By Marc Frank | Reuters
Cuba counted up billions of dollars in damage to buildings and infrastructure on Wednesday after Hurricane Ike ripped across the Caribbean island, damaging an economy already strained by Hurricane Gustav and the soaring cost of imports.
The central bank had already asked various creditors to restructure debt due to this year’s spike in fuel and food prices and a fall in the price of nickel, Cuba’s main export.
“If we were cash short before, you can imagine now. There is little liquidity for recovery, let alone anything else,” said a Cuban economist who asked not to be named.
Communist-ruled Cuba, under an economic embargo imposed by Washington more than 40 years ago, is not a member of the International Monetary Fund, World Bank or other multilateral lending institution with a U.S. presence that could help bail it out.
Ike struck on Sunday near Cuba’s nickel-producing region in eastern Holguin province and roared nearly the entire 700-mile (1,125-km) length of the island, flattening sugar cane fields and toppling decrepit buildings in the capital.
Damage from Ike could hit $3 billion to $4 billion (1.7 billion to 2.3 billion pounds), according to “some official sources” in Cuba, Elisabeth Byrs, a spokeswoman for the U.N. Office for the Coordination of Humanitarian Affairs, said at a briefing in Geneva on Tuesday.
Cuba’s economy has been restructured over the last 15 years from reliance on sugar to services, which account for 74 percent of gross domestic product and an equal percentage of foreign exchange earnings.
Foreign exchange comes mainly from tourism and service exports to Venezuela and other countries.
Total imports were $10 billion last year and foreign exchange income was $10.5 billion.
The restructuring should ease the blow a bit but payments will be delayed and imports over the next few years will surely slow, several local economists said.
They said an incipient recovery from the years of crisis that followed the demise of the Soviet Union, as well as new President Raul Castro’s plans to strengthen the economy and currency, were in trouble.
Ike was a powerful Category 3 hurricane when it slammed ashore in Holguin, home to the island’s three nickel-processing plants.
Cuba said on Tuesday the storm did no serious damage to its key nickel mines and plants and that it expected to restart some production in a few days. Nickel futures fell on Wednesday as a result.
CANE AND COFFEE
Ike damaged to varying degrees the entire sugar industry as it churned along the length and breadth of Cuba, gradually losing force while flattening and flooding cane fields.
Ike hit all three coffee-growing areas in the eastern Sierra Maestra, central Escambray and western Rosales mountain ranges as the harvest was moving into high gear, causing major damage, according to state-run radio reports.
Gustav, a powerful Category 4 hurricane when it struck Cuba 10 days ago, damaged tobacco industry infrastructure and the recently harvested crop when it hit westernmost Pinar del Rio province, home of the high-quality tobacco used to roll its famous Habanos cigars.
Cuban officials said last week that Gustav damaged or destroyed more than 120,000 houses.
Ike spared the oil industry and heart of the tourism industry and manufacturing when it missed western Matanzas and Havana province and city, though the area was without power on Wednesday, like most of the country.
(Editing by Jim Loney and John O’Callaghan)