Monday, June 22, 2009

The world's economic downturn, and Cuba's

The grim news about Cuba’s economy continues. The message of a Juventud Rebelde article, recounting interviews with officials and university economists, is that things remain tough: the Cuban diet will be affected, there is less liquidity, investment plans are being cut, tourism and remittances are likely to decline, and international credit will be harder to obtain. The economists urge cutting red tape that is slowing the distribution of unused farmlands and “changing the work incentive system” throughout the economy. But again the strongest message seems to be an exhortation to conserve energy and other resources so as to reduce Cuba’s import bill.

In El Pais, a foreign business executive says things “are worse than ever,” and he hasn’t been able to transfer dollars from his Cuban bank account since January. A diplomat tells the paper that some foreign businesses have started to limit supplies to their Cuban operations because they can’t repatriate their earnings.

A bright spot: South Africa is negotiating the forgiveness of Cuba’s bilateral debt, a Cuban minister announced, while a visiting South African cabinet minister thanks Cuba for the medical education nearly 300 South Africans are receiving in Cuba, and for the work of “302 Cuban specialists” in housing and other projects in South Africa.

13 comments:

Anonymous said...

And there are plans to make baseball games more energy efficient.

Vecino de NF

Anonymous said...

The article en El Pais mentions the additional use of 40,000 tons of oil to generate electricity. It says that would mean an additional US$100,000,000 on an annualized basis. That would translate to about US$119 per barrel of oil. From whom is Cuba buying oil at $119 per barrel when the average price for those four months was in the neighborhood of $50 per barrel? Is there a financing catch-up game with Venezuela and other suppliers?

Also how's the liquidity crisis affecting the joint ventures with Sherrit, Altadis, and STET just to mention three of the most prominent joint venture partners?

It's going to be a hot summer!

Vecino de NF

leftside said...

I can't find the link right now, but Cuba reported that energy usage has dropped 10-11 percent since the press started making savings it a big deal and measures were taken.

Anonymous said...

Cuba has been in an economic downturn since 1959.

Anonymous said...

Leftside,

Read the Juventud Rebelde and El País articles! Cuba is heading into a severe industrial depression due to a combination of the lack of national energy resources, and a lack of external financing. The Cuban government had 50 years to achieve energy and economic independence. It failed at that task. (When an ice cream factory is told to turn off its refrigeration units, anyone would realize that the central planners behind that order must have s#?! for brains!) The government is telling industrial concerns to shut down operations to save energy. A reduction in energy expenditure will likely result in a reduction in economic output. Nobody gets stronger by going on a diet!

BTW the Compañero Fidel shines by his absence! Where are the reflections?

Vecino de NF

Anonymous said...

Leftside,

Read the Juventud Rebelde and El País articles! Cuba is heading into a severe industrial depression due to a combination of the lack of national energy resources, and a lack of external financing. The Cuban government had 50 years to achieve energy and economic independence. It failed at that task. (When an ice cream factory is told to turn off its refrigeration units, anyone would realize that the central planners behind that order must have s#?! for brains!) The government is telling industrial concerns to shut down operations to save energy. A reduction in energy expenditure will likely result in a reduction in economic output. Nobody gets stronger by going on a diet!

BTW the Compañero Fidel shines by his absence! Where are the reflections?

Vecino de NF

leftside said...

I understand the seriousness of the economic crisis - in Cuba and everywhere. Certain nations that followed capitalist prescriptions (Ukraine and Romania for 2) are threatening to go completely belly up they are so broke. Other nations are imposing draconian cutbacks onto the neediest people (here in California for example, where they are about to gut the entire social safety net). I recently received an effective 10% pay cut because of the budget mess as well. Some other fortunate nations are able to simply borrow their way out of the mess - putting the onus on their children. Cuba, on the other hand, has not borrowed a penny, not lowered one salary, not cut one social benefit. Sure, there will be sacrifices, but rest assured, that they will not harm the neediest, nor result in anyone being thrown out onto the street, lose their health care or pensions.

leftside said...

And again, Cuba had to deal with 2 historic hurricanes that were the equivalent of trillion dollar events in this country.

