ECONOMY-CUBA: A Decade On, Crisis Persists

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Aug 29 2000 (IPS) - The economic crisis that the Cuban government termed a “special period in times of peace” has entered its tenth year, amidst cautious forecasts for the future and the people’s hopes that better times are just down the road.

The euphemism was officially used for the first time in public on Aug 29, 1990 to refer to the troubles that lay ahead, due to the plunge in supplies of oil and other products purchased under preferential trading conditions from Havana’s long-time partners in Eastern Europe.

A lengthy article published by the ruling Communist Party’s official newspaper ‘Granma’ warned at the time that fuel would probably begin to be rationed.

When that came to pass, the limits on fuel consumption, along with food shortages, became the most sharply felt symptoms of the economic recession that hit Cuba with the collapse of the East European socialist bloc.

“The blackouts were the worst aspect of those first years of the ‘special period’,” Nilda Díaz, a 54-year-old employee of an advertising agency, says without hesitation, echoing a view widespread among the 11 million inhabitants of this Caribbean island nation.

The last year of “normal” supplies of fuel — all of which came from the former Soviet Union — was 1989, when 13.1 million tonnes were imported.

Oil imports dropped to 9.9 million tonnes in 1990, and continued sliding, to 5.4 and 5.3 million tonnes in 1992 and 1993. The deficit translated into prolonged, and frequent, power outages.

Ten years later, the increase in Cuba’s output of locally extracted crude has eased the impact of the plunge in imports, although the current peak in international prices has driven spending on oil up to 1.3 million dollars a day.

However, the biggest slice of the Cuban family’s budget is not the cost of electricity and cooking gas, but food, the shortage of which was especially severe during the early years of the crisis, to the extent that some of Cuba’s excellent public health indicators were even affected.

Statistics from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) indicated that local production as well as imports of food crashed by nearly one-third in 1994, which meant the average daily intake of calories fell to nearly 2,000 — 1,000 less than the 1989 average.

“My pension is less than 200 pesos, and no one can live on that today,” complains Manuel Miranda, 70, who works as night watchman at a centre of higher learning to boost his income. “There are no wages that can withstand the prices of the farmers’ markets.”

Real per capita income lost one-third to 50 percent of its buying power from 1989 to 1994, while consumers spend 30 percent more than before in the free farmers’ markets, which were created in 1994 as one of the economic reforms adopted in the early to mid- 1990s. In the markets, prices are governed by the law of supply and demand.

If Miranda or Díaz want to buy cooking oil in the neighbourhood market, first they must obtain dollars (at the government exchange bureaux, where the rate stands at 22 pesos to the dollar) and then find a way to afford to shell out 2.40 dollars for a bottle of less than one litre of oil.

Cooking oil is one of the products that the state distributes at subsidised prices by means of “ration books”. But oil is not always available, unlike other staples like rice and sugar, which are provided to families every month.

“The blackouts are sporadic now, but food and transport are still a headache,” says Miranda, who used to ride his bicycle to get around in Havana until a tumble warned him that he should walk or take the bus, although the wait is usually long in his neighbourhood.

Miranda and Díaz are among those Cubans who have no family members abroad. Cuban exiles or emigrés send up to one billion dollars a year in remittances — according to some estimates — thus mitigating the impact of the crisis on their families.

Among the package of reforms that began to be adopted in 1992 to tackle the recession, the decriminalisation of the use of dollars has been one of the main factors fuelling social inequality in the past decade.

“They changed their tune on me. In the past, those who left were ‘gusanos’ (traitors); now, if they send dollars, they’re welcome,” complains María Caridad Bolaños, who says she broke off ties with the members of her family who left in 1960, and that she “never again” tried to make contact.

Bolaños, who has a 20-year-old daughter in the university, is more concerned about what she calls a “loss of values” than about economic troubles, which she says “will have to end someday.”

In times of crisis, “the best and the worst of the human being comes to the surface, and we have not escaped that reality,” according to Bolaños.

Some optimistic Cubans believe the end of the “special period” is just around the corner, basing their hopes on official statistics that point to a recovery of the economy.

After a 35 percent crash in the early years of the crisis up to 1993, Gross Domestic Product (GDP) grew 28.4 percent from 1994 through the first half of this year, while the inflow of direct foreign investment has topped 4.5 billion dollars.

Vice-President Carlos Lage reported early this month that GDP rose by 7.7 percent in the first half of the year, thanks largely to higher sugar and oil output.

But Lage and other officials caution that GDP is a macroeconomic indicator that does not faithfully or objectively reflect the progress made by any given country, although it can serve as one important reference point.

“What is clear is that the toughest moments have been left behind, and the country has a strategy for development,” stated an economic commentator in the official press.

He added, however, that the “special period, as a concept referring to a particularly high level of tension” suffered by the Cuban economy, cannot yet be seen as a thing of the past.