By Dalia Acosta
HAVANA, Aug 30 1997 (IPS)

Cuba’s ailing sugar sector, replaced last year by tourism as the country’s top foreign exchange earner, is undergoing major changes.

The sector has just been opened up to foreign investment, and will soo be incorporated into reforms of the labour market being implemented by the government since 1995.

While sugar cane by-products still head the list of Cuban exports, the sector has been particularly hard hit by the crisis gripping the country since the start of the decade. Sugar production crashed from an average of eight million tonnes a year in the 1980s to a recrd low of 3.8 million tonnes in 1994.

Although the government of Fidel Castro sought some 300 million dollars in financing from abroad for the 1996-97 sugar cane harvest, production totalled 4.2 million tonnes, short of the government forecast of 4.5 million.

The troubled sector has finally joined the opening of the country’s centralised state economy forced on Castro and the governing Communist Party by the crisis, when the only other alternative was to perish with empty coffers.

Deputy Minister of Sugar Francisco Rodriguez announced the creation of the first joint venture with foreign capital in the industry of sugar cane by-products. Alficsa, the new Cuban-Spanish company, will have the status of an anonymous society, and will produce fine liquor in the prvince of Cienfuegos, 336 kms east of Havana.

Rodriguez said the association could become a significant source of foreign exchange.

Although a 1995 law on foreign investment gave the green light to the attraction of capital from abroad, Alficsa is the first such accord reached in any sugar-related industry.

Local analysts point out that Cuban authorities, cautious by nature, moved even more slowly when it came to opening up a key sector like sugar to foreign capital.

Cuba is among the world’s 10 leading sugar producers. The product is the country’s main traditional export product, followed by cigars, nickel, citrus fruit and seafood.

The 1995 law on investment allows the participation of foreign capital in all branches of the economy, including real estate, only drawing the line at military institutions and education and health services.

According to the Ministry of Foreign Investment and Economic Collaboration, around 260 joint ventures are currently operating in Cuba, with capital from 50 countries, mainly in tourism, oil, nickel mining and telecommunications.

Canada has invested the largest amount of capital, while Spain heads the list in terms of the total number of joint ventures. Foreign Investment Minister Ibrahim Ferradez said this month that 35 of 140 new investment projects being studied by Cuban authorities had been proposed by Spanish entrepreneurs.

Vice-President Carlos Lage acknowledged earlier this year that although foreign capital was still flowing in, the pace had slowed down and investors had become more cautious due to the Helms- Burton law signed by U.S. President Bill Clinton in 1996, which stipulates sanctions for firms from any country that do business with assets which formerly belonged to U.S. citizens in Cuba.

Sugar is one of the sectors most vulnerable to that law, because as local historian Ramiro Guerra points out, by 1939 U.S. companies owned 59 of the 159 sugar mills operating at that time in Cuba.

Another big change on the books for the sugar sector is its incorporation into the “rationalisation” of the local labour market implemented by the government over the past two years.

Minister of Labour and Social Security Salvador Valdes announced this month that some 20,000 workers would be relocated next year. They will join the so-called “market of available labour,” and will be given three to five months to retrain.

The move has been expected since April, when authorities said several factories would have to be closed due to the inefficiency and poor performance of the sugar sector.

Next year’s phase of the “rationalisation” of the labour force will be carried out in a centralised manner, and will affect not only sugar workers, but employees of the railways, ports, merchant marine and other agricultural sectors, Valdes added.

The minister said that of the roughly 75,000 workers who lost their jobs over the past two years, only 5,000 of them remained jobless, earning 60 percent of their former salaries in accordance with local labour legislation.

The process forms part of a much broader process of reorganisationof the business sector, including the elimination of under-employment, technological reconversion and the creation of small and medium-sized enterprises.

In 1993, the government gradually began to introduce economic reforms designed to combat the crisis, which had triggered a 34.8 percent drop in Gross Domestic Product (GDP) from 1989 to 1993. The first signs of recovery appeared in 1994, and last year GDP rose 7.8 percent, according to government figures.

Although authorities predict four percent GDP growth for 1997, analysts call that forecast overly optimistic given the poor sugar harvest.

Trade unions said last year that unemployment would reach seven percent of Cuba’s economically active population of 5.5 million due to the crisis and the readjustment of the labour market. From 600,000 to 800,000 people are earning full salaries while working at 40 to 50 percent of capacity.

Government statistics indicate that most of Cuba’s unemployed are women aged 17 to 30, with a medium to high educational level. Some 200,000 people have opted for self-employment, one of the alternatives made possible by the government as a means of mitigating the social effects of the labour reforms.

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