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Posted July 31, 2009 by publisher in Business In Cuba

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Cuba on Friday suspended plans for a Communist Party congress and lowered its 2009 economic growth projection to 1.7 percent — nearly a full percentage point — as the island’s economy struggles through a “very serious” crisis.

In a closed-door meeting of the Communist Party Central Committee, officials agreed to postpone indefinitely the first congress since 1997, which had been announced for the second half of this year.

The gathering was to chart Cuba’s political future long after President Raul Castro and his brother Fidel are gone. Instead, top communists will try and pull their country back from the economic brink.

Cuba lowered its 2009 growth estimate from 2.5 percent to 1.7 percent, but even that figure is dubious given that it includes state spending on free health care and education, the food Cubans receive with monthly ration booklets and a broad range of other social services.

The revision downward was the second of its kind this year. As recently as December, central planners said they thought the Cuban economy would grow by 6 percent in 2009.

The country’s economic problems began last summer, with three hurricanes that caused more than $10 billion in damage. The situation has worsened with the onset of the global financial crisis and subsequent recession.

The 78-year-old Raul Castro succeeded his brother as president more than 18 months ago, but it’s the soon-to-be 83-year-old Fidel who remains head of the Communist Party.

Party congresses historically have been held every five years or so to renew leadership and set major policies, but the government has broken with that tradition over the past decade.

Information about the Central Committee meeting occupied the entire front page of the Communist Party daily Granma and a full page inside cited Raul Castro as reporting that “things are very serious and we are now analyzing them.”

“The principal matter is the economy: what we have done and what we have to perfect and even eliminate as we are up against an imperative to make full accounts of what the country really has available, of what we have to live and for development,” the newspaper said, citing the president.

It said authorities would postpone the sixth Party congress “until this crucial phase ... has been overcome,” but did not say when that might be.

Waiting for his copy of Granma when it hit newsstands at 7 a.m., Raul Salgado, a 72-year-old retiree, said, “I want to know what’s happening, or better yet, what’s going to happen.”

“I don’t think it matters much to the people if there is a congress or not. What the people want here in Cuba is to know what the government is going to do to get out of such a terrible situation like the one in which we’re living,” Salgado said.

Cuba has begun a major push to conserve energy in an attempt to save some of the imported oil it uses to run power plants. State-run factories have been idled during peak hours, air conditioners have been stilled at government offices and some work hours shortened.

Granma made it clear more cutbacks were coming, but did not give details. Cuba’s rubber-stamp parliament convenes Saturday for one of its two full sessions a year and could unveil new energy-saving plans then.

  1. Follow up post #1 added on July 31, 2009 by chuck bailey

    Maybe Cuba ought to offer the services of their spanish speaking doctors to the U.S. in return for food.
    We have a need for doctors to serve 13 million spanish speaking people that have no insurance.

  2. Follow up post #2 added on August 01, 2009 by publisher with 3905 total posts

    Cuba enters crisis mode as economy worsens


    Cuba clicked into crisis mode Friday, postponing a key Communist Party congress aimed at charting a post-Castro future and announcing that its woeful economy is even worse than expected.

    Cubans will have to make do with less, top communists suggested, as they insisted the armed forces are strong enough to deal with any unrest.

    The island’s top two political bodies — the Council of Ministers and the Communist Party’s Central Committee — huddled in secret on how to guide Cuba through what President Raul Castro was quoted as calling a “very serious” crisis.

    Such frank language is uncommon in a country where the state controls all news media, restricts free speech and assembly, and tolerates no organized political opposition. But it’s no secret that the global financial crisis has pounded the desperately poor nation — and people do not need to be told how tough times are.

    “The congress? I don’t care about that. What I want is something concrete,” said high school student Silvia Medina, 17. “We young people want to know what’s going to happen. We want some light on the horizon. We want a better life, where we don’t have to work so hard for so little.”

    Officials made clear there would be no tolerance for dissent, pointedly announcing the armed forces are as strong as ever.

    “The Central Committee agreed yesterday to support all conclusions and working projects suggested by the National Defense Commission,” read an article in the Communist Party newspaper Granma.

    Indefinitely postponing the much-anticipated congress, traditionally held every five years or so, came as central planners dropped 2009 growth projections from 2.5 percent to 1.7 percent. That’s down from a high of 12.5 percent in 2006 — and from projections as recently as December that Cuba would grow 6 percent this year.

    By most forms of accounting, performance would be even lower, because Cuba counts as output all state spending on free health care and education, as well as the subsidized food it gives citizens in monthly ration books and other social programs.

    Carmelo Mesa-Lago, an expert on the Cuban economy at the University of Pittsburgh, said the island could easily end the year with negative growth. He believes the cancellation of the congress indicates that Cuban leaders are retrenching to try to prevent debate about structural reforms that could improve the economy.

    “In the current conditions the best thing in Cuba would be to have a congress and have a five-year plan,” he said. “But politically this is difficult, because of the pressures it could cause.”

    Cuba has not faced truly dire straits since what it calls the “special period,” when the collapse of the Soviet Union brought the island’s economy to its knees in the early 1990s, making food and fuel scarce and prompting hours-long blackouts.

    Amid the heat of summer 1994, Fidel Castro had to make a personal appearance to quell street protests. The government didn’t release full economic figures during those dark days, but what there is suggests the current situation isn’t nearly as dire.

    Mesa-Lago said the country is more economically sound today because of aid from Venezuela and money sent home by Cubans in the United States.

    Any serious economic crunch could increase pressure on officials to pursue closer relations with Washington, where the Obama administration has suggested it’s time for a new beginning after a half-century of enmity.

    But Oscar Espinosa Chepe, a state-trained economist who has been jailed for his criticism of the communist system, said Cuba is unlikely to take President Barack Obama up on his offer.

    “It’s logical: The United States is the best option to help get out of this situation,” said Espinosa Chepe, currently paroled for health reasons. “But in Cuba, things are not logical.”

    The sixth Communist Party congress was to have been the first since 1997, an unusually long stretch without a top-level meeting. Many had speculated that Fidel Castro, 82 and ailing, would use the congress to formally relinquish control of the party, which he still heads. Friday marked the third anniversary of his last public appearance.

    Granma said the congress was postponed indefinitely “until this crucial phase ... has been overcome.”

    Retiree Reina Delgado said suspending the congress would only lead to more mystery about what the government has in store for Cubans.

    “I think people are going to be disappointed since they were hoping to participate and talk about problems,” said Delgado, 72. “We want steps taken so we can have better lives.”

    If that makes it sound as if Cubans are dependent on their government, they are. The state controls well over 90 percent of the economy and pays an average monthly salary of $20 to the 85 percent of Cubans who work for it.

    The problems began last summer, when three hurricanes caused more than $10 billion in damage. The global economic crisis cut into export earnings and caused budget deficits to soar, leaving Cuba short on cash.

    Some of the measures taken to remedy the crisis have backfired. To try to conserve energy and lower Cuba’s oil bill, the government has idled state factories during peak hours, stilled air conditioners at government offices, businesses and stores, and shortened work hours for some employees.

    That has led to a drop in productivity, exacerbating scarcities of products including cooking oil, laundry detergent and yogurt — even though all are sold in government stores that cater to tourists and are too pricey for most Cubans.

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