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Posted July 14, 2003 by publisher in Business In Cuba

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BY NANCY SAN MARTIN | .(JavaScript must be enabled to view this email address) | Miami Herald

WASHINGTON - Facing Cuba’s worst economic crisis in a decade, President Fidel Castro has turned to a string of newly appointed loyalists to help keep Cuba’s troubled economy afloat without placing his socialist system in peril, several analysts say.

The moves, involving the replacement of at least five officials in economy-related government posts, appear designed to bolster Cuba’s socialist system during a period of deteriorating economic conditions.

‘‘There is pressure in Cuba for economic reform, but most signs point to a president that is resisting,’’ Javier Corrales, an assistant professor of political science at Amherst College who has studied the makeup of the Cuban Cabinet and the Cuban economy, said in a telephone interview.

William LeoGrande, a Cuba specialist at American University in Washington, D.C., said he believes that “Fidel has made the decision to hold the line politically until the economic turmoil passes.’‘

‘‘Castro shuffles the Cabinet as the economy stagnates,’’ LeoGrande said. “The economy is not in good shape and there is a rising level of discontent. They’re looking for the economy to get going again and the current team hasn’t done the job.’‘

According to a new report by the University of Miami’s Institute for Cuban and Cuban-American Studies, the population is feeling the effect of a significant downturn in the economy.

The report, Cuba’s Economy in the Doldrums, is a compilation of data gathered from government statistics reported in Granma, the voice of Cuba’s Communist Party, and other sources by the institute’s Cuba Transition Project.


Among the report’s most dramatic assertions:

At least 13 percent of the population is clinically undernourished, as the state’s food rationing system now provides for only a week to 10 days of basic nutritional needs each month. Rations began to shrink with the start of Cuba’s so-called special period in the early ‘90s.

Unemployment hovers at about 12 percent and up to 30 percent of workers are displaced or underemployed. Government figures put unemployment at 3.3 percent in 2002, compared to 7.9 percent in the mid-1990s, but the official figure does not include the loss of up to 100,000 jobs last year in the sugar industry.

‘‘Cuba’s economy is un callejon sin salida. It’s a dead end,’’ Jaime Suchlicki, director of the UM institute, said in a telephone interview.

Even though the government recently announced a 16 percent increase in foreign visitors—suggesting that the island’s tourism industry is on the rebound—‘‘that’s not going to take them out of the hole,’’ Suchlicki said.

‘‘Cuba is not going to collapse, but it is going to continue to sink,’’ he said. “The only miracle is if the guy [Castro] opens up the economy. But there are no indicators of that.’‘


The government changes began in March with the dismissal of four of six deputy ministers at the Economy and Planning Ministry. Their replacements have not been made public.

Last month, Castro also replaced the minister of finance and pricing.

The changes come amid one of the harshest waves of repression since Castro rose to power in 1959. Beyond the recent arrests of 75 dissidents sentenced to as many as 28 years in jail and the executions of three hijackers who tried to commandeer a passenger ferry to Florida, the government also has cracked down on black marketeers and conducted raids allegedly in search of drugs, according to various independent reports out of Havana.

In previous economic crises, government crackdowns on dissent have been followed by reforms spearheaded by new government appointees who have tended to be younger. Although most of the recent appointees are younger than their predecessors, they are viewed as loyal to Castro.

‘‘They’re baby dinosaurs,’’ said Daniel Erikson, director of the Caribbean Program at the Inter-American Dialogue in Washington. “Their thinking is old guard, but they just happen to be younger.’‘

It is uncertain how the new appointees will respond to Cuba’s economic situation.


John Kavulich, president of the New York-based U.S.-Cuba Trade and Economic Council, which monitors Cuba’s economic performance, said tougher times are likely ahead.

‘‘The economy is bad: 2002 was worse than 2001 and 2003 may not be better than 2002,’’ Kavulich said by telephone.

Over the past decade, tourism has replaced sugar exports as Cuba’s main foreign-exchange earners, bringing in as much as $2 billion each year, according to government estimates. However, that calculation is based on gross revenues, meaning Cuban coffers get perhaps 10 to 15 percent, Kavulich said.

Remittances from Cubans living abroad account for another $400 million to $1 billion a year, according to various estimates.

While such numbers seem impressive, they pale in comparison to Cuba’s estimated $12.2 billion hard-currency debt to the Western World.

The primary reason the government has been able to maintain its existing commercial and economic structure is because it hasn’t been paying off its foreign debt since the mid-1980s, analysts said.

‘‘By not having to put aside substantial foreign exchange, that allows the government to use foreign exchange for other purchases,’’ Kavulich said. It does not include money owed to the former Soviet Union.

That poses another question: What’s in the future?

‘‘some in the government of Cuba may correctly calculate that with a post-Castro Cuba there would be widespread foreign debt relief,’’ Kavulich said.

“If they believe that is likely to happen, which it likely will, why put additional pressure on the economy?’’

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