lets Cuba off the hook, at least in part. Cuba can now claim that it is a responsible economic partner and participant in the international economic system. This should facilitate access to new foreign credit and thus be of some benefit. Cubana also acquires Russian aircraft, presumably at a reasonable price relative to those of the leasers of European, Brazilian and Canadian aircraft, even if of unproven quality and competitiveness. This all looks good for Cuba.

What does Russia get out of the deal? A market for its aircraft. While its military aircraft industry appears to be highly competitive internationally, the civilian aircraft sector has almost disappeared in the face of Boeing, European Airbus, Embraer of Brazil and Bombardier of Canada – and with Chinese aircraft starting to make an appearance. This deal provides a market – albeit a small one– for Russia’s civilian aircraft. Perhaps the Cuban market provides a loss-leader for Russian civilian aircraft into international markets.

At the same time, Russia probably loses nothing in writing off Cuba’s debt as it probably never would have been paid in any case.

Cubana’s New Aircraft, the Ilyushin 94-400 and Tupelov 204SM

The above chart, based on the work of Leogrande and Thomas illustrates the magnitudes of Soviet assistance to Cuba including trade credits.

 

William Leogrande, and J. M. Thomas illustrates the magnitudes of the assistance. My own quantitative estimates placed the value of this subsidization at around 23% to over 36% of National Income in the 1980 to 1987 period.

 

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Pravda: “Russia to write off $35 billion of Cuba’s debt”

Presidents Medvedev and Castro, February 21, 2013

From Pravda, Feb 22, 2013: Cuban Debt to USSR Write-Off

Russia and Cuba have initialed an agreement to settle Cuba’s debt to Russia on the loans that Cuba took from the Soviet Union. In addition, representatives of the two countries signed two agreements on the deliveries of Russian aircraft to Cuba in the amount of $650 million.

The initialed agreement “sets the general direction for further work”, a high-ranking source in the Russian delegation told Itar-Tass. The agreement was signed by Deputy Foreign Minister Sergei Ryabkov and Deputy Chairman of the Council of Ministers, Ricardo Cabrisas.

“This document is like a declaration of political will, and it sets off extensive work, which will consist of three stages,” said the official.

“The document goes through internal procedures and coordination. Afterwards, there will be another agreement signed – the new one will contain all specifications of all the technical details, and then it will have to be ratified,” he explained. According to the official, it is a very substantial amount of debt – $35 billion.

The final agreement on writing off the debts of Cuba will be prepared within six months, Minister for Industry and Trade, Denis Manturov, told reporters after the Russian-Cuban talks.

 “More than $30 billion – this is the total amount of debt that will be partially written off and partially refinanced, – said the minister. – So today it is still early to talk about the precise proportions. We have to coordinate all procedures inside the countries first before we sign the final agreement, which will take effect and determine the amounts and proportions of restructuring and writing-off the debt.”

The minister assured that it will happen “before the end of the year for sure.” “I think that the term that we have agreed on – six months – will be enough to finalize the formalities,” he added.

The total volume of two agreements about the supplies of Russian planes to Cuba is $650 million, the head of the Russian Ministry of Industry said. “In total, the amount for the supply of aircraft is 650 million dollars, – he said. – This includes two agreements for three Antonov aircraft (AN-158), three Ilyushin (IL-96-400) and two Tupolev airplanes (Tu-204SM).”

Following the talks, an option agreement was signed for the supply of three An-158 airplanes. Manturov explained that these would be delivered to Cuba in addition to those that Cuba would receive this year.

Under the second agreement, Cuba will receive three Il-96-400 planes. The planes will be redesigned from the cargo to the passenger version. In addition, Cuba will receive two Tu-204SM airplanes when tests and certification procedures are complete.

In addition, the agreements, according to Manturov, stipulate for the delivery of complete sets of spare parts to maintain the operation of the aircraft, which Cuba uses already. Manturov added that all aircraft would be delivered as part of financial leasing procedures.

The Russian delegation, led by Prime Minister Dmitry Medvedev, arrived on a work visit to Cuba from Brazil, where the head of the Russian government held talks with the leadership of the republic and took part in the meeting of the bilateral high-level commission on cooperation.

Following the results of Medvedev’s official meetings in Cuba, a number of bilateral documents is expected to be signed. On Friday, the Prime Minister will visit the 22nd Havana International Book Fair, which takes place in the Cuban capital every year.

The current fair is dedicated to the 160th anniversary of the birth of Cuban revolutionary Jose Marti. Medvedev will lay flowers to his monument as part of the traditional protocol ceremony.

The flight to Cuba marked the middle of Medvedev’s Latin American tour. The prime minister crossed seven time zones on the way from Moscow to Brasilia, making a technical refueling stop in Cape Verde. As a result, Medvedev spent more than 14 hours in the air. The trip to Cuba added two time zones to this route and a seven-hour flight.

Due to the nine-hour time difference between Havana and Moscow, even morning events in Medvedev’s Cuban work schedule fall for the evening time in Moscow.

 

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