Cuba’s Somber Economic Horizon

Havana sunset from the Melia Cohiba Hotel – Photo: Caridad
Havana sunset from the Melia Cohiba Hotel – Photo: Caridad

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.

4 thoughts on “Cuba’s Somber Economic Horizon

  • September 26, 2009 at 11:16 pm

    One month in Cuba, 8/24 – 9/25/09 confirmed previous views about the undeferrable needs of urgently creating small business/industrial joint ventures across the nation, which is capable of generating 1 million new jobs, pay tax, rent, social security, utilities etc., provide non existent or poor quality services, erradicate a growing mentality of stealing government goods, restore work ethics and discipline . Study and implement decent, fair, job-related salaries, capable of addressing individuals needs by removing today’s arguments to justify illegalities. Cuba’s tourism is one of the main casaulties of its centralized economy which makes services monotonous, unpolite and rude, without a national taste of its culutre, history, cuisine or craft, leading many to choose the Dominican Republic with a similar culture with a different economical approach, warm wellcome, greater purchasing power, burning desire to return, in spite of Cuba’s highly educated personnel.

  • August 18, 2009 at 4:08 pm

    If Cuba would only take some baby step without introducing those structural changes that are demanded by many who do not wish our country well, Cuba, could easily be on its way to be among the five most prosperous country in our region. These terrible, tunnel vision, fear of small private enterprises presumed to be unpatriotic is not only mistaken, it is the only way to immediately create half a million of badly needed jobs, restore quality service, expand availability of products and generate millions for the economy, enabling the government to pay decent wages to its employees, raising their standard of living and accessing those basic goods most family needs. These simple adjustment would reverse what have become a public embarassment for the country, in which tens of highly trained Cubans are migrating every day to foreign lands into menial jobs, wasting a substantial national investment and suppling the largest pool of grey matter to the developed world.

  • August 18, 2009 at 3:28 pm

    Need further proof? Put up for lease tens of thousands closed, functioning or newly created corner stores under acceptable operating practices. Put up for sale, thousands of old vehicles rotting in “cemeteries” around the country and stock hundreds of auto parts stores and lease to any individual willing to put it to work. Stop limiting the sale/purchase of produce from farmers and its introduction into the cities. Lease fallow agricultural lands for 25 years with an initial two years grace period, for a reasonable, publicly debated rate and authorizing the production of every legally accepted crops, to Cubans and every Caribbean orderly migrant needing a job. Stop the failed practice of donating, rather charge lease fee, health insurance, education, retirement funds and tax income to all self employed, generating millions to local governments without funds to address basic social services, erradicating massive stolen goods, which none of these newly operators will allow.

  • August 18, 2009 at 3:03 pm

    As someone who shed tears over the suffering of my people, I can assure, no one will dispute the arguments put forth in this and many other arguments. The point we all asks ourselves, how much longer will the Cuban government continue to do the same things, expecting different results. Living abroad have shown us many things. For the most, it is amazing the overnight transformation that is experimented in Cuban arriving at any country around the world. Social demands, economical pressure and personal responsibility, sends these same people who refuse to work in Cuba or claim that is not part of their job description, hitting the road, pleading with acquaintances to help them search for a job, any job.

    Among many other mistakes that must be corrected immediately if our nation is to survive as it must, is stop spoon feeding millions of people, who are turning worthless, social parasites, many of whom have not held a job in FIFTY YEARS. Only in Cuba!

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