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Economic hardships in Cuba spark rumors of a new “Special Period”

Economic hardships in Cuba spark rumors of a new “Special Period”

Without Venezuelan aid, Cuba’s grew only 1 percent and could get
worse in 2017 as the government confirms power blackouts and suspension
of payments.

Cuban ruler Raúl Castro may have ruled out a return to the “Special
Period” — the devastating economic crisis sparked by the loss of Soviet
subsidies in the early 1990s — but he was clearly somber earlier this
month when he confirmed that the island faces a grim future.

Castro predicted the economy would grow by only 1 percent — half the
previous forecast — and confirmed that deliveries of Venezuelan oil have
fallen “despite the firm commitment of Nicolás Maduro.” Key
Cuban exports such as nickel and sugar face low international prices,
and the latest sugar harvest was 19 percent smaller than the previous

But here’s the real headline, according to some experts: “The most
striking part of this is that we could see it coming,” said Cuban
economist Pavel Vidal, among various experts who had long predicted that
’s economic and political crisis would force the Cuban
government to rethink its economic strategy and accelerate the warming
of relations with the United States.

“It was clear the Venezuelan crisis at some point would have a negative
impact on the Cuban economy. Nevertheless, the commercial and financial
dependence on Venezuela remained high and not enough was done to search
for alternatives,” he said.

“Cuban diplomats have renegotiated with debt-holders and opened new
spaces for international integration as alternatives to Venezuela, but
until now that has not translated into bigger flows of trade, finances
or investments,” Vidal added.

The shortage of liquidity is so serious that Castro informed the
population that Cuba has not been paying its foreign debts on time and
Minister of the Economy Marino Murillo — who was later reassigned to a
new position — said the government would not be paying new debts for the
rest of the year.

His public statements came as U.S. agricultural producers are lobbying
Congress, hard but without success so far, to ease laws and regulations
that currently require Cuba to pay cash and in advance for its U.S.
agricultural purchases.

Rep. Rick Crawford, R-AK., recently withdrew his proposal to ease those
requirements after agreeing with Florida members of congress to look for
different ways to meet the interests of U.S. agricultural producers.
Crawford’s office issued a brief statement saying that Cuba’s failure to
pay its debts and lack of liquidity “will not affect the Congressman’s

Castro ruled out, however, dire predictions of a new “Special Period”
along the lines of the concerns expressed recently by the deputy editor
of the Communist Party’s Granma newspaper, Karina Marron, about possible
outbreaks of large-scale protests against the government.

“As was expected, in an effort to spread despondency and uncertainty
among the people, we are starting to see omens and speculations about
the imminent collapse of the economy and a return to the worst part of
the Special Period we faced at the beginning of the 1990s — and which we
knew how to survive thanks to the Cuban people’s capacity to resist and
its unlimited trust in Fidel (Castro) and the (Communist) Party,” he
said. “We do not deny that we could have problems, perhaps even worse
than the ones we have now, but we are now more prepared and in better
condition to overcome them.”

Murillo promised that any electricity blackouts would not affect either
citizens or , although other sectors like street lighting might
have to be cut by 50 percent.

Some state employees already have been sent home on “vacation” and
private taxis have raised their prices because they depend largely on
gasoline bought on the black market, where the fuel has been
increasingly scarce.

At the end of the recent National Assembly session, an official
announcement said Murillo was removed as Minister of the Economy so he
could focus on “updating the economic model” — the package of economic
reforms pushed by Castro since he succeeded brother Fidel 10 years ago.
The government recently acknowledged that only 21 percent of the
“guidelines” established to achieve the reforms have been implemented.

Murillo retained the post of vice minister of the Council of Minister
and was replaced as minister of the economy by Ricardo Cabrisas, also a
vice minister and a key figure in Cuba’s foreign debt renegotiations.
Experts say Cabrisas, well known abroad, faces a tough task because the
worst is yet to come.

Vidal, who had developed his own index for measuring the Cuban economy,
had predicted a 1.8 percent growth in Domestic Product this year
if all trade links to Venezuela were halted. He now estimates GDP growth
in 2016 at zero or slightly lower.

“The worst will come next year, 2017,” said Vidal, a professor at the
Javeriana in Colombia. “In 2016, Cuban officials could
cushion the blow by using up inventories of raw materials and finished
products. Our forecast is a drop of 3 percent of GDP in 2017, with the
subsequent contractions of real salaries and consumption.”

For now, Cuba continues to count on tourism as a lifeline. More than
94,000 U.S. visitors — not counting Cuban Americans — set foot on the
island in the first four months of this year and regular commercial
flights between the two countries are expected to start in the fall,
despite concerns among some U.S. Congress members about security at
Cuban airports.

But in the short run, Cubans face another hot summer of shortages and
economic uncertainties.

Source: Economic hardships in Cuba spark rumors of a new “Special
Period” | In Cuba Today –

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