Tuesday, December 20, 2011

IMF aid would highlight failures in Cuba

IMF aid would highlight failures in Cuba
By Andres Oppenheimer
December 20, 2011

An old joke I heard for the first time more than 20 years ago in Havana
says that the three biggest achievements of the Cuban revolution are
health, education and low infant-mortality rates, and that its three
biggest failures are breakfast, lunch and dinner.

A new study by the Brookings Institution think tank shows that, two
decades later, things remain just as bad, if not worse.

Consider some of the findings of the study, titled "Reaching out: Cuba's
new economy and the international response." It was written by Richard
E. Feinberg, a former Clinton administration Latin American adviser who
supports growing international development cooperation with Cuba and who
traveled to Cuba earlier this year and interviewed Cuban officials,
academics and average citizens.

• Despite big increases in tourism, some investments in mining and
massive subsidies from Venezuela, "the Cuban economy remains in the
doldrums." The main constraint slowing the Cuban economy is not U.S.
trade sanctions, but Cuba's own outdated economic model, inherited from
the Soviet Union, of central planning, it says.

• Cuba's average income is one of the lowest in Latin America: 448 pesos
a month, or $20 at the official exchange rate. University graduates are
in a frantic search for jobs, such as hotel doormen or waiters, that
offer access to foreign currency, or they want to emigrate, it says.

• Measured in per-capita income on a purchasing power parity basis,
Cuba's per capita income is $6,000 a year. By comparison, it is $8,000
in the Dominican Republic, $11,000 in Brazil, and $14,000 in Mexico,
Chile and Uruguay, according to United Nations figures.

• Industrial production stands at only 43 percent of its 1989 levels and
employs only 10 percent of today's workforce. Exports of goods are a
paltry $3 billion to $4 billion a year, only slightly more than
Venezuela's annual oil-for-doctors subsidies to the island.

• Cuba's external debt is "alarming." According to Cuba's Central Bank,
the island owes $8.9 billion to foreign creditors, plus another $7.6
billion in "frozen debts" that have not been restructured in more than
two decades.

• Cuba has developed service industries — such as tourism, which has
grown to 2.5 million visitors a year — and exports doctors to Venezuela
through government-run oil-for-doctors swaps. The services sector now
accounts for 81 percent of the island's economy but is not enough to get
the economy on its feet, the study says.

• Despite Cuban President Raul Castro's recently announced pro-market
economic reforms — including allowing certain forms of home ownership —
implementation of these reforms is slow and erratic amid fierce quarrels
between hard-liners and reformers within the regime, it says.

Feinberg's study proposes supporting economic reforms in Cuba through a
growing involvement of international financial institutions, such as the
International Monetary Fund, and by lifting U.S. barriers to these
institutions' technical assistance to Cuba.

Interestingly, Cuban officials expressed some interest to engage with
the IMF and the World Bank, especially since these institutions have
conceded that "there is no single model of development," and have gained
experience from their recent advisory roles in Vietnam and Nicaragua, it

"When asked by the author for the Cuban position regarding IMF
membership, a senior official of the Cuban ministry of foreign affairs
responded: 'Cuba has no principled position against relations with the
IMF or the World Bank,'" the study says. It was the first time Cuba has
made such a statement, it says.

My opinion: If Gen. Castro's military dictatorship wants IMF help, after
decades of lashing out against that Washington-based institution — it
shouldn't be denied technical assistance. It would help build bridges
with reformers within the regime, and would amount to a dramatic example
of how Cuba's octogenarian rulers have failed on all fronts.

Those who claim that the Castro brothers are still popular, and that
Cuba has a model education system, should be asked: If Cuba's leaders
are so popular, why don't they dare hold free elections? And if Cuba's
education system is so good, why doesn't Cuba participate in the
world-wide PISA tests of 15-year-old students? The answer is simple:
Cuba's entire propaganda campaign, unchallenged on the island because of
rigid state censorship, would not hold up to the most basic independent

The old joke I heard in Havana doesn't work anymore. Today, Cuba has the
worst of both worlds: It doesn't have great social services, or
breakfast, lunch and dinner.

Andres Oppenheimer is a Latin America correspondent for the Miami
Herald. His email address is aoppenheimer@miamiherald.com.


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