Cuba watchers are pushing a new “domino theory” lately. They suggest that an eventual defeat of chavismo in Venezuela would spark an immediate collapse of the Cuban economy and with it the much awaited political collapse of Cuba’s government.

But those who make such predictions seem to have short memories. They should remember that in the late 1980s, the Castro regime suddenly came face-to-face with an unprecedented crisis as the Soviet Union and its surrogates in Eastern Europe began to crumble.

Actually, this was the real “domino theory” and by 1989, it was in full swing by 1989. Predictions were that Cuba could not survive the impact. Hundreds of foreign correspondents flocked to Havana just waiting for the collapse to take place, or the spark that would bring about the much-expected outcome.

Finally, they got tired of waiting and left; 25 years later, they’re still waiting.

It’s also important to remember that between the late 1980s and 1999, there was no “savior” named Hugo Chávez or any government “giving away resources” to Cuba. In 2002, trade with Venezuela was only $60 million a year, and it was not until 2003-04 that bilateral ties started to approach current levels.

Any serious research today, after digging through the many agreements signed between Caracas and Havana over the years, will show that lots of projects are still floating in the air, far from any tangible implementation.

Even now, after Nicolás Maduro’s narrow Apr. 14 electoral victory, such predictions are being reformulated, adapting the argument that his new chavista government is under such economic pressure that it’ll soon be forced to scale back or do away totally with its current Cuba policy causing major havoc to Cuba’s financial and political stability.

These predictions are based on the following analysis: Venezuela is “giving away” about a third of its oil production at below-market prices, the Venezuelan oil sector is unlikely to improve significantly in the short term, regardless of domestic politics, and the Venezuelan economy is in serious trouble. Indeed, inflation exceeds 30% compared to Latin America’s average of 7%, traditional debt is rising, and so is Venezuela’s fiscal deficit.

On the other hand, many experts agree that Venezuela’s oil transfers to Cuba along with Petrocaribe as a whole are threatened only if oil prices fall below $75 a barrel, something that seems nowhere in sight.

As Trinidadian economic consultant Antho-ny Bryan recently wrote: “President Maduro will most likely maintain Petrocaribe. But domestic fiscal constraints will force his administration to reduce foreign aid. In this scenario, maintaining aid to Cuba would be a priority since the Castro brothers are strategic allies. A strong relation with the Castro regime is also Maduro’s main path to justify his revolutionary credentials in the post-Chávez era.”

Ex-Chilean President Ricardo Lagos offers a similar approach: “I don’t believe Chávez’s successor will proceed to review the political alliances forged with the ALBA states. Realignments will not take place immediately.”

Similarly, University of Pittsburgh economics professor and Cuba scholar Carmelo Mesa-Lago cautions against such apocalyptical predictions.

“The impact would be powerful but not as severe as the loss of Soviet-bloc support and trade two decades ago,” he said, writing in the Cubaencuentro website. Mesa-Lago added that this extreme scenario would take place only in the case “of a substantial reduction or the ending of Venezuelan aid.”

The question then becomes: how prepared is Cuba to deal with such an impact compared to the Soviet collapse of 25 years ago?

Several factors must be considered here.

* For one, the old system is fading away. In its place, a socialist market economy is rising, thanks to several key reforms some of which have already been implemented, others which will become law soon.

The growing private sector now involves more than 40% of Cuba’s working population. In some places, 50% of agricultural production is sold through private channels. None of this existed before.

“The trend toward reform in Cuba is evident, and suggests that an inflection point is approaching,” writes noted Cuba scholar Ted Piccone of the Brookings Institution. “Now is the time to employ a new paradigm by opening a long overdue direct dialogue with our next-door neighbor.”

A number of European Union member states agree. They’ve restored cooperation with Cuba, while others say they’ll review the EU’s seemingly outdated posición común. That would have been inconceivable following the Soviet collapse.

* Economic activities like tourism which were almost non-existent in 1990 today have become crucial sources of employment and hard currency. Research, production and exports of biotech and pharmaceuticals negligible 25 years ago today exceed $2 billion a year, and by 2018 could exceed $5 billion.

The same is true when it comes to Cuban doctors sent abroad, whether to Angola, Venezuela or Qatar.

