Cubans Worry as Economy Suffers

Cubans Worry as Economy Suffers
November 11, 2009 9:17 PM
Posted by Portia Siegelbaum

Ever since Raul Castro became Cuba's President in February 2008,
people—at home and abroad—have been waiting for changes that would
improve living conditions on the island. But the changes have been slow
coming and there are indications that when they do take place they might
not be the ones hoped for.

For three days this week, the official Communist Party daily, Granma,
has front-paged statements made in the 1970s and 80s by former President
Fidel Castro. They are all variations on the same theme: too many people
being employed to do too little, and low productivity as the bane of the
economy. He also warned that at some point there would be more
university graduates than openings in their fields and that students
should view their degrees as an honor but not necessarily as a ticket to
a professional career.

Castro's statement printed last Tuesday focused on "inflated" payrolls.
Inside the same newspaper was an article announcing that the Ministry of
Agriculture would be cutting thousands of bureaucratic jobs. Twenty-six
percent of their employees - 89,000 people - it said, were office
workers resulting in an "excess of unproductive personnel."

Cubans fear that similar layoffs will come in many other sectors of the
economy and that Granma's publication of Fidel Castro's views—if
dated—on the issue are rather like trying to put the "Good Housekeeping
Seal of Approval" on what are bound to be unpopular if necessary
measures taken by his younger brother Raul.

Raul Sarmiento, a retired University of Havana professor of political
economy who for many years reported on economic issues for Cuban TV,
sees the payroll cuts as part of the effort to save money and reduce
subsidies but is unwilling to say that those laid off will be left to
scrape by on their own.

"These are bureaucrats who don't produce anything … I don't think
unemployment will go up but that these people who are now a burden on
the economy will be relocated in jobs where they actually produce
something," Sarmiento says. He wouldn't specify where in the economy
they could accommodate tens of thousands of newly unemployed white
collar workers.

Cubans are closely watching every step taken.

"People are very tense," said a foreign ministry employee and specialist
on the Caribbean. "The ration book is flying out the window," she said,
asking not to be named because she was not authorized to make statements
to the press.

The ration book she refers to is a thin drab brown pamphlet the
government issues annually to every Cuban family. It entitles them to a
series of basic products—rice, beans, eggs, etc.—at highly subsidized
prices.

Earlier this year President Castro said his "maximum priority" was
increasing domestic agricultural production. It's an understandable goal
as international prices have gone up and Cuba depends on imports for
over 80 percent of the food consumed by the population of 11.2 million.

But to cope with the global economic meltdown, $10 billion in damages
from three hurricanes in 2008 and a liquidity crisis, Cuba has been
forced to reduce spending: imports were cut by 30 percent, and overall
trade is down by 36 percent to about $10 billion so far this year with
about 80 percent of that being foodstuffs, according to Foreign Trade
and Investment Minister Rodrigo Malmierca, who spoke at the recent
International Trade Fair in Havana.

The official state-owned media has been floating trial balloons on cost
cutting and import substitution. Some of what they suggest has begun to
be implemented, at least in part.

In October, the Communist Party's daily newspaper Granma published a
full-page editorial saying it was time to do away with the five decade
old rationing system. It went so far as to compare some Cubans to "baby
birds," waiting to be fed by "Daddy state." That description drew
criticism from many people who have long complained about the
"paternalistic state" that left them little room for individual initiative.
The follow-up to that editorial was the recent removal of two basic
products—potatoes and dried peas—from the ration book. Now they are
available in unlimited quantities but at substantially higher prices -
as long as the supplies last.

Prior to that, cheap state-subsidized lunches were eliminated on an
"experimental" basis from four government ministries whose workers had
regularly eaten in on-site cafeterias. Wages were raised by 15 Cuban
pesos a work day to compensate. And to encourage employees to "brown bag
it" one of those ministries, the Ministry of Economy and Planning, has
installed microwaves and a city food service has taken over their
lunchroom and is offering reasonably priced meals in Cuban pesos.

