Thursday, August 17, 2006

Experts see cure for ailing Cuba

The Chicago Tribune

Analysts say there are signs that a regime led by Raul Castro would push economic reforms

By Gary Marx
Tribune foreign correspondent
Published August 17, 2006

HAVANA -- Bolstered by more than $1 billion in discounted oil and other assistance from its key ally Venezuela, Cuba has put behind it the chronic blackouts and other problems that once plagued this nation.

The assistance has helped Fidel Castro, the now ailing Cuban leader, roll back limited economic reforms while breathing life into a socialist economy whose primary goal is to provide full employment and a social safety net for Cuba's 11 million residents.

Yet the Cuban economy remains precarious at best, dependent on the largesse of Venezuela and unable to significantly lift living standards as it faces a potential crossroads with Castro temporarily ceding power to his younger brother, Raul, and Cubans contemplating a future without their longtime leader.

Raul Castro, should he take over permanently, might liberalize the economy to bring material wealth to a nation that has suffered much deprivation, experts say.

Philip Peters, a Cuba expert at the Lexington Institute, a Virginia-based think tank, said a profile of Raul Castro published in June in the Communist Party daily Granma suggested the 75-year-old general recognizes that many younger Cubans are dissatisfied with the status quo.

"That article was an important indication that he realizes that the economic improvements haven't reached them," Peters said.

Under the leadership of Raul Castro, who is defense minister, the Cuban Armed Forces have taken a major role in the economy, especially by managing the lucrative tourist industry. The younger Castro has sent some of his most trusted generals to Europe to learn modern business techniques, and in the 1990s he supported free-market reforms, such as farmers markets, which helped boost the island's economy.

Brian Latell, a former CIA analyst and expert on Raul Castro, said he believes the Cuban general would encourage the formation of small businesses and other enterprises that could create what Latell calls "a modified tropical Chinese model."

"These are things that Fidel has shied away from," said Latell, author of the book "After Fidel: The Inside Story of Castro's Regime and Cuba's Next Leader."

Dual economy

Experts agree there will be no major policy changes while Fidel Castro is convalescing. Castro, who celebrated his 80th birthday Sunday, has appeared publicly only in government-released photos and a video since undergoing intestinal surgery.

To push Cuba forward, the island's next leaders must reconcile a dual economy where a handful of modern, efficient enterprises supporting well-paying jobs exist side-by-side with a massive state sector that is unable to generate work opportunities or decent salaries, experts say.

"I won't return to working for the state," said one Cuban engineer who asked not to be identified. "It's so frustrating. There is no room for initiative."

The challenges for the economy are perhaps best illustrated by the revolutionary changes that Castro brought to the sugar industry, long the nation's most important crop and one that has defined Cuba's history and culture.

Sitting on a park bench in the eastern Cuban town of Jesus Menendez, 76-year-old Jacinto Pan recalls the prerevolutionary days when Americans ran the local sugar mill with capitalist efficiency. He said they paid employees well during the harvest but most workers were laid off during the eight months between harvests, leading to widespread hunger and desperation.

Shortly after taking power in 1959, the new government nationalized the mill and hired anyone who needed a job, Pan said. The workforce, he said, grew to "infinity."

"No one was left without work, but many were not productive," said Pan, who worked 44 years at the mill. "Where there were 10 people doing a job before the revolution, after it there were 20 or 30 people."

What occurred in Cuba's sugar mills took place throughout the economy, but there was no downside as long as the Soviet Union provided billions of dollars in assistance. Cubans recall with fondness the 1970s and 1980s, when salaries went much further and goods from the Soviet Union and Eastern bloc filled market shelves.

But the Soviet Union's collapse ended the subsidies, and Cuba's bloated and inefficient economy went into a nosedive.

"It was shocking," recalled one Havana resident who also asked not to be identified. "Even if you had money, there was no food, and the blackouts lasted 22 or 23 hours a day. You could look down the street and see no cars or buses."

In August 1994, the hardships helped ignite the largest anti-government demonstration since the 1959 revolution. The demonstration was quickly quelled, but Castro responded by compromising his socialist principles to save his government.

He opened Cuba to tourists; encouraged foreigners to invest in key areas such as tourism, mining and oil; and allowed limited private enterprise. To eliminate food shortages, some farmers were allowed to sell their excess produce.

One of those who has benefited from the reforms is Reyes Calunga, a 28-year-old fruit and vegetable vendor at the bustling Egido outdoor market in Old Havana. Calunga said he earned about $6 a month in his state job. He now pulls down $63 a month.

"I live fine with this salary," said Calunga, smiling and pointing to his worn sneakers. "But to buy a new pair of shoes is one month's work. I want more. One always wants more."

As the economy rebounded in the last few years, Castro reversed many of the market reforms to re-exert state control and ease the growing disparity between what he described as Cuba's "new rich" and the general population. But he also cut expenditures by closing 114 of 156 government-subsidized sugar mills, including the refinery in Jesus Menendez.

Thanks to Venezuelan largesse, high prices for Cuba's nickel exports and a steady growth in tourism, government officials have distributed pressure cookers, electric hot plates and refrigerators to residents on generous credit terms. New Chinese buses ply the roads between Havana and outlying provinces, and Castro acquired diesel-powered generators to ease the blackouts.

"Venezuela has been a boon for Castro," said Hans de Salas, a researcher at the University of Miami's Institute for Cuban and Cuban-American Studies.

The improvements have given Cubans reason for optimism, yet life remains a grind.



Everyday struggles

Cubans still wait hours for public transportation, and the monthly government-supplied food rations of rice, sugar, salt and other items last only 10 days to two weeks.

That forces shoppers to go to places like the Egido market, where the high prices are eye-popping. In a nation where many people earn only $15 a month, a pound of pork costs $1.45, an avocado goes for 50 cents, and a pound of tomatoes is 41 cents.

"I can't buy pork at that price," snapped one angry shopper. Asked what she had purchased, she responded curtly, "Just a little junk."

Some Cubans receive remittances from family members in the United States, but many others are compelled to supplement their income by participating in the black market, skimming products from their workplace and bartering their services in off-hours.

One orthopedic surgeon spends his time outside the operating room selling smoked pork chops, red snapper, oranges and other items. A 43-year-old woman living in one of Havana's poorest neighborhoods supplements her regular income as a pizzamaker by hawking tamales on the black market.

"In one hour, I can sell everything, and there are people waiting for more," said the woman, standing in her yard next to a pile of cornhusks and a giant black pot used for cooking the tamales.

"You can't identify this with the corruption in other countries because these people are not making a huge amount of money," said one Havana-based diplomat. "They are only asking more or less what they need to survive."

The diplomat and other analysts argue that Cuban authorities largely tolerate the illegal activities as long as the people involved do not oppose the government.

"Corruption is the Damocles sword hanging over every Cuban," explained the diplomat, who asked not to be identified. "The government knows that people ... must engage in some illegal work or bartering. At any time they can cut you down. It's a very good form of social control."

Some Cubans say life is so difficult they want to leave the country.

Susana, a 25-year-old physician from the eastern town of Velasco, said she hopes authorities will send her to Venezuela, where more than 20,000 Cuban doctors are working under a trade pact between the two nations.

There she can earn $300 a month, enough to buy a home and a car, she hopes. Her monthly salary in Cuba is about $20.

"This is the only way that you can have something here," said Susana, whose physician husband left for Venezuela last month. "It's a struggle."

gmarx@tribune.com

No comments: