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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 economy grew only 1 percent and could get
    worse in 2017 as the government confirms power blackouts and suspension
    of debt payments.
    NORA GÁMEZ TORRES
    ngameztorres@elnuevoherald.com

    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 President 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
    year’s.

    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
    Venezuela’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
    efforts.”

    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 tourism, 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 Gross 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
    Universidad 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 –
    www.incubatoday.com/news/article90315777.html