Informacion economica sobre Cuba

Cuba without Chavez

How far could the island fall if Venezuelan leader can't beat cancer —

or his election opponent?

Nick MiroffMay 5, 2012 06:00

HAVANA, Cuba — Ask Cubans what the worst years of the so-called "Special

Period" were like, right after the Soviet Union's demise dumped the

island's economy in a ditch, and you're likely to hear a recitation of

the era's most notorious menu options.

Sautéed rags. Burgers made from grapefruit rinds. Cat-meat stew.

Apocryphal or not, the stories of Cuban desperation are so much a part

of popular lore that they now serve as shorthand for Cuba's lowest

point, in the early 1990s, a time of acute hardship the island has been

trying to recover from ever since.

Now, with Hugo Chavez and his Cuban oncologists locked in a mortal

battle with an undisclosed form of cancer — and the Venezuelan president

facing uncertain re-election in October — Cubans are wondering if hard

times are coming back. If so, how hard will they be?

The Venezuelan leader supplies the island with about two-thirds of its

oil on favorable credit terms, a mysterious arrangement whose details

remain a state secret here. Chavez also pays the Castro government more

than $6 billion a year for the 40,000 or so Cuban doctors, nurses,

security advisers and other professionals sent on "missions" to

Venezuela, typically to provide social services in the poor

neighborhoods where support for Chavez is the strongest.

These missionaries are Cuba's biggest source of hard currency, bringing

in far more revenue for the island than tourism, nickel exports or other


That arrangement looks increasingly shaky with Chavez now in a Havana

hospital, undergoing another round of radiation therapy but assuring the

public he's in the "home stretch" of his treatment schedule. It's not

much comfort, given that he has yet to disclose what type of cancer he's


Instead, the world has seen a worried-looking Chavez praying for Jesus

to spare his life — a scary sight for many here.

If Chavez beats the cancer with the help of his Cuban doctors and his

nurturing mentor, Cuba's former President Fidel Castro, the Venezuelan

leader's bond with the island will likely be stronger than ever. A

vigorous recovery would give a huge boost to his re-election bid,

converting his larger-than-life heroic image into a death-defying one.

If Chavez's cancer is terminal but he lives long enough to win

re-election, a hand-picked vice president could take over and keep

Venezuela's trade agreements with Cuba in place, since that figure would

likely need Havana's help to maintain support among Venezuela's poor.

But if Chavez can't win or can't survive, and his campaign rival

Henrique Capriles wins the presidency, Cuba's generous subsidies could

be a fat target for his red pen.

Experts say a split between the two countries wouldn't necessarily

happen immediately, playing out more as a gradual untangling than an

abrupt break. Pulling thousands of doctors and other Cuban social

workers out of Venezuela's toughest neighborhoods too fast might be

tricky, unleashing a wave of anger and unrest.

Still, few believe a post-Chavez trade balance would stay sweet for Cuba

very long.

University of Havana economist Pavel Vidal said the island would likely

face a recession lasting "one, two, even three years" if Venezuelan

subsidies dry up, with an economic contraction projected at 9 percent of

Cuba's gross domestic product (GDP).

The Soviet collapse in 1991, by contrast, produced a 35 percent economic

contraction, he said, but warned that the island's economy is in some

ways more fragile now.

"Cuba doesn't have the same kind of economic cushion it had back then,"

said Vidal, noting that the island has been facing acute cash shortages,

with little ability to borrow money.

"There isn't as much of a margin to work with," he said, "which is why

it's even more important to accelerate economic liberalization and reforms."

There are signs that Chavez's illness has created new urgency for Cuban

President Raul Castro to move faster on his economic reform agenda. Last

month a top Cuban Communist Party official said that while nearly 95

percent of the island's economic output is generated by state-owned

businesses today, that figure will drop closer to 50 percent in the next

four or five years, as millions of government workers shift to private

sector and other "non-state" jobs.

Given that Cuba still restricts small business and self-employment

licenses to micro-enterprises like snack bars, room rentals and barber

shops, there is potentially a good deal of room to grow. But the

government would have to allow Cubans to own medium-sized businesses and

accelerate the conversion of money-losing state companies into

worker-run cooperatives.

At this week's May Day rally in Havana, employees from several privately

owned businesses marched alongside state workers, some carrying large

banners which conveniently doubled as free advertising.

One restaurant owner and his 21 employees marched in their red company

shirts, handing out business cards.

Another Havana entrepreneur, Lazaro Enciso, said he sees his capitalism

as a patriotic calling. "I'm creating jobs, and that makes me feel

useful to society," said Enciso, who runs three businesses — a snack

bar, a clothing shop, and a stand selling religious items — for which

he's hired about 20 workers.

"We're providing our country with exactly what it needs right now," he said.

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