Incremental changes likely for Cuban economy
As Fidel Castro bows out of Cuban political life, experts see potential
for long-debated economic changes to take place on the island — even if
change comes one step at a time.
Posted on Wed, Feb. 20, 2008
By JANE BUSSEY
When Bay of Pigs veteran Antonio R. Zamora returned from Cuba last
month, he carried signs of a new Cuban economy on a disc in his
briefcase — a list of possible sites and plans for dozens of golf courses.
There are currently just 27 holes to be played on the entire island.
Although adding golf courses to boost tourism pales besides the huge
sums of capital needed to revitalize Cuba, it does indicate a more
pragmatic approach to Cuba's economic needs.
Experts say Cuban leader Fidel Castro's decision to bow out of the
presidency has opened the door for small economic changes — ranging
from allowing some form of private farming to increased manufacturing to
golf courses surrounded by villas.
''A lot of the things that the Raúl Castro government has put on the
table are now going to happen,'' said Zamora, of counsel in the Miami
office of Squire, Sanders & Dempsey.
Cuba stills needs billions of dollars in investment to improve its
highways, bridges and railroads, as well as to update factories,
refineries and utilities on the island.
But in comparison to the first economically desperate years after the
country lost Soviet-era subsidies — the era called the ''Special Period
in Time of Peace,'' the Cuban government has had sufficient export,
tourism and remittance earnings to run up huge bills importing machinery
In 2006, machinery and manufactured goods imports totaled $3.1 billion.
Food imports totaled $1.3 billion and fuel imports almost double that
These imports have been financed, in part, by windfall earnings from
nickel exports. In January, Cuban state TV economic analyst Ariel
Terrero said Cuba exported $2.7 billion in nickel — more than double
its nickel exports in 2006.
Investment from China, lines of credit from Russia to purchase new jet
aircraft and financing from Venezuela are just a few of the sources of
income that helped propel gross domestic product growth to 7 percent
last year, according to figures from the Economic Commission for Latin
America and the Caribbean.
Although Cuba is a country with shopping plazas, business centers and
cell phones in tourist areas, it still has one of the lowest per capita
GDP levels in the hemisphere, some $3,900 per person in purchasing power
parity, according to the CIA World Factbook.
''You have a socialist sector and you have a capitalist sector,'' Zamora
Nowhere is the discrepancy more visible than the exchange rate of the
Cuban peso — around 25 pesos per dollar. Ordinary Cubans earn the
equivalent of $15 to $20 a month. Even though much of their food,
healthcare and housing is subsidized, low wages are a problem.
''Salaries are clearly insufficient to satisfy all the necessities,''
interim leader Raúl Castro said in a speech last July 26, the
anniversary of the launch of the Cuban revolution. Raúl Castro, who may
step into his brother's shoes as president of the Council of State this
weekend, also talked of the need to increase food production and said
the government was studying how to attract more foreign investment.
NO MAJOR UNREST
Experts see discontent among Cubans, but no sign of major unrest.
''Having stayed around for another year and not died, [Castro] has
helped Raúl manage expectation,'' said Julia Sweig of the Council on
Foreign Relations in Washington.
Expectations center on ''how Cubans are going to have access to a better
life,'' she said. “The relation between opportunity, jobs, and the kind
of options that young Cubans have is just critical.''
But there is no quick fix for Cuba.
Although a U.S. Geological Survey study estimates a high probability of
oil in the 59 exploration blocks off Cuba's coast, drilling for oil is
problematic because of the U.S. trade embargo.
''If you find oil, what do you do with it?'' said Jorge R. Piñon, a
fellow with the Center for Hemispheric Policy at the University of
Miami. “You cannot sell the crude to the United States.''
Some experts insist that real change in the Cuban economy also requires
change in Washington.
''The next administration is going to take a more pragmatic approach,''
said David Cibrian, a partner at Strasburger & Price in Dallas.
“Corporate America is going to help them do that.''
Miami Herald staff writer Nancy San Martin contributed to this story.