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Teetering on the Brink: Cuba's Current Economic and Political Crisis

Published online by Cambridge University Press:  05 February 2009

Andrew Zimbalist
Andrew Zimbalist
Affiliation:
Andrew Zimbalist is Professor of Economics at Smith College and the Five College Graduate Faculty.
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Extract

Cuban scholars are not noted for fashioning consensus, much less unanimity. Yet it is unlikely that a Cubanist could be found who would not agree with the proposition that Cuba in 1992 is in the worst crisis of the revolution. It is perhaps arguable that the material situation on the island in 1969 was as difficult as it is today, but back in 1969 the revolution was young and the Cuban people for the most part were energetic and hopeful. Cuba was then an increasingly accepted and economically integrated member of the large world socialist community.

The proximate cause of Cuba's present predicament is not hard to identify. Cuba has a small and heavily trade-dependent economy. In the presence of the US embargo, Cuba came to depend on the former Soviet trade bloc (CMEA) for over four-fifths of its imports. Without access to the US market, with access to other markets restricted and with imports from the former CMEA countries reduced by roughly two-thirds, Cuba's economy and its people are struggling to survive.

The government's response to the crisis has been deliberate but inadequate. A number of reforms initiated prior to 1989 are being continued,1 others are being accelerated and some new programmes are being put in place. The new emphasis on foreign investment and tourism, structural reforms in the operation of foreign trade, and the impossibility of central planning in the presence of ubiquitous supply uncertainties have combined to transform the nature of Cuba's economic mechanism. Despite the promise of some extension of private enterprise and the market in the service sector, however, the needed and more concerted introduction of a broader market mechanism has not been forthcoming.

Type
Research Article
Information
Journal of Latin American Studies , Volume 24 , Issue 2 , May 1992 , pp. 407 - 418
Copyright
Copyright © Cambridge University Press 1992

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References

1 For a full discussion of these reforms, see Zimbalist, A., ‘Industrial Reform and the Cuban Economy’, in Jeffries, I. (ed.), Industrial Reform in Socialist Countries (London: Edward Elgar, 1992)Google Scholar, and, Zimbalist, A. and Smith, W., ‘Reform in Cuba’, in Kim, and Zacek, (eds.), Reform in Communist Systems: Comparative Perspectives (Washington, D.C.: Washington Institute, 1991).Google Scholar

2 The estimate is by the author. It is Ingreso National Creado plus depreciation plus estimated non-productive services. The latter is estimated to be equal to 28% of Gross Domestic Product. See Zimbalist, A. and Brundenius, C., The Cuban Economy: Measurement and Analysis of Socialist Performance (Baltimore: Johns Hopkins University Press, 1989), ch. 4.Google Scholar

3 The 1990 figure for Soviet trade is from Cuba Business, October 1991, p. 2, and for trade with Eastern Europe it is estimated based on proportions in import reduction reported in Alvarez, Elena C., ‘Algunos efectos en la economía cubana de los cambios en la coyuntura internacional’, Institute de Investigaciones Económicas (Habana, Cuba, Junio de 1991), p. 7.Google Scholar The 1991 estimate is from the opening speech of Fidel Castro at the Fourth Party Congress, 10 October, 1991, reprinted in FBIS, Daily Report Supplement: Latin America, 14 October, 1991.

4 These figures and others, unless otherwise noted, are from the Anuario Estadistico de Cuba, 1989 published by the Comité Estatal de Estadísticas and the Resumen Estadístico del Comercio Exterior, 1986–88, published by the Ministerio de Comercio Exterior.

5 These numbers are in current prices and it is likely that in constant prices the decline would be less sharp. This is because the price Cuba paid for Soviet oil fell approximately $7 a barrel between 1989 and 1991.

6 Figures are from Castro's opening speech to the Fourth Party Congress, op. cit.

7 Under the new regulations, a US individual may send no more than $500 for travel expenses, including airfare, to a Cuban national intending to visit the United States and the funds may not be sent until a visa has been issued to the traveller by the US Interests Section in Havana. A limit of $100 a day has also been placed on the amount a US citizen can spend in Cuba for those categories of citizens exempt from the travel blockade (Cuban exiles, journalists, politicians, professionals). Allowable family remittances were reduced from a maximum of $500 to $300. The author did not independently confirm Alarcón's allegations.

8 There was also a year-end credit clearing accord, but it is unclear how this worked out.

9 Cuba has also shifted some sugar cane land to the production of root crops and vegetables. Prior to 1990, Cuba could sell virtually all the sugar it desired to the Soviet Union at a stable, preferential price. Now that is no longer the case and the Cubans seem to have reformulated their traditional goal of maximising yearly cane production. Expectations for this year's harvest are 6.0 to 6.5 million tons.

10 More generally, Cuba's greatest asset, human capital in the form of a highly educated and healthy labour force, is being preserved through a commitment to maintain expenditures in education and health.

11 An ongoing problem with the code, however, is that it provides inadequate guarantees to foreign investors; most notably, the government retains the right to reallocate labour to and from joint ventures. In at least one instance that was called to this author's attention, workers who had been trained by a foreign company were transfered to another enterprise by the Cuban government. The Cuban government also retains the right to select the pool of domestic workers from which the foreign enterprise may hire. See recommendations for further liberalisation of the Cuban joint venture law in Stuart Diamond, Cuba: The Biotechnology Industry, Key Issues in Marketing and Strategy. Report to the Cuban Government. United Nations Center on Transnational Corporations, New York, December 1991, pp. 12–14.Google Scholar

12 Cuba Business, October 1991, p. 5.Google Scholar

13 There were early quality control problems in production with the Cuban vaccine. Its present effectiveness is around 85%, which is considerably above the competing products (with a reported effectiveness closer to 65%.)

14 Grupo de Perfeccionamiento de las Organizaciones Empresariales e Instituciones del MINFAR, Bases Generates del Perfeccionamiento en el MINFAR (Havana, September 1989), p. 198.Google Scholar

15 The 1981 Cuban Census reports that blacks and mulattos together comprise around 33% of the population (Censo de Población y Viviendas, 1981, pp. 10–12), but this is according to the self-definition of the Cuban people. In the 1950s it was common for mulattos with lighter skin to be referred to as más adelantados (more advanced) and this prejudice has not been completely erased. The Census count, thus, is likely to understate the true proportion of black and mulatto Cubans. It is also true that the birth rate among black and mulatto Cubans has been somewhat higher, so that the 1981 figures would tend to understate the 1992 realities in this regard as well. Of course, the precise number cannot be scientifically established because of centuries of intermarriage and the consequent existence of a continuing colour spectrum.

16 We exclude here, perhaps naively, the possibility that US forces would invade the island. Should a second invasion take place, the prospects would be little different from those described in the text that follows.

17 The head of the right-wing Cuban American National Foundation, Jorge Mas Canosa, made his fortune building telephone poles in Florida for Southern Bell and may well have inspired Torricelli, who represents a district with a sizeable concentration of Cuban Americans, to introduce these exemptions. Another director of the Cuban American National Foundation, Armando Codina, is a development partner of Jeb Bush, Miami resident and son of President Bush.