Alan Gross: Castro's prisoner
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    Cuba faces deep financial woes

    Cuba faces deep financial woes
    Tourism increase is great hope in 2017.

    HAVANA (AP) — Alex Romero was delighted when President Barack Obama came
    to Havana in March bearing the promise of a bright new future.

    Like so many other Cubans, the 42-year-old state photography shop
    employee was thrilled with the president’s vision of restored ties
    between the United States and Cuba. Families would reunite. A flood of
    American business would lift the stagnant centrally planned economy,
    fueling its slow path toward reform. Even as Obama spoke, an 80 percent
    surge in U.S. visitors was drenching state-run and private businesses
    with hundreds of millions of desperately needed dollars.

    Nine months later, the world seen from Havana looks different.

    President Raul Castro faces what could be his toughest year since he
    took power in 2006. 2017 brings a possible economic recession and a U.S.
    president-elect who promises to undo Obama’s normalization unless the
    Cuban government makes concessions on civil rights. Resistance to
    pressure from Washington is a founding principle for the Cuban communist
    system, making domestic concessions in exchange for continued detente a
    virtual impossibility.

    “People expected that after Obama came there would be changes in the
    relationship between the U.S. and Cuba but that we could keep the best
    of what we have, the benefits for the people,” Romero said. “Trump’s not
    going to be able to get what he wants, another type of Cuba. If the
    world’s number one power takes us on, 2017 is going to be really bad for

    Castro must manage these twin economic and diplomatic challenges during
    a year of transition. The 85-year-old general has promised to hand over
    the office in early 2018 to a successor, widely expected to be Miguel
    Diaz-Canel, a 56-year-old official with neither the Castro name nor
    revolutionary credentials. The change will occur without Castro’s older
    brother Fidel, the revolutionary leader whose largely unseen presence
    endowed the system he created with historical weight and credibility in
    the eyes of many Cubans before he died last month at 90.

    “Even if those two events hadn’t taken place — Trump’s victory and
    Fidel’s death — 2017 was going to be a very difficult year for Cuba,”
    said Cuban economist Omar Everleny Perez, a visiting professor at Keio
    University in Tokyo.

    Cuba publishes few credible economic statistics, but experts expect the
    country to end this year with gross domestic product growth of 1 percent
    or less. It maintained a rate close to 3 percent from 2011 to 2015.

    One bright spot is tourism, booming since Obama and Castro’s Dec. 17,
    2014, detente announcement set off a surge in overall visitor numbers,
    up more than 15 percent in 2015 and again this year.

    “I’ve never seen as many tourists as I have this year,” said Magalys
    Pupo, a street-corner pastry vendor in Old Havana. “They’re everywhere
    and they’re the income that we need in this country.”

    The slowness of macroeconomic growth despite a surge of interest in
    foreign investment and the greatest tourism boom in decades attests to
    both long-term mismanagement of the Cuban economy and the depth of the
    crisis in other sectors, particularly aid from Venezuelan in the form of
    deeply subsidized oil.

    Analysts believe that as Venezuela’s Cuba-inspired socialist economy has
    disintegrated, exports to Cuba has dropped from 115,000 barrels daily in
    2008 to 90,000 in recent years to 40,000 a day over the past few months.

    Venezuela was the prime destination alongside Brazil for Cuban doctors
    and other professionals whose salaries go directly to the Cuban
    government, providing another vital source of hard currency believed to
    be slackening in recent years. Nickel, another of Cuba’s main exports,
    has seen a sharp price drop this year.

    The revenue drop might be creating a vicious cycle for Cuba’s state-run
    industries. Experts said cutbacks in imported industrial inputs this
    year will lead to lower productivity in Cuba’s few domestic industries
    in 2017 and make zero growth or recession highly likely.

    “It’s going to be a tough year,” said Antenor Stevens, a 66-year-old
    retired public water specialist. “We’re a people who’ve suffered a lot.
    We’ve felt a lot of need, but there’s still a revolutionary consciousness.”

    Source: Cuba faces deep financial woes | Business |