Thursday, December 27, 2007

Cuba is rising from the post-Soviet ashes, says Castro

Cuba is rising from the post-Soviet ashes, says Castro
February 14, 2005

By Anthony Boadle

Havana - Cuba's communist state was rising from the ashes of its
post-Soviet economic crash with greater control over its economy and
help from China and Venezuela, President Fidel Castro said on Saturday.

"The state is rising again like the phoenix," Castro said in an almost
six-hour speech to economists at an anti-globalisation conference.

For two years Cuba has been steadily centralising control again over
state companies, scaling back the autonomy allowed during the crisis
that followed the collapse of the Soviet Union.

It has also introduced foreign exchange controls, eliminated the dollar
as legal tender, increased regulation of foreign companies and curbed
private enterprise in a return to a classic command economy that is 90
percent state-owned.

The centralisation of state company operations would save Cuba between
$500 million (R3.05 billion) and $1 billion, Castro said.

He complained that previously 3 000 managers had authority to buy and
sell, or run up hard currency debt.

Since the beginning of the year, all foreign exchange and its Cuban
equivalent, the convertible peso, must be turned in to a single account
controlled by the central bank.

Cuba would double its production of nickel and cobalt over the next four
years thanks to Chinese investment and the increase in output by its
joint venture with Canada's Sherritt International, the Cuban leader said.

Nickel, the Caribbean island's top export, would earn Cuba at least $800
million in gross revenue, or $500 million in net terms.

Cuba has the world's third-largest nickel reserves and its industry is
producing at capacity of about 75 000 tons a year from three processing

China's state-owned Minmetals Corporation signed an agreement in
November to invest $500 million in a joint venture that aims to produce
68 000 tons of ferronickel a year. Castro called China the "new engine"
of economic growth.

Cuba's tourism industry, the island's top foreign currency earner that
brought in $2 billion last year, has cut its costs to between 60c and
80c per dollar of gross income.

Castro thanked Venezuela's leftist president Hugo Chavez, his closest
foreign ally, for assistance in shipping vital supplies of Venezuelan
oil, officially 53 000 barrels a day, on preferential terms.

The number of Cuban doctors, dentists and teachers sent to Venezuela in
part payment for the oil would increase from 20 000 to 30 000 by the end
of the year, he said.

The demise of the Soviet bloc deprived Cuba of billions of dollars in
subsidies, mainly through cheap oil supplies in return for overpriced sugar.

The Cuban economy shrank by 40 percent between 1990 and 1993, and has
not recovered to precrisis output.

Castro reluctantly legalised the dollar, opened up Cuba to foreign
investment and tourism, and allowed private entrepreneurs in food,
transport and other services the state could not cater for.

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