[Marxism] FT Article on Cuban Austerity

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Austerity bites as Cuba fails to revamp
By Marc Frank in Havana 

Published: June 3 2009 03:00 | Last updated: June 3 2009 03:00





Cubans are in no mood to party today as Raul Castro, the president, turns 78. 
They are suffering the toughest austerity measures since the post-Soviet crisis 
of the 1990s, despite diplomatic achievements that have left the US isolated in 
its tough policy towards the Communist nation.

It has been just over a year since Mr Castro took over from his ailing brother 
Fidel with a pledge to improve people's lives and remake one of the most 
statist economies in the world. But now the population is being called on to 
sacrifice by a government many view as old and bureaucratic.

Cubans this week jostled one another in ever longer lines waiting for buses, 
sweated to meet mandated reductions in power consumption and grumbled over a 50 
per cent reduction in lunch portions served at work place cafeterias.

At the same time, the region's foreign ministers battled the US over Cuba's 
status in the Organisation of American States at a meeting in Honduras which 
began yesterday. The austerity measures that took effect on Monday have stirred 
up memories of the dark days after the Soviets fell, called the Special Period, 
when 18-hour blackouts and food shortages traumatised the population.

Cubans are once more confronting darkened stores and offices that are going 
without air conditioning into the early afternoon. The government has 
threatened to black out entire provinces if they do not reduce power 
consumption.

"With a combination of global and domestic factors driving a new round of 
economic and material deprivation, it's hard to imagine a birthday celebration 
will be on the Cuban president's mind," said Julia Sweig, senior fellow at the 
Washington-based Council on Foreign Relations and author of the forthcoming 
book, Cuba: What Everyone Needs to Know .

"The diplomatic environment for Cuba is arguably the best in memory, but Raul 
Castro surely understands that it will be hard to leverage a favourable 
external environment domestically if life is about to get even harder than it 
already is," Ms Sweig said.

The austerity measures followed warnings by the government that it could not 
meet rising electricity demand because of a cash crunch that has forced it to 
restructure debt and put off payments to foreign businesses. The 
import-dependent country purchases more than half its fuel and food 
requirements abroad and Venezuela, its main ally and economic partner, is 
struggling with a 50 per cent decline in oil revenues so far this year.

The Caribbean and Latin America have seen export earnings, remittances and 
tourism revenues drop significantly and credit dry up as the international 
financial crisis and economic downturn spreads to the developing world.

The United Nation's Economic Commission on Latin America forecasts foreign 
investment will decline by as much as 45 per cent and trade 11 per cent in the 
region this year, undermining years of steady growth.

The Cuban government reduced its growth forecast from 6 per cent to 2.5 per 
cent last week and said the fall in nickel and tourism revenues alone could 
exceed $1bn in 2009 because of the crisis and US sanctions.

But there is a growing feeling among Cubans that Raul Castro's failure to 
revamp the state-dominated economy as he promised upon taking office is at 
least partially to blame for renewed hard times.

Rafael Hernandez, editor of the often critical Temas Magazine, said that Raul 
Castro faced not only the international financial crisis, but "an inefficient 
domestic economic model due to its extreme centralisation and waste, where a 
dysfunctional bureaucracy resistant to change has prospered".

The state-run media have increasingly taken the bureaucracy to task for a range 
of shortcomings, including its failure to implement wage reform and move crops 
from the fields to consumers.

Bert Hoffmann, Cuba analyst at the German Institute of Global Area Studies in 
Hamburg, said that Raul Castro recognised that "only a policy of change - 
controlled, gradual as it may be - can hope to regain public support."

Copyright The Financial Times Limited 2009
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