Wikileaks: Cuba expected to survive recession

Posted on Wednesday, 02.09.11

Wikileaks: Cuba expected to survive recession

U.S. diplomats in Havana reported in Wikileaks cables that Cuba would
suffer but survive a deep economic crisis in 2009.
By JUAN TAMAYO
jtamayo@elnuevoherald.com

As an economic crisis began gripping Cuba in early 2009, U.S. diplomats
in Havana reported the island was better equipped to withstand the blow
than when its Soviet subsidies collapsed in 1989.

Havana had diversified its foreign trade and built up its tourism
industry in the intervening two decades, they reported. Cuba also was
receiving billions in remittances and the government was planning to
slash public spending.

The judgements that the communist system would struggle but change and
survive were contained in four cables filed by the U.S. diplomatic
mission in Havana in 2009 and made public by the whistleblower site
Wikileaks.

One dispatch that June noted that the crisis had begun to bite in Cuba.
The world economy had gone into a tailspin, drying up new loans that
Cuba desperately needed.

Income from tourism, remittances and nickel exports were down and the
island was still trying to recover from the three hurricanes that
devastated it the previous year.

The problems already had sparked rumors that the island was headed for
another "special period,'' noted the dispatch, referring to Cuba's
economic implosion triggered

by the end of Soviet subsidies in the early 1990s.

But "the reality is that Cuba and Cubans are not as vulnerable as they
were ... before the end of Soviet subsidies'' because by 2009 they also
were getting income from tourism and remittances, the dispatch added.

While the former Soviet Union represented 80 percent of Cuba's total
trade in 1989, the island's top five trade partners in 2007 --
Venezuela, China, Canada, Spain and the United States -- represented
only 60 percent, the cable noted.

The dispatch also noted Castro had good diagnoses of Cuba's economic
ills -- low productivity, high public spending and corruption -- and
reported his famous jab at the island's version of communism: "In the
conditions of our imperfect socialism, because of our own shortcomings,
two plus two often produces three.''

But "what he has failed to identify (or admit) are the root causes
endemic to a system where the government tries to control every aspect
of the economy, and of life in general,'' the cable added.

Another dispatch dated Oct. 19 detailed some of the tough cost-cutting
measures that the government of Cuba, known as the GOC, was then rumored
to be contemplating to overcome the burgeoning crisis.

They included closing free workplace cafeterias, removing or reducing
the food ration system, distributing idle state lands to private
farmers, starting a merit-based pay

system and encouraging municipalities to resolve local problems.

"The next question is how far the GOC is willing to expand the private
sector in order to fill the gap,'' noted the cable, titled The end of
the Papa' state in Cuba? and published last week by Spain's El País
newspaper.

The Castro government indeed announced last year that it would allow a
broad expansion of private economic activity, hoping to provide new jobs
for about half the 500,000 state workers to be laid off in order to cut
public spending.

So far, only about 80,000 Cubans have applied for the permits required
for the new jobs, which range from carpenters to animal groomers to
umbrella repairmen.

One cable in March of 2009, one year after Castro had officially assumed
power from his ailing brother Fidel, noted that a string of changes in
senior jobs meant Cuba's new

leadership was made up "entirely of individuals known for their loyalty
to Raúl Castro and/or their experience as military officers.''

"The result is a much older governing group, but one which is likely to
respond well to (Castro) when he demands greater discipline and
efficiency within the government and society alike,'' the dispatch added.

Written the month after President Barack Obama was sworn in, the cable
reported that Havana "appears to be taking a wait and see attitude'' on
relations with the new U.S. administration.

But while Cuba may even "hope for some adjustments in U.S. policy toward
Cuba that will make its life easier ... it should not be expected to
initiate any positive steps in that direction,'' the dispatch cautioned.

http://www.miamiherald.com/2011/02/09/2058145/wikileaks-cuba-expected-to-survive.html