Cuba Chases the Dollar
COLBURN, FORREST D.
A NEW AUSTERITY Cuba Chases the Dollar BY FORREST D. COLBURN Havana The peso notes here portray different bearded guerrilla leaders of the Revolution—Camilo Cienfuegos, Ernesto "Che"...
...higher prices and scarcity are never popular...
...Finally, agricultural exports have been ravaged by weather conditions...
...Havana's immediate response to the foreign exchange crisis has been the imposition of 28 austerity measures designed to either step up exports or slow imports...
...A notable target was the system of material incentives to stimulate productivity instituted in the 1970s...
...A NEW AUSTERITY Cuba Chases the Dollar BY FORREST D. COLBURN Havana The peso notes here portray different bearded guerrilla leaders of the Revolution—Camilo Cienfuegos, Ernesto "Che" Guevara, Fidel Castro...
...Today, with the advent of corn syrup and other substitutes, sugar is unlikely to rise above its depressed price of five cents a pound...
...In these circumstances it is hardly surprising that the regime has begun to express doubts about the management of the economy...
...Prices have been raised for bus fare, electricity and assorted foodstuffs and consumer goods...
...Within the confines of the Cuban political system, efforts to curtail inefficiency appear to be evanescent...
...Indeed, despite the bonuses handed out, Cuba's enterprises have, generally speaking, become "increasingly unprofitable...
...The Soviet Union gives Cuba a generous supply of petroleum (the island itself produces a mere 5 per cent of its requirements), and since 1977 has allowed it to sell off whatever is "saved...
...He recounted how a youth caught stealing $130 worth of goods was sentenced to 10 years in prison, while an administrator of a state farm discovered to have planted spoiled seeds—causing untold losses—did not even lose his job...
...But the real and easiest attraction is simply sun and sand...
...Although Castro's prescription for improving matters would retain the principle of setting pay according to the quantity and quality of work, it calls for greater emphasis on political education and suasion...
...In one province, Guantânamo, over the last six years rainfall has dropped to 57 per cent of its historic norm...
...Television broadcasts have been cut back, as has been the distribution of kerosene and cloth...
...The surge was only partially covered by exports, prompting the establishment of a five-year-goal to increase exports by $500 million...
...Castro attacked the belief that such incentives could eliminate economic inefficiency...
...When prices topped, oil actually exceeded sugar as Cuba's biggest export earner...
...Cuba, officials explain, is suffering from an abrupt foreign exchange imbalance...
...Concurrently, there is a feeling that, notwithstanding the regime's exhortations, little can be done to stave off the approaching economic troubles...
...More than 70 per cent of its foreign trade is with the Soviet Union, and many exports to the USSR—particularly sugar—are heavily subsidized...
...As 1987 unfolds and the brunt oftheausteritymeasures makes itself felt, one hears considerable grumbling...
...In a world economy awash with dollars from the burgeoningU.S...
...It will take more than Castro's vaunted "communist spirit" to overcome that reality...
...they almost could besaidtobea form of political patronage...
...Its successful pursuit was to enable the government to import $1.2 billion worth of goods annually, the minimum considered necessary in 1985...
...In fact, there has not been much follow-up to Castro's call for combating inefficiency with political education and suasion...
...In 1984 Cuba spent an unprecedented $1.5 billion on imports from Western nations...
...They practically all seem to be stymied in their reform efforts by entrenched political interests and habits...
...A sense of uncertainty, marked by fatalism, is also in theair...
...At the same time, because Cuba uses the dollar for international trade and the other industrial nations have increased their prices to compensate for the devaluation, the cost of imports is expected to rise by 3040 per cent, causing a net reduction of purchases...
...Several factors have contributed to the deteriorating situation, beginning with a $300 million decline in petroleum exports—or, more accurately, re-exports...
...The practice of "dressing administrators up as capitalists," he argued, had simply encouraged them to further their own narrow interests...
...The announcement of this year's trade agreement between the two countries— valued at $ 13 billion—concluded with a note that contingents of Cuban laborers will work in the timber region of eastern Siberia...
...Forrest D. Colbiirn teaches politics at Princeton and is the author of PostRevolutionary Nicaragua: Stale, Class and the Dilemmas of Agrarian Policy...
...As is the case nearly everywhere, that is merely a euphemism for a shortage of dollars, which has led to the imposition of austerity measures affecting both the populace and government bureaucracies...
...A lapse of that kind would be noteworthy, because the debt has already been renegotiated and currently Cuba's responsibility is limited to paying the interest on it...
...Government agencies have been asked to trim their budgets by reducing purchases of equipment, subsidies for employee meals, travel allowances, and extraneous meetings...
...It has made goods from the United States less expensive, but they are for bidden to Cuba...
...The problem with "disciplining" the incompetent and eliminating the superfluous in Cuba is that employment and the lack of the kind of discipline that is characteristic of market economies are part of the political system...
...Many Cubans, including those who are committed to the Revolution, say they are tired of sacrificios...
...Less than two years later, the figure has been cut in half and the regimeis soberly predicting that hard currency earnings in 1987 may at best reach $500 million...
...Certain goods that are crucial to its economic development come exclusively from Western countries...
...Although Castro has said publicly that he does not like tourism, the government has successfully devoted considerable resources to increasing the number of visitors...
...But Cuba's prospects are especially bleak...
...The one bright spot in the balance of payments battle is earnings from tourists...
...A consciousness, a communist spirit, a revolutionary will and vocation were, are and always will be a thousand times more powerful than money," he concluded...
...Sugar, still the island's major export, brought 20 cents a pound in the 1920s...
...Perhaps more significantly, it has raised serious questions about how this country manages its economy...
...Besides a healthy tourist industry, Cuba can count on continued Soviet assistance...
...In addition, a host of popular consumer items are regularly imported from the West...
...For even if it could uproot its deepseated inefficiency, it would not be out of the woods...
...The second most important factor forcing a cutback of imports, the devaluation of the dollar, is, as Castro has remarked, ironic...
...Hurricane Kate, meanwhile, wiped out the crops in its path and is said to have done serious long-term damage to the agricultural infrastructure...
...One well-educated Havana resident suggested privately that nothing will change until incompetent state administrators are shot and their execution is announced on the front page of the government newspaper, Granma...
...Still, the Soviet Union does not provide for all of Cuba's requirements...
...Like the other 21 Latin American countries, Cuba is now attempting to use its foreign exchange crisis as a catalyst for economic reform (though elsewhere the move is toward liberalization...
...trade deficit, virtually none of these nations has been able to earn its needed share...
...At the Third Congress of the Cuban Communist Party last December, discussion centered on having to produce more with less...
...Many of the measures will have a direct impact on the populace at large: Cuts are being implemented in the distribution of such staples as milk, sugar and meat...
...A shortage of dollars—of "the green language," as one Cuban put it—thus thwarts numerous development plans and projects...
...It has gone so far as to lure Italian hunters with game preserves offering ducks, snipe and pheasant...
...Since the 1959 Revolution, Cuba's economy has experienced some wide gyrations, and the fear at the moment is that rough times are ahead...
...In Havana these days, though, the currency in demand bears the portraits of such men as George Washington, Alexander Hamilton and Benjamin Franklin...
...For example, some 50,000 Canadians—"snow birds"— are expected during the present winter season...
...In the last two years rain has been especially sparse...
...It has been announced, too, that for the first time Cuba will not be able to meet its commitments on the debt it owes Western banks...
Vol. 70 • March 1987 • No. 3
