Cuba Enters Crisis Mode as Economy Worsens

Cuba clicked into crisis mode Friday, postponing a key Communist Party congress aimed at charting a post-Castro future and announcing that its woeful economy is even worse than expected.

Cubans will have to make do with less, top communists suggested,
as they insisted the armed forces are strong enough to deal with
any unrest.

The island's top two political bodies - the Council of Ministers
and the Communist Party's Central Committee - huddled in secret on
how to guide Cuba through what President Raul Castro was quoted as
calling a "very serious" crisis.

Such frank language is uncommon in a country where the state
controls all news media, restricts free speech and assembly, and
tolerates no organized political opposition. But it's no secret
that the global financial crisis has pounded the desperately poor
nation - and people do not need to be told how tough times are.

"The congress? I don't care about that. What I want is
something concrete," said high school student Silvia Medina, 17.
"We young people want to know what's going to happen. We want some light on the horizon. We want a better life, where we don't have to
work so hard for so little."

Officials made clear there would be no tolerance for dissent,
pointedly announcing the armed forces are as strong as ever.

"The Central Committee agreed yesterday to support all
conclusions and working projects suggested by the National Defense
Commission," read an article in the Communist Party newspaper
Granma.

Indefinitely postponing the much-anticipated congress,
traditionally held every five years or so, came as central planners
dropped 2009 growth projections from 2.5 percent to 1.7 percent.
That's down from a high of 12.5 percent in 2006 - and from
projections as recently as December that Cuba would grow 6 percent
this year.

By most forms of accounting, performance would be even lower,
because Cuba counts as output all state spending on free health
care and education, as well as the subsidized food it gives
citizens in monthly ration books and other social programs.

Carmelo Mesa-Lago, an expert on the Cuban economy at the
University of Pittsburgh, said the island could easily end the year
with negative growth. He believes the cancellation of the congress
indicates that Cuban leaders are retrenching to try to prevent
debate about structural reforms that could improve the economy.

"In the current conditions the best thing in Cuba would be to
have a congress and have a five-year plan," he said. "But
politically this is difficult, because of the pressures it could
cause."

Cuba has not faced truly dire straits since what it calls the
"special period," when the collapse of the Soviet Union brought
the island's economy to its knees in the early 1990s, making food
and fuel scarce and prompting hours-long blackouts.

Amid the heat of summer 1994, Fidel Castro had to make a
personal appearance to quell street protests. The government didn't
release full economic figures during those dark days, but what
there is suggests the current situation isn't nearly as dire.

Mesa-Lago said the country is more economically sound today
because of aid from Venezuela and money sent home by Cubans in the
United States.

Any serious economic crunch could increase pressure on officials
to pursue closer relations with Washington, where the Obama
administration has suggested it's time for a new beginning after a
half-century of enmity.

But Oscar Espinosa Chepe, a state-trained economist who has been
jailed for his criticism of the communist system, said Cuba is
unlikely to take President Barack Obama up on his offer.

"It's logical: The United States is the best option to help get
out of this situation," said Espinosa Chepe, currently paroled for
health reasons. "But in Cuba, things are not logical."

The sixth Communist Party congress was to have been the first
since 1997, an unusually long stretch without a top-level meeting.
Many had speculated that Fidel Castro, 82 and ailing, would use the
congress to formally relinquish control of the party, which he
still heads. Friday marked the third anniversary of his last public
appearance.

Granma said the congress was postponed indefinitely "until this
crucial phase ... has been overcome."

Retiree Reina Delgado said suspending the congress would only
lead to more mystery about what the government has in store for
Cubans.

"I think people are going to be disappointed since they were
hoping to participate and talk about problems," said Delgado, 72.
"We want steps taken so we can have better lives."

If that makes it sound as if Cubans are dependent on their
government, they are. The state controls well over 90 percent of
the economy and pays an average monthly salary of $20 to the 85
percent of Cubans who work for it.

The problems began last summer, when three hurricanes caused
more than $10 billion in damage. The global economic crisis cut
into export earnings and caused budget deficits to soar, leaving
Cuba short on cash.

Some of the measures taken to remedy the crisis have backfired.
To try to conserve energy and lower Cuba's oil bill, the government
has idled state factories during peak hours, stilled air
conditioners at government offices, businesses and stores, and
shortened work hours for some employees.

That has led to a drop in productivity, exacerbating scarcities
of products including cooking oil, laundry detergent and yogurt -
even though all are sold in government stores that cater to
tourists and are too pricey for most Cubans.


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