Cuba's economy growing in pockets

Posted on Thu, Aug. 10, 2006

Cuba's economy growing in pockets
By JANE BUSSEY
McClatchy Newspapers

In movies and memories, sepia-tinted snapshots depict the Cuban economy of the past — sugar cane fields, bejeweled tourists in casinos, the unmistakable presence of wealth.

Then came portraits of the Soviet years — of lines, ration cards and an economy crippled by bureaucracy.

Today, Cuba is both and neither. Nearly half a century after Fidel Castro took power, the Cuban economy is such a study in jarring contrasts that few images can capture its reality.

There are showrooms where you can buy a Mercedes or Peugeot, sparkling hotels built and managed by foreigners, and a budding cell phone culture. There is oil, nickel and mineral ore, such as limestone and iron. China is investing, and Venezuela plowed in $900 million in 2004.

Yet the prosperous, modern pockets are mostly outposts of foreign corporations. Cubans still live in crumbling buildings with broken-down appliances. And the 8-million-ton sugar harvest of 1989 is just a memory; only 1.3 million tons were cut last year.

"To get a good picture of what Cuba really is, rather than what people think it is, would be a good idea," said Miami consultant Teo Babun, who has spent the past few years studying the island's electricity, road and railroad infrastructure.

The numbers illustrate how difficult it is to get a realistic picture of Cuba.

Last year, Cuba revised the way it calculates gross domestic product, giving more weight to social and health services — pricing doctors' services sent abroad — in overall output.

The result is an economy that grew at 11.8 percent annually in 2005 and 12.5 percent in the first quarter of this year, enabled by generous energy subsidies from Venezuela.

Economists question those numbers. But even if the Cuban economy is not growing at that clip, it is expanding.

The construction and transportation sectors are expected to climb 15 percent this year, according to the Economic Commission for Latin America and the Caribbean.

Tourism income will rise 8 percent, and high nickel prices have helped Cuba participate in the commodities boom that has lifted the rest of Latin America.

Besides energy subsidies, the key to Cuba's development is foreign investment.

Fifteen years ago, after the Soviet Union ended its largess, Castro launched an austerity period that brought not only belt tightening but also experimentation with limited free markets and foreign investment.

Canada's Sherritt energy company started drilling for oil and investing in the Moa nickel mine. Spanish hotel chains stepped up management of existing hotels and refurbished or built new ones. And hundreds of joint ventures were formed.

And more money is on the way. The Chinese have plans for investments in two nickel mines.

The investment means Cuba is integrating in fits and starts with the global economy.

"Cuba continues to be dependent, whether it's dependent on donations, on favorable trade agreements," said John Kavulich, senior advisor to the U.S.-Cuba Business Council in New York. "They are not independent."

SOURCE: The Associated Press

http://www.thestate.com/mld/thestate/news/nation/15238670.htm

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