* Remittances amounted to next to nothing in the 1980s. Today they bring in several billion dollars a year, though accurate estimates of just how much are nearly impossible to come by. Those remittances are helped by the 400,000 Cubans living abroad mostly in the U.S. who visited the island in 2012.

Jorge Duany, head of Florida International University’s Cuban Research Institute, suggests that 10% to 20% of these Cubans would consider going back to the island of their birth as a “second place of residence.” Since 2010, several thousand exiles have actually done so.

Meanwhile, says Duany, most Cubans living the United States would be ready to travel to Cuba “to support its development and economic reconstruction” an unthinkable development two decades ago.

* In the early 1990s, Cuba had almost no oil or gas. These days, the island meets 50% of its needs with local hydrocarbons. Despite three initial major setbacks, several foreign energy companies continue to drill exploratory wells off Cuba’s Gulf of Mexico coast.

* Nickel production, one of the lifesavers of the early 1990s, is now back on its feet after overcoming serious technological challenges and a slump in world prices.

The industry plans to produce 61,700 metric tons of nickel plus cobalt this year, and by 2015 it should surpass the 74,000 tons it averaged annually during much of the past decade. Much of this depends on the scheduled opening in 2014 of a joint-venture ferronickel plant under construction with Venezuela. The $700 million facility will produce 21,000 tons of nickel a year once it’s up and running. In fact, nickel for many years has been Cuba’s top cash export, although prices have been very unstable.

* With construction proceeding at the port of Mariel and a pending investment law, Cuba is getting ready to make a major effort to attract foreign investors. The Mariel project, as Cuban President Raúl Castro recently pointed out, will serve as a model for the promotion of new Zonas Especiales de Desarrollo (ZEDs), or special development zones.

* Cuba has much more diversified trade partners and markets than it did 20 years ago. The island’s priorities include all five BRICS countries, but especially China, Russia and Brazil. Even the United States has become an important market, though only for food purchases ($711.5 million in 2008, falling to $465 million in 2012).

* At the same time, Cuba’s foreign debt has been downsized considerably thanks to final arrangements with major creditors as Russia and Japan, followed by partial payments and rescheduling with other countries outside the Paris Club. The CIA Factbook puts Cuba’s foreign exchange and gold reserves at $5.23 billion, compared to near-zero in the early 1990s.

* Cuba is also much more active diplomatically in the Western Hemisphere and the world in general than it was in the early ‘90s. The island achieved significant victories at various regional summits in Salvador (Brazil), Port of Spain (Trinidad), San Pedro Sula (Honduras), Cartagena (Colombia) and Santiago (Chile).
And this year, Cuba was elected president pro tempore of CELAC. In the last three years, many of the hemisphere’s heads of state have visited Cuba seeking better relations.

“In historical terms, the Latin American ‘lefts’ because there is not one but many from chavismo to social democrats, are experiencing a good period and have perspectives of continuity,” said international relations professor Julio Burdman of Argentina’s Universidad de Belgrano.

Eight out of 10 South American countries fit this pattern not bad at all for Cuba.

* Finally, critics of Venezuela’s oil and trade policies within Petrocaribe tend to characterize relations as “giving away resources” or call them “subsidies.”

But the United States and Europe’s former colonial empires resorted to such practices, and continue to do so today. In the early ‘80s, Mexico and Venezuela (long before Chávez and Maduro) agreed on such an oil arrangement, and it was called the San José Treaty.

So the policies themselves are not wrong; they’re only wrong when the chavistas do it.

The latter conduct trade based on policies and terms linked to their domestic and regional goals or national interests. Trading oil for doctors is not simply a financial transaction; it also has social and political considerations. Even the CIA doesn’t call it a giveaway or a subsidy; it prefers the more ac-curate description, “oil on preferential terms”.

CONCLUSIONS

* Current developments in Venezuela don’t point to a debacle or a chaotic outcome. Subsequently, many of these gloomy predictions will have to remain on hold.

* Even if the new Venezuelan leadership should adopt any readjustment of Petrocaribe or aid to Cuba, the island will continue to enjoy a privileged status.

* Cuba’s current situation, in stark contrast to that of the early 1990s, will safeguard the economy from any apocalyptic changes in Venezuela, even if those changes are as severe as the Soviet collapse.

* Cuba’s reforms will pick up speed, making its economic ties with Venezuela less vulnerable to any unexpected contingencies.