Chavez illness a wake-up call for worried Cuba

A woman drinks coffee outside her house in Havana July 1, 2011.

HAVANA (Reuters) - Venezuelan President Hugo Chavez's admission that he is battling cancer has given Cuba new worries as it ponders the possibility of life without its biggest benefactor.

His illness, disclosed in a television address on Thursday, is a wake-up call Cuba knew would come one day, given its history of over-reliance on one ally, but hoped was a ways off.

Chavez, 56, is being treated in a Cuban hospital where he will get the best care the communist-run island has to offer, in part because its survival depends as heavily on him as his does on his Cuban doctors.

"I don't really like him or Venezuelans, but if he goes it would be a disaster. We have tranquility now because of his oil," schoolteacher Olga Rivera said on Friday.

During his 12 years in power, Chavez has made Cuba a pet project, giving it oil, pouring money into joint economic development projects and becoming close friends with his political godfather Fidel Castro.

Even though an enfeebled Fidel Castro, 84, has handed over power to brother Raul Castro, he and Chavez confer often and plot a joint strategy to unify Latin American nations against U.S. influence in the region.

In a chatty session aired on Thursday in both countries, the two men, both wearing gym suits, made insulting jokes about U.S. President Barack Obama and extolled the virtues of socialism, two shared obsessions.

Cuba's struggling economy has become closely intertwined with that of Venezuela as Chavez uses his country's vast oil wealth to keep Cuban socialism afloat.

Venezuela supplies about two-thirds of Cuba's oil needs, shipping 115,000 barrels a day at highly favorable terms. It also is refurbishing the island's antiquated refineries and planning a new one.

In return, Cuba has sent 40,000 people to work in Venezuela, including doctors, nurses, teachers, military advisors and security personnel.

DEPENDENT ON CHAVEZ

Cuba's problem is that much of Venezuela's aid depends heavily on the continued presence of Chavez. If he goes, either due to illness or defeat in the 2012 elections, his successor may not have the same fealty to Cuba, said Christopher Sabatini, policy director at the Americas Society in New York.

"I would imagine they are scared," he said of the Cubans.

"While few in Chavez' loyal following would cut that (oil) off were he to become incapacitated, the cancer makes him look more fallible for the 2012 elections - and the opposition would cut off Cuba's lifeline," he said. "And once that's gone, I don't know where Cuba turns."

Cuba knows the dangers of depending too heavily on one ally after its experience with the Soviet Union. For 30 years, the Soviet Union was its top benefactor, providing oil and many other things at a cost of more than $4 billion a year.

When it collapsed in 1991, Cuba's economy plummeted, ushering in a dark time known locally as the "special period" where shortages of food, oil and electricity reigned and popular discontent swelled.

It was only with Chavez's help that Cuba's economy began to recover.

With that in mind, President Raul Castro, 80, has set about cultivating ties with other friendly countries, particularly China and Brazil, ushered in a wide-ranging set of economic reforms and pushed for development of its still-untapped oil fields in the Gulf of Mexico.

The latter, which is expected to begin this fall with a deepwater well drilled by Spain's Repsol YPF, is crucial to weaning Cuba from Venezuelan oil.

But even if oil is found, production will be several years away, meaning Cuba needs for Chavez to survive and stay in power.

"It goes without saying that energy independence is critical for the political and economic future survival of the island nation," said Jorge Pinon, an expert on Cuban oil at Florida International University.

"The collapse of the Soviet Union in 1991 taught Cuba a very expensive lesson," he said.

For average Cubans, Chavez is both a savior and a painful reminder of their country's chronic economic problems, and because of that they have mixed feelings about him.

Many consider him a bit of a buffoon, but one they cannot live without.

"We're grateful because we have light, thanks to his oil. But he's a clown, trying to follow everything Fidel did," said Irma Barrientos, a Havana office worker.

(Editing by Kevin Gray and Anthony Boadle)