Cuba: Emerging from the crisis

By Tjarda Muller
Each neighborhood or community has a store when where basic staples are sold at low prices thanks to government subsidies.

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"I lost 90 pounds. Our diet dropped from 3,000 to 1,800 calories per day. There was no gas and I had to bike to work—nearly 35 miles a day," says Jose Aguilar, a researcher at the Institute of Economic Research. His experience was typical for Cubans during the crisis of the 90s.

In the 1980s, 80 percent of Cuba's trade was with the Socialist Block. With the fall of the Berlin Wall, this market disappeared and the economy practically collapsed. From 1990 to 1991 Cuba's imports declined by 73 percent. The agricultural sector, centered on intensive sugar production for export, depended on imported supplies. It hit rock bottom.

Then came the Cuban Democracy Act of 1992 (also known as the Torricelli Law) and the Helms-Burton Act, prohibiting companies that receive US subsidies to trade with Cuba, and excluding ships that dock in Cuba to visit the US for six months. This resulted in Cuba paying more for shipping because ships had to come from very far away and often solely to go to Cuba.

There were shortages of everything: medicine, gas, food, soap, toilet paper, and matches. "My bones were protruding here," says Jose Diaz, a 66-year-old architect, pointing to his ribs. "I had to sell my car because there was no gas. I lost 80 pounds, since there wasn't enough food and I was biking to work. But now I have a pot belly. I eat everything put in front of me."

Overcoming the crisis

To confront this crisis, Cuba's doors were opened to tourism and certain economic activities were liberalized, like small restaurants and fruit and vegetable markets. Later on, foreign currencies were allowed to circulate. Today, in addition to the Cuban peso, a convertible peso is circulating and can be used to make purchases in many stores and restaurants. Cuba also started to diversify its exports, focusing on medical services and biotechnology, distance learning, and commodities like nickel and tobacco.

What little foreign currency entered the country was used to maintain basic social services. In meetings with the Ministry of Education and National Institute of Economic Research, representatives were proud of the fact that no educational or health facilities were closed, and the weight of the crisis was distributed in an even manner.

The agricultural sector had to adapt to new conditions, and change from a monoculture, export-oriented model to the organic production of food for local consumption. Cuba is now considered the biggest laboratory for organic agriculture, in part because there are no chemical products available in Cuba for many of its crops.

Cuba today

In recent years, Cuba is slowly emerging from the crisis. In 2005, economic growth was at 11.8 percent; the next year 12.5 percent. During 2007 it grew 7.5 percent, thanks partly to a relaxation of some aspects of the US embargo. The United States is now Cuba's fifth largest trading partner.

The GDP of the country is higher than it was in 1989 when the crisis began. But this doesn't mean that Cuba has fully recovered. There are still great challenges ahead, like transportation, housing, and food security, to name the most pressing. Even though the average diet has increased to more than 3,200 calories per day, there is still much to be desired in terms of variety. There are shortages of milk and beef, and crop yields are lower than they were in the 1980s. The country spends a lot of money importing subsidized food to distribute to the population. But that food only covers half the population's nutritional needs. The buying power of salaries and pensions are insufficient to cover basic needs. Despite substantial increases, an average family still needs the equivalent of three median salaries to cover their basic needs.