Anonymous said...

Leftside,

A Cuban Social Security pension is meaningless. The recent electricity cutbacks have been extended to hospitals with the medical personnel fighting back because the blanket order includes shutting off air conditioning to sterile rooms like surgical theaters when not in use. If one doesn't have access to either CUC (Pesos Convertibles) or FX, one can not buy basic necessities like food. The Cuban social net is frayed and failing. It is time for the friends of the Cuban government to tell it to change its policies because saying that one has access to social welfare benefits is not the same as providing them. Centralization of economic and social decisions have eliminated any possibility for civil society agents to supplement the financial, energy, and economic crisis in Cuba. It is time for the Cuban government to trust the Cuban people in Cuba.

Vecino de NF

leftside said...

The Cuban pension system that covers every single worker is far from "meaningless." Perhaps you can tell me what other Latin American country guarantees old age pensions to everyone like Cuba? The pension amounts have been increased several times in the last few years, and are now almost 4x what they were in 2004 (55 pesos to 225 I believe) but I understand they are still too low. For comparative purposes however, Chilean pensioners receive about $250 a month, which does not come close to paying for the average rent (over $1000). In Cuba, costs of living are obviously far different. So you have to take this into account.

Reforms are surely needed, but cutting the safety net (rations, subsidies, etc.) as free-marketeers demand is not an option. Decentralization is all well and good, and is being promoted in several areas, but also has its drawbacks. The civil society is plenty engaged in the hard work needed in Cuba. Just because it is not "oppositional" in nature does not mean it is not there.

Anonymous said...

Leftside,

If the average pensioner in Cuba would lose his Social Security pension, he or she would not experience any appreciable change in his standard of living. That's what makes the average Cuban Social Security pension meaningless. The same applies to most wages. People in Cuba work not because of a salary but rather for the ability to trade goods and services that they control de facto but not de jure.

It is always interesting to read travelogue notes about the experiences in other countries, but to the average Cuban those comments are meaningless as they should be. Just because someone thousands of kilometers away is facing difficulties does not solve your immediate problems. Once again I suggest that you talk to your Cuban government friends and tell them that they need to get out of the business of micromanaging the economy. Not for my sake or for the sake of anyone outside of Cuba but for their sake and the sake of their neighbors in Cuba. If you are interestested in saving the Revolution, it's time to change and quickly. This current crisis is worst than anything that Cuba has faced in the past and it doesn't has the resources to deal with it.

Vecino de NF

Anonymous said...

Leftside is right, as always! With all the luxuries bestowed upon the pampered Cuban populace by the overindulgent Revolutionary Authorities, NO WONDER the Revolution has to spend so much time and money combating illegal immigration by the envious Latin American masses!

The next thing you know, Lefty, the vicious and genocidal imperialist press will start spreading rumors that lots of Cubans want to flee their own country, too. Can you imagine?

Anonymous said...

I would like to know where Leftside got the information about the rents in Chile being at 1000 dollars a month average? And the pensions at 250 dollars? I wonder what is this guy drinking in L.A.? Sewer water at his job?
Chile has one of the best and booming economies in Latin America due to the Free Trade Agreement signed with the US. Trade with China is also booming and increasing by the billions. In fact recently Chile was going to be added to the club of the richest nations on Earth. In contrast Argentina across the Andes is a basket case with leftist thieves like te Kirchners in power stealing everything in sight.
All of this advances in Chile did not come from Allende's policies, or were invented by the socislist Bachelet, they came as a result of from Pinochet's economic policies.
Now we can hear from Leftside about how bad Pinochet was and how terrible, but his policies saved Chile from being a second Cuba and have laid the groundwork for Chile's expanding economic advances and boom. In comparison Cuba is a basket case in a land where 4 season planting and harvesting was always possible, the common people do not even have vegetables or fruits to eat and when they can find them, they are very scarce and are not always readily available.
You can visit any market place in any city in Chile and one can see the difference and contrast with Cuba. I know because I visit and cross into Chile every two months. I wish Cuba was one tenth of what Chile is.