Cuba without Chavez

Cuba without Chavez

How far could the island fall if Venezuelan leader can't beat cancer —
or his election opponent?
Nick MiroffMay 5, 2012 06:00

HAVANA, Cuba — Ask Cubans what the worst years of the so-called "Special
Period" were like, right after the Soviet Union's demise dumped the
island's economy in a ditch, and you're likely to hear a recitation of
the era's most notorious menu options.

Sautéed rags. Burgers made from grapefruit rinds. Cat-meat stew.

Apocryphal or not, the stories of Cuban desperation are so much a part
of popular lore that they now serve as shorthand for Cuba's lowest
point, in the early 1990s, a time of acute hardship the island has been
trying to recover from ever since.

Now, with Hugo Chavez and his Cuban oncologists locked in a mortal
battle with an undisclosed form of cancer — and the Venezuelan president
facing uncertain re-election in October — Cubans are wondering if hard
times are coming back. If so, how hard will they be?

The Venezuelan leader supplies the island with about two-thirds of its
oil on favorable credit terms, a mysterious arrangement whose details
remain a state secret here. Chavez also pays the Castro government more
than $6 billion a year for the 40,000 or so Cuban doctors, nurses,
security advisers and other professionals sent on "missions" to
Venezuela, typically to provide social services in the poor
neighborhoods where support for Chavez is the strongest.

These missionaries are Cuba's biggest source of hard currency, bringing
in far more revenue for the island than tourism, nickel exports or other
industries.

That arrangement looks increasingly shaky with Chavez now in a Havana
hospital, undergoing another round of radiation therapy but assuring the
public he's in the "home stretch" of his treatment schedule. It's not
much comfort, given that he has yet to disclose what type of cancer he's
fighting.

Instead, the world has seen a worried-looking Chavez praying for Jesus
to spare his life — a scary sight for many here.

If Chavez beats the cancer with the help of his Cuban doctors and his
nurturing mentor, Cuba's former President Fidel Castro, the Venezuelan
leader's bond with the island will likely be stronger than ever. A
vigorous recovery would give a huge boost to his re-election bid,
converting his larger-than-life heroic image into a death-defying one.

If Chavez's cancer is terminal but he lives long enough to win
re-election, a hand-picked vice president could take over and keep
Venezuela's trade agreements with Cuba in place, since that figure would
likely need Havana's help to maintain support among Venezuela's poor.

But if Chavez can't win or can't survive, and his campaign rival
Henrique Capriles wins the presidency, Cuba's generous subsidies could
be a fat target for his red pen.

Experts say a split between the two countries wouldn't necessarily
happen immediately, playing out more as a gradual untangling than an
abrupt break. Pulling thousands of doctors and other Cuban social
workers out of Venezuela's toughest neighborhoods too fast might be
tricky, unleashing a wave of anger and unrest.

Still, few believe a post-Chavez trade balance would stay sweet for Cuba
very long.

University of Havana economist Pavel Vidal said the island would likely
face a recession lasting "one, two, even three years" if Venezuelan
subsidies dry up, with an economic contraction projected at 9 percent of
Cuba's gross domestic product (GDP).

The Soviet collapse in 1991, by contrast, produced a 35 percent economic
contraction, he said, but warned that the island's economy is in some
ways more fragile now.

"Cuba doesn't have the same kind of economic cushion it had back then,"
said Vidal, noting that the island has been facing acute cash shortages,
with little ability to borrow money.

"There isn't as much of a margin to work with," he said, "which is why
it's even more important to accelerate economic liberalization and reforms."

There are signs that Chavez's illness has created new urgency for Cuban
President Raul Castro to move faster on his economic reform agenda. Last
month a top Cuban Communist Party official said that while nearly 95
percent of the island's economic output is generated by state-owned
businesses today, that figure will drop closer to 50 percent in the next
four or five years, as millions of government workers shift to private
sector and other "non-state" jobs.

Given that Cuba still restricts small business and self-employment
licenses to micro-enterprises like snack bars, room rentals and barber
shops, there is potentially a good deal of room to grow. But the
government would have to allow Cubans to own medium-sized businesses and
accelerate the conversion of money-losing state companies into
worker-run cooperatives.

At this week's May Day rally in Havana, employees from several privately
owned businesses marched alongside state workers, some carrying large
banners which conveniently doubled as free advertising.

One restaurant owner and his 21 employees marched in their red company
shirts, handing out business cards.

Another Havana entrepreneur, Lazaro Enciso, said he sees his capitalism
as a patriotic calling. "I'm creating jobs, and that makes me feel
useful to society," said Enciso, who runs three businesses — a snack
bar, a clothing shop, and a stand selling religious items — for which
he's hired about 20 workers.

"We're providing our country with exactly what it needs right now," he said.

http://www.globalpost.com/dispatch/news/regions/americas/cuba/120503/cuba-without-chavez-castro-venezuela