HAVANA TIMES, Aug. 17 (IPS) – Those who say that Cuba does not get out of one difficult situation without getting into another are not mistaken. Independent of mistakes in domestic economic policy and unfolding measures to escape the crisis – which generated monetary imbalances, lost purchasing power and indifference towards work, among other woes – the Cuban economy has been hit by a volley of adverse forces.
Though the country had still not recovered from the crisis that began in the 1990s, it was struck by negative events such as the drop in sugar prices, which had the direct impact of severely decreasing sugar production. Likewise, the attacks on the twin towers in the United States disrupted the flow of tourists to the island, which led to a contraction in revenues of one of the most vulnerable components of the Cuban economy.
On top of this, Cuba is still suffering from the effects of three hurricanes that pummeled the island in 2008. These worsened the already critical housing situation – whose solution will be costly and protracted – as they caused an estimated $10 billion in damage across the island.
The consequences of these storms also include a continuing food deficit, since expected growth in agricultural production failed to materialize, forcing the country to allocate even larger sums of hard currency toward imports of everything from rice and chicken to salt and even sugar. Inevitably, the global crisis is determined to continue knocking at the door.
As a result of the world crisis, downward price spirals continue in the Caribbean nation’s draft horses of export: nickel, tobacco and fishing products.
In a never ending cycle, the country doesn’t have enough financial reserves, and interest rates on credit – should they find a creditor – have shot up.
Tapping Our Potential
Therefore the solution must be sought from within – in Cuba’s own reserves – through measures that include everything from conservation and saving to production increases that stem greater declines in the Gross Domestic Product (GDP).
In this respect, Adel Izquierdo, the first vice minister of the Economy and Planning, affirmed that there are still many potential areas that can be tapped to improve efficiency and reduce the impact of the crisis.
Among those that he mentioned are the decrease in excess inventories of state agencies, which will allow a reduction in imports; as well as increases in labor productivity and energy conservation efforts by consumers.
On August 1, in a session of parliament, the Cuban president announced new projections and measures for greater “economic rationality” in the emblematic Cuban sectors of health and education. “Expenses in the social sphere must be in consonance with real possibilities, and that requires we eliminate that which is possible to do without,” said Raul Castro.
“This might involve beneficial and even praiseworthy activities, but ones that are simply not within the reach of the economy”, he warned.
The leader noted that “paths are being studied to reduce the number of boarding school students” in the country’s rural areas, where “their participation in agricultural tasks is no longer required.” He added, “It is a decision made for the sake of greater savings in the considerable expenses that accumulate in the area of education, but without affecting its quality.”
According to the Cuban leader, those measures are directed at “eliminating expenses that are simply untenable.”
Even in the difficult current circumstances, considered by analysts as one of the most serious in 50 years, the island’s authorities defend the socialist model of development.
In a speech before parliament, Raul Castro reiterated that there would be no modification to the political and economic system of the island. “The task that we Cuban communists and the entire population have before us is large,” he said, “What must be defined -with the widest popular participation- what is the socialist society that we aspire to and can build under the current and future conditions of Cuba. We must determine the economic model that will govern the life of the nation in our fellow citizens’ benefit and how to assure the irreversibility of the country’s sociopolitical system, which is a guarantee for its true independence.”
A Havana Times translation of the original article published in Spanish by IPS.