[L-I] (no subject)

Cuban Economic Downturn Deepens Island's Hardship
By REUTERS


Filed at 3:38 p.m. ET

HAVANA (Reuters) - Communist Cuba's economy has been battered by 
falling tourism, low export prices and shortages of oil that will make 
life harder on the Caribbean island, experts and business sources said 
on Monday.

President Fidel Castro's government plans to shut down almost half of 
Cuba's inefficient sugar mills, which cannot compete at today's rock-
bottom world price of about 5 U.S. cents a pound.

The drastic measure will leave tens of thousands of Cubans out of work 
in Cuba's largest industry, which for decades was the backbone of its 
socialist revolution.

Cuba's pressing need for hard currency to pay for essential imports of 
food and oil led the government to jack up prices for consumer goods 
sold in dollar shops by up to 30 percent.

The price hikes angered Cubans, most of whom earn local pesos but need 
dollars to buy a fan, a refrigerator or other basic consumer goods in 
the state-run shops.

``It is going to be a very hot summer in Havana, which can only mean 
more push for migration and more social tension,'' said Damian 
Fernandez, an expert on Cuba at Miami's Florida International 
University.

The Castro government has taken difficult steps long overdue, such as 
the closing of 71 unproductive sugar mills, but has done nothing to 
spur output, he said.

``The economic downturn can only widen the gap between the government 
and the people,'' Fernandez said.

``Tired is the word. People are tired,'' a member of Cuba's Catholic 
Church hierarchy told Reuters.

REMITTANCES DOWN

The world economic slowdown reduced the remittances sent by relatives 
living mainly in the United States, an estimated $800 million a year 
that for many Cubans has become vital for daily survival.

The communist government was forced to legalize possession of U.S. 
dollars in 1993 after the collapse of the Soviet Union, which 
subsidized the Cuban economy by buying sugar at good prices and 
supplied the island with cheap oil.

The economy shrank by one third between 1989 and 1994 and Cuba opened 
up to tourism and foreign investment to dig itself out of the crisis.

But the impact on world travel of the Sept. 11 attacks in the United 
States has meant tourism, Cuba's main source of foreign currency and 
the engine of its recovery, fell off by 15 percent in the first four 
months of 2002, officials said.

Ten days ago, Cuba began allowing tourists to pay in euros at its prime 
beach resort of Varadero, in an attempt to draw more visitors from 
Europe.

The Cuban government, which blames four decades of U.S. trade sanctions 
for its economic woes, forecasts 3 per cent growth this year, the same 
rate posted last year.

But Western diplomats do not expect to see any growth.

CASH NEEDED FOR U.S. FOOD

Following last year's devastating hurricane Michelle, Cuba's worst 
storm in half a century, Cuba began buying food from the United States 
for the first time since Castro took power in the 1959 revolution.

So far Cuba has bought some $90 million-worth in U.S. farm goods 
allowed after American agroindustrial groups succeeded in modifying the 
embargo. But the purchases must be maid in cash.

Cuba's increasing international isolation and chronic credit 
difficulties have worsened the economic outlook.

Venezuela stopped supplies of 53,000 barrels-a-day on easy terms in 
April, when President Hugo Chavez was briefly overthrown.

Chavez, an admirer of Castro's, vowed to restart shipments as soon as 
he returned to power, but Venezuela's state oil monopoly PDVSA says 
shipments have not resumed because of Cuba's arrears.

A foreign executive in a joint venture with the Cuban state said 
shortages of diesel may force temporary industrial plant closures in 
coming weeks.

``I don't see any growth. If there is growth it will be minimal and 
offset by the fact that daily life is getting worse,'' Fernandez said.

-- 
Macdonald Stainsby,
External Relations Co-ordinator, Douglas College Students Union.
**
In the contradiction lies the hope. --Bertholt Brecht.
***
"`Order rules in Berlin.' You stupid lackeys! Your 
`order' is built on sand. Tomorrow the revolution will rear 
ahead once more and announce to your horror amid the brass 
of trumpets: `I was, I am, I always will be!'" 

-Rosa Luxemburg, 1918.



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