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ACCESSION NUMBER:297504
FILE ID:LEF502
DATE:07/30/93
TITLE:CONGRESS TOLD CUBA ON THE ECONOMIC ROPES (07/30/93)
TEXT:*93073002.LEF
*LEF502   07/30/93
CONGRESS TOLD CUBA ON THE ECONOMIC ROPES
(Gelbard and CIA Senate testimony) nrb (660)
(With Lsi506 of 07/30/93)
By Norma Romano-Benner
USIA Staff Writer
WASHINGTON -- In unusual open congressional testimony, a Central
Intelligence Agency (CIA) official told a Senate committee that Cuba is in
the worst economic shape it has been since Fidel Castro came to power 35
years ago.
"Fidel Castro's government is in acute distress," Brian Latell, the CIA's
senior Latin American analyst, told the Senate Committee on Intelligence
July 29.
According to Latell, Cuba's economy is on a course leading to further
decline, largely because this year's sugar harvest is the smallest in 30
years.  He said export revenues will fall to about $1,600 million, down
1rom more than $5,000 million in 1989.
"Moreover," Latell said, "the prospects for much growth in export earning
are poor because of severe shortages of fertilizers and herbicides, the
decrepitude of sugar mills and equipment, and mounting transportation
problems.
"Earning from nickel and other traditional exports are unlikely to rise much
above the levels of recent years because of faltering production and low
prices."
Latell noted that gross revenues from tourism rose about 33 percent in 1992
to about $400 million, "but the net contribution to the economy is
relatively small because of high operating costs."
He said foreign investment of about $100 million a year between 1990 and
1992 was mainly in the tourist sector.  Furthermore, Latell noted, Cuba is
receiving only minimal foreign credits and is unlikely to receive more
because it has been in arrears on its greater than $7,000 million hard
currency debt to Western creditors since the mid-1980s.
"The impact of the economic crisis on the populace has been devastating,"
Latell added.  "Food shortages and distribution problems have caused
malnutrition and disease, but although the difficulties of subsisting will
intensify, the regime should be able to prevent large scale starvation.
Latell predicted that public health, sanitation, and other services will
further deteriorate, "additional factories will be idled," and the rate of
unemployed or underemployed will "probably rise to at least half of the
labor force."
"Cuba's leaders recognize the gravity of the situation and recently
initiated new economic reforms that hold some promise for partial relied,
but which also entail considerable political and social risk."
Latell explained that Castro's intent to legalize the use of dollars in Cuba
could aggravate social tensions in Cuba "because only a small percentage of
the population will be likely to receive hard currency from abroad; labor
productivity in the peso economy will further erode; and inflation will
rise."
"Castro is a stubborn man," Latell added.  "He is loath to permit economic
and political reforms like those that were carried out in former communist
countries because they would dilute his personal political hegemony."
Robert S. Gelbard, deputy assistant secretary of state for Inter-American
Affairs, said "it is apparent to us, to the world at large, and most
poignantly to the Cuban people, that Cuba's experiment with state socialism
has been an abject failure.
"Cuba's economy has proven unable to recover from the loss of the massive
Soviet subsidy."
Gelbard said that while U.S. policy toward Cuba remained unchanged in its
call for democracy and respect for human rights, the United States "poses
no threat to Cuba and has no hostile intentions" and wants to help Cubans.
"We and the entire free world have a profound humanitarian interest in
seeing an end to the suffering of the Cuban people," Gelbard said.  "Ten
million of our neighbors have withstood three decades of a one-man,
one-party state, and now they face material deprivations unknown in their
nation's history.  That is a tragedy which must end.
"We call once again for a peaceful transition to democracy so that the Cuban
people can begin to rebuild their economy, live in freedom, and rejoin this
hemisphere's democratic community."
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