Cubans face dire formula

HAVANA — As a general rule with Cuban revolutionary slogans, the second choice is never a good option.

Such is the case with Fidel Castro's famous rallying cries of "Patria o Muerte" ("Homeland or Death") and "Socialismo o Muerte" ("Socialism or Death"). And now, with the island facing its grimmest economic outlook in years, Cubans have been presented with a new mortal ultimatum: "Ahorro o Muerte" ("Conservation or Death").

That phrase, appearing in a recent editorial in the Communist Party newspaper Granma, was meant as a call to arms for the Cuban government's new energy-conservation campaign. But taken more broadly, it also appears to reflect the country's economic strategy under President Raul Castro, who assumed Cuba's leadership more than a year ago. Rather than follow the path of market-based liberalization reforms that China and Vietnam's communist governments have taken, Cuba intends to weather the crisis by slimming its bureaucracy and exhorting citizens to conserve resources and produce more.

Cuba "can't get more out of its pockets than what it puts in," economic planner Julio Vazquez Roque said in a lengthy article on the country's economic woes that appeared June 21 in the communist youth daily Juventud Rebelde.

The effects of the global economic crisis are hitting Cuba at a time when the island is still struggling to recover from three powerful hurricanes that caused an estimated $10 billion in damage last year. And the situation is worsened by five-decades-old U.S. trade sanctions that squeeze Cuba's access to credit and export markets, a policy Cuba likens to a "blockade" in part because the measures attempt to punish foreign companies and governments who do business with Havana.

But government officials increasingly acknowledge that many of Cuba's shortcomings are self-inflicted.

The country's state-run economy is plagued by inefficiency, low worker productivity, and a frighteningly skewed trade imbalance. During the first three months of 2009, imports outpaced exports at a nearly four-to-one clip, according to Granma. Revenues in key Cuban industries like tourism and nickel are slumping with the global recession, and tightening foreign credit markets have produced a cash crunch at government banks. Projections for Cuba's economic growth this year have been revised sharply downward in recent months.

The island is in the throes of a "very deep and difficult" crisis, leading Cuban economist Alfredo Jam said at an international economic conference here last week. "We’re at a truly complex moment in our history."

Some foreign suppliers have suspended shipments to the island for lack of payment, causing certain car parts or other imported goods to disappear from state-run stores as well as Cuba's vast black market. Foreign businessmen who partner with the Cuban government complain of frozen bank accounts and mounting debts that are long overdue.

"I haven't been able to touch my money for five months," said an English businessman who imports computer equipment.

At the street level, the crisis has amounted to additional hardship for ordinary Cubans, who earn an average of $17 a month and rely heavily on state-subsidized housing, electricity, food and other services, including free health care and education.

Monthly rations for beans and salt have already been cut, and the recent Juventud Rebelde report warned that government planners would further scale back food rations, which are also heavily dependent on imports.

Other cost-saving measures have resulted in reduced bus service, scattered factory closures and power blackouts. Much of the energy rationing has been targeted at workplaces, however, where most managers are under instructions to keep air-conditioning turned off until 1 p.m. despite stifling humidity and temperatures reaching into the high 90s.

Government officials say the conservation campaign is working so far, resulting in a savings of 20,000 tons of fuel during April and the first half of May, alleviating the threat of residential blackouts.

Still, the severity of the country's financial straits has prompted some comparisons to Cuba's so-called "Special Period," a euphemism for the grinding penury of the 1990s that followed the collapse of the Soviet Union and the Eastern Bloc. When Soviet subsidies and most foreign trade disappeared virtually overnight, Cubans faced acute food and fuel shortages, with power outages routinely lasting 12 hours or more.

"Things haven't gotten that bad yet," said a vegetable vendor at a local outdoor market, when asked how the current situation compared. Like several Cubans who echoed similar sentiments, she was afraid to be quoted by name.

A key difference now is oil. Cuba produces about 55,000 barrels a day from domestic sources, and the island receives another 93,000 barrels a day from Venezuela, according to industry data. With its own needs met, Cuba has become an energy supplier, and oil is now the country's second-leading export after nickel, according to Reuters. Several foreign energy companies are partnering with Cuba to explore for crude off the island's northwest coast.

Oil exports brought Cuba an estimated $880 million in revenue in 2008, and with global fuel prices rising, the government's current energy-saving measures are likely to deliver a clear cash benefit: The more oil Cuba can save through conservation measures, the more it can sell abroad.

More on Cuba:

Cuba libre

The future of Cuba

A remnant of the Cold War