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Cuba’s New Economy

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Posted on Apr 14, 2011
© Reese Erlich 2011

Ernestina Ford’s mother was a domestic servant before 1959. Today Ernestina is a college professor and her daughter Yoama is a translator.

By Reese Erlich

(Page 2)

Economist Munster says a lot of government workers don’t put in a full day’s work and wouldn’t be missed if laid off. “One-third of the workforce has nothing to do,” she tells me. But the process of deciding who stays and who goes will be difficult and could end up taking years.

Meanwhile, the government also confronts fears about the elimination of the libreta (ration card). In the early years of the revolution, the government opened up special stores to sell basic food such as rice, cooking oil and milk at very cheap prices.

More recently, particularly after the end of subsidies from the Soviet Union in 1990, the libreta provided many fewer items. Yet the food subsidies still cost the government $900 million per year.

The government plans to gradually remove items from the libreta, hoping the free market will provide more food at reasonable prices. For those who can’t afford free-market prices, the government will hand out cash subsidies. Thus the government hopes to save $600 million per year.

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“Instead of subsidizing the goods,” says Yepe, “we should subsidize the people who are not able to get the goods properly.”

But these internal changes won’t be enough, according to Yepe. Cuba needs more foreign investment. Spain, Norway and China are already developing offshore oil fields. Spain invests heavily in Cuban tourism.

But the nearly 50-year-old U.S. embargo against Cuba still hurts. Cuba can’t lease oil drilling platforms that have any U.S. parts. Ships that come to Cuba can’t dock in the U.S. for the following six months.

The embargo, which is not supported by any other country in the world, mainly hurts ordinary Cubans. For example, Marta’s mentally ill sister can’t get the latest generation of U.S.-manufactured antidepressants.

The embargo hasn’t strangled the Cuban economy, but it does drive up costs. The domestic reforms are aimed at reducing government costs, while still providing a strong safety net. Yepe notes that the government will continue to control the major industries such as tourism, nickel mining, sugar and petroleum. Education and health care will remain free.

“It doesn’t mean we’re going to copy China or Vietnam,” he says. “We’re going to continue with our creation of socialism. We have done it in a very creative manner.”

Cubans are anxiously waiting to see if that creativity actually puts more food on the table.

Freelance foreign correspondent Reese Erlich is author of “Dateline Havana: The Real Story of U.S. Policy and the Future of Cuba.” His most recent book is “Conversations With Terrorists: Middle East Leaders on Politics, Violence and Empire.”


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By Terrence V Sawyer, April 20, 2011 at 3:26 pm Link to this comment
(Unregistered commenter)

Keep Cuba barefoot and pure.  Oh please.

Tourism is the lifeblood of the Cuban economy.  4 major flight routes originate in Canada and several others in Europe, taking millions of tourists to Cuba every year, including thousnads of Americans. 
Working in the Dollar economy there is the ticket to success.  Sadly, the sex trade is a major component of that economy. 
The Cuban economic model suffers from these incredible contradictions where the ordinary Cubans are shooed away from the “tourist beaches” and doctors can make more money hustling bags in the airport than treating the sick.
As far as being an environmental paradise, this is true in a time warp sense.  Conch thrive within easy diving depths because there has been no market in the US for Cuban conch, while the rest of the Caribean has been fished out for Miami Conch Fritters.
However, the city of Havanna and most other cities use the old fashioned burnpile for solid waste disposal and I suspect, there has been little money in the coffers of the revolution for sewage disposal, what with the ocean right there and all.  Urban vehicles range from diesel tractors pulling passenger wagons to a large fleet of cobbled together cars from prerevolutionary days to Russian imports and late model cars, (I was puzzled to see motorcycles that looked like early BMW’s, then I remembered the Soviet army dismantled and shipped whole factories to Russia as reparations after WWII.)  few catalitic converters there, but good trade winds disperse the air polution.  Sugar is still king, being the only export of value, so the ag economy is a monoculture, crowding out local food markets and bringing the usual erosion and soil depletion.

Cuba has a lot of potential as her people are the healthiest and best educated in the hemisphere. The US embargo has kept that nation “pure” and free of the taint of Capitalism that makes Truthdig possible and provides one or three computers for each of your readers, but it has been hard on the people, as shown by their choices to vote with their feet and innertubes over the years.

I hope change comes there peacefully, but I do not idealize the place.

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By ryan32515, April 20, 2011 at 2:15 pm Link to this comment

I agree robertbeal, the last thing cuba needs is millions of post - embargo u.s tourists

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By Shelley, April 19, 2011 at 4:10 am Link to this comment
(Unregistered commenter)

I’m right here with the commenters.

This article is a little too breathless about capitalist “development” (read devastation) for my taste.  Trade does not bring happiness.  Learn the lessons from all the unhappy and angry Americans.

Cuba has been incredibly, astoundingly lucky to have escaped the environmental degradation USAns spread around the world. 

It would be nice if Cuba would follow Ecuador and Bolivia and put Nature at the center of their changes, fully articulating what will be destroyed and damaged as the changes are considered.  Your countries were close once and could share a vision of health and wellness for all peoples again.

Plan for ameliorating the damage from US-induced climate change and possible oil/dispersant contamination of your ocean from the Gulf.

Cuba could be an incredible world leader and with vision and intelligent planning away from a petrol culture.  You could be a brilliant gift to the planet.

Don’t let millions of tourists in!  Know your value and charge the heck out of a strictly limited number of tourists who really should pay a fortune to luxuriate on your extraordinary island.  There are plenty of folks looking for bliss away from oil and pollution.  Market what you have to the world of folks eager to experience such breathtakingly glorious nature.  Industry is absolutely not the solution when you have such a rare commodity.

Make the tourists sail over and bring solar panels and other goods.  Don’t allow genetically modified seeds, pesticides and other pollutants.

Make the universities who want to do research provide funding and scholarships for the education of the Cuban citizenry.

You should skim off the best of the earth as you have the corner on pristine.  Good luck.

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By maruata, April 15, 2011 at 12:19 pm Link to this comment

It’s amazing how many commentators on Cuba are frothing at the mouth to talk
about Cuba finally waking up to the splendours of capitalism…

... that somehow if they had followed the U.S. model from the start Cuban’s too
could be borrowing huge sums from banks that have only the interest of the
people at heart (yeah, right!).

Sad to think this so-called embrace of capitalism could be enough to make
Obama lift the embargo and unleash all the seething Miami Cubans back to
their homeland where they will proclaim the 50 year embargo as a great
success.

Cuba is pristine indeed, a last refuge, don’t think for a second the adoption of
the U.S. system will save the country, McDonalds billboards will replace Castro’s
cheerful revolutionary placards, it will be a noisy massacre.

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Paul_GA's avatar

By Paul_GA, April 15, 2011 at 9:26 am Link to this comment

Times change; too bad they don’t seem to change in Mordor-on-the-Potomac, too ...

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By robertbeal, April 14, 2011 at 7:49 pm Link to this comment

per year

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By robertbeal, April 14, 2011 at 7:48 pm Link to this comment

Please please please—do not let 1 to 2 million post-embargo U.S. tourists ruin the pristine UNINDUSTRIALIZED ecosystems of Cuba.

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