Rubles Don't Much Sweeten Cuba's Economic Woes
CUBA has a serious problem: It needs American dollars to repay its debt and buy imports. But its main export - sugar - goes to the Soviets who pay in unconvertible rubles. Cuba is in its fourth year of austerity and economic decline, and one reason is Havana's inability to find Western sources of credit. Such credit is drying up because the government of President Fidel Castro has been unable to obtain the dollars to service its $6.4 billion foreign debt.
For this reason, Cuba has had to slash imported goods - for which it must pay in hard currency - from $1.2 billion a year in 1984-86 to $900 million in 1987.
What this means for the average Cuban is that all non-Soviet manufactured goods - from buses to entire industrial plants - go unserviced much of the time and must run with fewer spare parts. It also means that the widespread Cuban desire for more Western consumer goods has had to remain on hold.
Sugar is king in Cuba, but the world sugar market has been in decline for almost 10 years. The Soviet Union buys more than half of all Cuba's sugar exports at about 40 cents a pound.
The average world price has been 11-12 cents a pound this year, up from about 8 cents a pound last year. Eastern-bloc countries are the second largest buyers of Cuban sugar, also at inflated prices and also paid for in currencies worthless outside the Soviet bloc.
However, in those cases where some payments are made in goods rather than cash, Cuba benefits. For instance, Moscow often pays for Cuban sugar with Soviet oil. What Cuba doesn't use domestically, it re-exports to Western countries for hard cash. Oil sales accounted for 40 percent of all of Cuba's hard currency earned in 1988. Together, oil and sugar account for 50 percent of all hard currency earnings.
As a result, Cuba's pre-revolution dependence on the United States has become a near-total dependence on the Soviet Union. Of the 5.4 billion pesos in exports in 1987 - 77 percent of which was earned through the sale of sugar - 3.86 billion worth went to the Soviet Union.
Of imports totaling 7.61 billion pesos in 1987, 5.49 billion worth came from the Soviet Union. (The official exchange rate is one peso to one dollar; but on the black market, the dollar fetches between five and seven pesos.)
In a world where all ideologies eventually must balance accounts in dollars, Cuba's dilemma can be stated simply: Of 4.7 billion pesos in exports in the first nine months of 1988, only 805 million pesos worth - about 20 percent of the total - was for products that earned hard currency.
For this reason, a top priority through the year 2000 is developing tourism. Indeed, the staunchest, most orthodox communist leader in the world, Mr. Castro, is creating a virtual parallel economy in Cuba - one in pesos for Cubans and one in dollars for tourists.
Last year, tourism brought in $120 million. That figure, economists predict, is likely grow 10 times by 2000 as Cuba's beautiful beaches and tropical hinterlands see a building spree that will increase hotel space from 3,000 rooms to 30,000.