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Posted June 06, 2003 by publisher in Cuba-US Trade

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By Marc Frank

HAVANA (Reuters) - A Cuban economic think tank has urged Communist authorities to stimulate a stagnating economy through more private initiative and less regulation of state- run businesses, in documents obtained this week by Reuters.

Analysts said the presentations from a conference by Havana University’s Center for the Study of the Cuban Economy were unusually bold and reflected growing sentiment within President Fidel Castro’s government in favor of opening up the economy.

“The economy grew, but not as much as expected and was needed,” the center said, referring to last year’s 1.1 increase in the gross domestic product, compared with 3 percent in 2001 and more than 6 percent in 2000.

The center’s annual summary of the economy, introducing the papers from the February conference, praised efforts to forge an egalitarian society, but pointed out that “you can only distribute what you produce, growth is the order of the day.”

The think tank said the government should make the economy “more attractive to foreign investment ... encourage development of (private) production and service cooperatives as a compliment to state industry ... eliminate regulations that block better use of productive potential,” among other reforms.

Cuba forecast growth this year at 1.5 percent, but various official sources report the state-dominated economy stagnated at best through May. The government has not reported on this year’s economic performance.

Power outages, transportation and consumer goods shortages, which have plagued island residents since the collapse of Soviet Communism more than a decade, increased noticeably this year.

Many local and foreign analysts consider the center to be more reliable and innovative than other government think tanks, due to its affiliation with Havana University.

A European diplomat said pressure was mounting within the government to liberalize policies because the economy is in such serious trouble.

“The economic situation is a disaster. The report reflects growing frustration within the system over Castro’s refusal to adopt market-oriented policies similar to Communist China and Vietnam,” the diplomat said.

Cuba’s economy declined 35 percent and industrial production 75 percent during the 1989-1993 period, as the the Caribbean island’s main market, supplier and source of aid, the Soviet Union, collapsed.

The government began a timid opening to foreign investment, legalized some family businesses, turned to tourism and began a gradual decentralization of the command economy, among other measures.

The policies, which paled by comparison with China’s liberalization, allowed for some growth through 2000, but not enough to restore precrisis standards of living.

The Center for the Study of the Cuban Economy praised the measures, but said they were “exhausted” and needed to be revamped and freed of excessive bureaucratic regulation. (Reporting by Marc Frank, Editing by Andre Grenon; +537-833-3145, .(JavaScript must be enabled to view this email address)

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