Russia opens new chapter in trade with Cuba

HAVANA, Sep 29 (Reuters) Russia turned a page in trade with its former Cold War-era ally Cuba by extending credit for the purchase of vehicles and winning Cuban commitment to buy 100 million dollars a year in civilian aircraft.

During a visit by Russia's prime minister, Moscow extended a fresh credit line for 355 million dollars -- repayable over 10 years at 5 percent interest -- to buy Russian cars and trucks and finance Cuban energy and transport infrastructure projects including air navigation systems, a Russian official said.

Moscow, which has set aside a 26 billion dollars debt it says Cuba owes it from the Soviet era, also agreed to restructure 162 million dollars in debt run up by Cuba with Russia since the demise of the Soviet Union in 1991.

Cuba, which early this year received two long-haul Ilyushin Il-96s passenger jets, committed to buying two aircraft a year for seven years to overhaul its vintage fleet of Soviet-era planes, including regional and medium-range planes.

''Cuba agreed to spend 100 million dollars a year in purchasing all sizes of Russian civilian aircraft over seven years,'' said Alexander Rubtsov, general director of private Ilyushin Finance Co., which is arranging the plane sale.

''We have started a new chapter. We are creating the conditions for major growth in trade with Russia,'' Cuban Vice President Carlos Lage told Reuters yesterday.

The highest-ranking Russian official to visit Cuba since President Vladimir Putin in 2000, Prime Minister Mikhail Fradkov met with acting Cuban President Raul Castro, who temporarily took over from his brother, Cuban leader Fidel Castro, after he underwent intestinal surgery in late July.

Fradkov was not scheduled to meet with the convalescing Fidel Castro, but he passed on Putin's wishes for a speedy recovery, Russian news agency Interfax reported.

''We hope Fidel Castro's health will improve and the people of Cuba will see their Comandante back at the helm soon,'' Fradkov said during talks in Havana, Interfax reported.

'THE POTENTIAL IS UNLIMITED' Removing financial obstacles to a rebirth in trade with Cuba was the goal of Fradkov's visit, said Russian ambassador in Havana, Andrey Dmitriev.

''The potential is unlimited. Russia can supply anything the Cubans need,'' Dmitriev said during a visit by Fradkov to a transport fair in Havana.

Russian companies displayed mighty GAZ trucks and vans, Volga sedans and shiny new Ladas, the small car used by communist-run Cuba's chauffeur-driven ministers.

Russian firms also offered locomotives and electric trains, fast naval patrol boats as well as seismic survey boats and oil drilling platforms for offshore oil exploration.

Russian-Cuban trade plummeted after the Soviet Union collapsed.

Cuba has turned to communist ally China as a major supplier of household appliances financed by soft credits. Cuba is buying thousands of buses from China to renew its badly deficient transport sector.

Cuban officials said buying vehicles from Russia was a good option because many of their country's aging trucks and cars are Russian-made and the technology is familiar to Cubans.

Cuba's flag carrier Cubana de Aviacion, which cannot buy Boeing or Airbus airplanes due to US trade sanctions, has ordered two more wide-bodied Il-96-300s and three medium-range Tupolev Tu-204s with an estimated value of 250 million dollars.

The purchases are financed by Ilyushin Finance Co. with Russian state guarantees for 85 percent of the loans, general director Rubtsov said.

Ilyushin signed an agreement with Tupolev on Thursday to sell regional commuter and medium-range airplanes over the next five years to replace Cuba's aging turboprop AN-24s and YAK 40s and 42s jets, he said.

REUTERS AD RAI0728