Friday, July 31, 2009

Cuba shuts factories, cuts energy to save economy

Cuba shuts factories, cuts energy to save economy
By WILL WEISSERT, Associated Press Writer Will Weissert, Associated Press Writer 1 hr 1 min ago

HAVANA – It's hard to find a spare tire in Cuba these days, or a cup of yoghurt.

Air conditioners are shut off in the dead heat. Factories close at peak hours, and workers go without their government-subsidized lunches.

Cuba has ordered austere energy savings this summer to cope with rising budget deficits and plummeting export profits, and the Communist Party Central Committee on Friday lowered 2009 economic growth projections by nearly a full percentage point. The committee also announced that it was suspending plans for the first Communist Party congress in 12 years in order to deal with the financial crisis.

A report in official Cuban newspapers cited President Raul Castro as saying the island is struggling through a "very serious" crisis and hinted that further belt-tightening was on the way.

The government already has imposed conservation measures even as it continues to get free oil for services from Venezuela, fueling rumors that Cuba is selling President Hugo Chavez's crude on the side to raise cash.

More likely, the shortages result from a global recession that hit an already struggling economy still reeling from last year's hurricanes. President Raul Castro scolded Cubans in a national address Sunday to work harder because they have no one to blame but themselves.

"The only thing I know is that this is lousy," said one 27-year-old who only gave the name Raul because he sells cement and housing materials on the black market. "I don't work. I find a way to survive."

The latest cuts are small compared with strict measures imposed during the so-called special period, when Cubans nearly starved after subsidies dried up with the collapse of the Soviet Union. Nor are they as severe as the blackouts of 2004, when technical problems at power plants left much of the island in the dark for hours at a time. Fans and water pumps were idled. Milk and food spoiled, while electrical surges damaged refrigerators, televisions and other costly appliances.

Still, every bit of belt-tightening stings in a country where almost everyone works for the state and average wages are less than $20 per month.

The price of nickel, Cuba's chief export, is down more than 50 percent from last year, according to Toronto-based Sherritt International Cooperation, Cuba's largest energy partner.

The company's oil production on the island was down 19 percent last quarter compared to the second quarter of 2008, mainly because Sherritt suspended drilling earlier this year when Cuba fell behind on its payments.

The government and Sherritt have worked out a plan to pay down the debt, and the company says Cuba has been sticking to it. But the situation could have spurred the mandatory energy savings. Neither Sherritt nor the Cuban government would provide more details.

Or Cuba may be trying to save unused oil to bolster strategic reserves while prices are still relatively low, said Dan Erikson of the Inter-American Dialogue in Washington.

But he also said the strict measures lend credence to whispers that Cuba is selling Venezuelan oil overseas — something the communist government did with some of the discounted oil it got from the Soviet Union.

"It's been alleged they've been selling Venezuelan oil on the side. They've denied that, but if they are open to doing it, now would be the time," Erikson said. "Cuba's in a real cash crunch."

Beginning June 1, the government ordered energy conservation measures as part of a broader plan to cut the national budget by 6 percent. Central planners also announced Friday they were revising their economic growth projections downward, from 2.5 percent to 1.7 percent. As recently as December, they had projected 6 percent economic growth in Cuba.

These days, most countries would cheer any economic growth. But Cuba counts what it spends on free health care and education, monthly food rations and other social programs as production — making economic growth figures dubious.

The island's economic woes began in earnest with three hurricanes last summer that caused more than $10 billion in damage and wiped out some of the food and grains the government had stockpiled to insulate itself from rising commodities prices.

How much Cuba has spent on hurricane recovery is unclear. But Castro said the government has rebuilt or repaired 43 percent of the 260,000 homes damaged or lost in the storms.

Cuba consumed about 150,000 barrels of crude oil a day in 2008, of which 52,000 were produced domestically and 93,000 imported from Venezuela, said Jorge Pinon, an energy fellow at the University of Miami's Center for Hemispheric Policy. Half is used to generate electricity, according to Cuba's Ministry of Basic Resources.

Though the numbers leave the country 5,000 barrels a day short, Pinon said natural gas production last year covered the energy equivalent of 20,000 barrels of oil daily and kept the power plants running smoothly.

"Cuba, from a petroleum point of view, is balanced," he said. "It's not running out of oil."

So far the power-saving measures have been confined to state-run businesses and factories, though many Cubans fear they will soon hit residential users as well.

Workers at a tire factory in San Jose de las Lajas, a rugged farming town 30 miles (50 kilometers) south of Havana, said production is down and the factory goes dark when demand for electricity is high — leaving gas stations and mechanics short on spare tires.

In the central province of Cienfuegos, a large dairy that supplies ice cream and other products to much of the country and exports cheese has been ordered to cut production, according to the Communist Youth newspaper Juventud Rebelde. Yogurt is scarce in Havana — sold only in upscale grocery stores that cater to tourists and are too expensive for most Cubans.

