Posted on Saturday, 08.01.09
CUBA | ECONOMIC CRISIS
Cuba delays key summit on economy
With no answers on how to solve Cuba's tanking economy, government
leaders postponed a crucial conference on the nation's future.
BY FRANCES ROBLES
Reeling from global and domestic economic crises, the Cuban government
announced Friday that it planned to postpone an important Communist
Party conference to chart the island's economic future.
The decision — announced on the third anniversary of Raúl Castro's rise
to the presidency — was further evidence that Cuba's moribund economy
is in a free fall and that its leaders have yet to figure out how to
stop the slide, experts familiar with the island's economy said Friday.
Cuba's Communist Party has not held its congress since 1997. The sixth
party convention was supposed to be held later this year in a quest to
chart the country's political and economic future without the presence
of Fidel Castro, who fell ill three years ago.
But the Cuban government newspaper Granma announced Friday that a grim
financial picture forced a postponement. Reporting from a joint meeting
of the Council of Ministers and the Communist Party's central committee,
the paper also said Economy and Planning Minister Marino Murillo Jorge
had lowered economic growth projections from 2.5 percent to 1.7 percent.
The next party congress will likely be his last and must be done
properly, Raúl Castro was quoted as saying. The gathering is normally
held every five or six years.
“Because of the laws of life, this will be the last [congress] led by
the historic leadership of the revolution,'' Raúl Castro said.
Cuba experts gathered Friday at the downtown Miami Hilton Hotel for the
Association of the Study of the Cuban Economy said putting off the party
congress was a significant decision that showed trouble ahead for Cuba.
The months ahead, they said, could rival the early 1990s, which saw long
lines and bare shelves as the economy imploded in the wake of the
collapse of the Soviet Union.
“They have two big problems: a model that doesn't work and a global
economic crisis,'' said María Dolores Espino, an economist at St. Thomas
University. “There's nowhere for them to go. This is going to be worse
than the 1990s, because this time the problem is worldwide.''
The Cuban government is facing its worst economic crisis in years.
Back-to-back hurricanes last summer wreaked $10 billion in damage upon
the island just as the price of Cuba's chief export — nickel —
plummeted. Nickel, which amounts to 41 percent of Cuba's exports,
dropped from $50,000 a ton to $10,000.
Meanwhile, tourists visiting the island spent less money, and Cuban
Americans sending money from the United States cut back on remittances
sent to family members on the island.
Cuba is plagued by low productivity and high prices for imports. But as
prices for imports climb and exports decline, Cuba has increasingly
found itself out of cash. Espino said Cuba failed to implement smart
economic policies when the time was right — when financing was available.
In response, the government froze the bank accounts of foreign
investors, forcing them to request permission for withdrawals of more
than $10,000, a move that backfired, said economist Joaquín Pujol,
retired from the International Monetary Fund and organizer of the ASCE
“Now you have exporters saying, `Sorry, we're not exporting any more to
Cuba,' '' Pujol said. “The government had to cut the ration card so
people are getting less beans, rice and salt — in some cases half as
much. People are going to the stores and finding the shelves empty —
even if they have the dollars to spend — because exporters are cutting
The reason, Pujol said: “Cuba owes everybody and the Holy Mary money,
and hasn't been able to pay.''
In response, the cash-short government has taken belt-tightening
measures such as scheduled blackouts to save energy. Some factories have
been idled during peak hours to cut back on air conditioning.
Pujol and other experts agreed that the postponement of the party
congress meant Castro lacked a cohesive plan and feared that he would
not be able to maintain a firm grip on the party.
“This is a big deal, because Raúl Castro's claim to government has
always been a focus on bread and butter and moving away from charismatic
leadership,'' said Cuba expert Daniel P. Erikson, author of The Cuba
Wars. “Right now the economy is in decline, so he's not delivering on
bread and butter. And he's postponing the congress, which is part of his
strategy of creating a normalized institutional government.''
The party congress, Erikson said, is when the government sets direction.
“He is delaying that,'' Erikson said, “and backtracking on his goals.''
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