All of this represents major changes in Cuba's system. So much so that
all the chatter in a doctor's waiting room last week focused mainly on
the potential disappearance of the ration book. Like her patients, the
woman general practitioner, a single mom supporting a 9-year old
daughter and a mother in her 70s, worries how she will get by on her
salary. She already illegally sells her Internet password—provided by
the Health Ministry—for 250 Cuban pesos a month.

Cuban economists have long debated the subsidized rations. Most have
argued for providing aid to families in need rather than subsidizing
products for everyone.

But the ration book is a nearly 50-year-old institution and the thought
of losing it provokes panic in many quarters.

Clara, a housewife, and Pedro, a retired administrator are both in their
80s. In their younger years, Clara took in sewing and with her earnings
and her husband's salary, they did alright. Now they are forced to live
on Pedro's 200 peso monthly pension. They buy everything available on
the ration book at their local grocery but they resell the extra sugar
and rice to their neighbors at prices well above what they paid for
them. They wonder what they will do for extra income if the ration book
no longer exists.

"Some people don't buy the chicharos or dried peas but some families
depend on them," says Alina, a hotel restaurant employee in her 40s.
Looking doubtful she added, "We'll have to wait to see what happens."

Alina, like other tourist industry worker, is part of a privileged group
whose income from tips gives them a living standard way above the
average worker. But now they say their income is down because although
tourists continue to vacation in Cuba they are spending less because of
the economic crisis in their own countries.

Besides the problem of putting food on the table more cheaply Cuba is
also facing an energy crunch which is bound to become another irritant
of everyday life.

In June, government offices, factories and schools were ordered to
substantially cut electricity use. Air conditioners were only allowed to
be used for about three hours a day despite the unseasonably warm
temperatures.

In Havana, the enterprise providing information services for the
national transportation industry, SITRANS, has a windowless room full of
computer servers and other equipment worth tens of thousands of dollars.
But the IT employees there are prohibited from turning on their air
conditioners before 1 p.m. and by 4 p.m. they must be turned off. "It's
only going to be a matter of time before the equipment begins to break
down. My co-workers are already suffering from the stifling heat," says
one of their specialists, who asked us not use him name.

Now State enterprises are being asked to save even more energy during
the remainder of 2009. A memo circulated by the Ministry of Light
Industry to factories and work centers under its control says Vice
President and Communications Minister Ramiro Valdez has ordered them to
take "extreme measures" in order to avoid having to resort to programmed
blackouts in residential neighborhoods. Among the measures to be
implemented immediately is a total ban on air conditioning. Production,
except for export goods and essential domestic products, will be shut
down. Commercial refrigeration will be turned off unless they hold
perishable food or medicines. Even security lighting will be reduced to
the minimum.

Similar memos have gone out to other sectors of the economy and to
provincial and city governments. Already residents of the eastern city
of Santiago de Cuba are complaining about reports that street lights
will be turned off. "The most common complaint is that the absence of
street lighting will be dangerous," says law professor Miguel Martinez.
"Increased crime and hilly streets that are difficult to navigate even
in daytime will make for an unhappy mix," he points out.

It's unclear if the current energy crunch is simply a result of people
having used more fuel than the country has money to pay for during an
extremely hot Spring and summer or if there are other factors that have
not been made public. Cuba receives over 90,000 barrels a day of crude
oil from Venezuela on very favorable terms that involve providing that
country with medical and other professional personnel. Some Cuban
analysts we spoke with speculated that Cuba might be reselling some of
that oil in an effort to boost its cash reserves but it has not been
possible to confirm that.

There is a belief, however, that President Raul Castro is trying to deal
with the problems of his cash-strapped economy in ways that will provoke
the least instability. But that doesn't mean he will hold back on
changes he deems necessary.

Tags: cuba , raul castro , fidel castro , economy , rations

Cubans Worry as Economy Suffers - World Watch - CBS News (12 November 2009)
http://www.cbsnews.com/blogs/2009/11/11/world/worldwatch/entry5621361.shtml