Some government office workers say their hours have been cut to between 8 a.m. and 3 p.m., and others are being told to come in only twice a week.

State companies also have stopped offering employees low-cost lunches in worker cafeterias to save power.

Other government offices, businesses, banks and stores have ordered air conditioners turned off for much of the day, rather than close early.

Customer service, never stellar in state-run institutions, has suffered even more. In the sweltering banks, barbershops and boutiques, listless employees are more interested in fanning themselves than serving sweating customers.

Cuba Cancels Plans for Communist Party Congress

Cuba nixes plans for party congress
Economic woes foil plans for congress to chart island’s post-Castro course
The Associated Press
updated 7:47 a.m. PT, Fri., July 31, 2009

HAVANA - Cuba on Friday suspended plans for a Communist Party congress and lowered its 2009 economic growth projection to 1.7 percent — nearly a full percentage point — as the island's economy struggles through a "very serious" crisis.

In a closed-door meeting of the Communist Party Central Committee, officials agreed to postpone indefinitely the first congress since 1997, which had been announced for the second half of this year.

The gathering was to chart Cuba's political future long after President Raul Castro and his brother Fidel are gone. Instead, top communists will try and pull their country back from the economic brink.

Second downward revision of 2009
Cuba lowered its 2009 growth estimate from 2.5 percent to 1.7 percent, but even that figure is dubious given that it includes state spending on free health care and education, the food Cubans receive with monthly ration booklets and a broad range of other social services.

The revision downward was the second of its kind this year. As recently as December, central planners said they thought the Cuban economy would grow by 6 percent in 2009.

The country's economic problems began last summer, with three hurricanes that caused more than $10 billion in damage. The situation has worsened with the onset of the global financial crisis and subsequent recession.

Break with tradition
The 78-year-old Raul Castro succeeded his brother as president more than 18 months ago, but it's the soon-to-be 83-year-old Fidel who remains head of the Communist Party.

Party congresses historically have been held every five years or so to renew leadership and set major policies, but the government has broken with that tradition over the past decade.

Information about the Central Committee meeting occupied the entire front page of the Communist Party daily Granma and a full page inside cited Raul Castro as reporting that "things are very serious and we are now analyzing them."

"The principal matter is the economy: what we have done and what we have to perfect and even eliminate as we are up against an imperative to make full accounts of what the country really has available, of what we have to live and for development," the newspaper said, citing the president.

It said authorities would postpone the sixth Party congress "until this crucial phase ... has been overcome," but did not say when that might be.

Waiting for his copy of Granma when it hit newsstands at 7 a.m., Raul Salgado, a 72-year-old retiree, said, "I want to know what's happening, or better yet, what's going to happen."

"I don't think it matters much to the people if there is a congress or not. What the people want here in Cuba is to know what the government is going to do to get out of such a terrible situation like the one in which we're living," Salgado said.

More cutbacks likely
Cuba has begun a major push to conserve energy in an attempt to save some of the imported oil it uses to run power plants. State-run factories have been idled during peak hours, air conditioners have been stilled at government offices and some work hours shortened.

Granma made it clear more cutbacks were coming, but did not give details. Cuba's rubber-stamp parliament convenes Saturday for one of its two full sessions a year and could unveil new energy-saving plans then.

Sunday, July 26, 2009

Castro calls for tight finances in Cuba


Castro calls for tight finances in Cuba
From Shasta Darlington

HOLGUIN, Cuba (CNN) -- Sunday was a day of commemoration in Cuba -- the 56th anniversary of the start of the Cuban Revolution -- but the message from President Raul Castro was not all celebratory.

The island nation will face a second round of belt-tightening as a result of the global financial crunch, Castro said in a speech marking Revolution Day.

He said that on Tuesday he would hold a meeting of the Council of Ministries "dedicated to the analysis of the second cost adjustment in this year's plan, due to the effects of the global economic crisis, especially on the reduction of revenues from exports and the additional restrictions on accessing external financing."

The global economic downturn has hit Cuba hard. Revenues from key exports like nickel are down. The price of imports, like food, is up.

Castro said he would also meet with the central committee of the Communist Party this week to discuss the situation.

Any proposed cuts will affect a Cuban population already feeling the squeeze.

Public transport has been reduced as part of austerity measures. The government has ordered factories and businesses to cut energy consumption or face sanctions.

Castro took a few swipes at the U.S. trade embargo that has been in place since 1962, but made it clear Cubans have only themselves to blame for agriculture shortages.

"The land is there. We Cubans are here. We'll see if we get to work or not, if we produce or not, if we keep our words or not," he said, pounding his fist on the podium.

"It's not just a question of shouting 'fatherland or death, down with imperialism, the blockade knocks us out' when the land is there, waiting for our sweat."

Cuba has seen hard times before and has always worked to pull through, Castro said in front of the 200,000 people packed into the parade grounds of Holguin, about 500 miles southeast of Havana.