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The Last Word: Protecting Social Achievements during Economic Crisis in Cuba

1 Jun 1998

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The collapse of the USSR had a devastating effect on the Cuban economy. Since nearly 90 per cent of the island's international trade in the 1980s took place within the Soviet-led Council for Mutual Economic Assistance (Comecon), the impact on Cuba of the events of 1989-1993 was similar to that experienced within the Soviet Union and Eastern Europe. The gross domestic product of Cuba fell by over one third and its import capacity declined by four fifths.

The Cuban economy apparently resumed very modest growth after 1994, but in 1997 GDP was still less than US$ 1,200 per capita. This was approximately two thirds of the levels attained in the 1980s, and it was below the ceiling used by the World Bank to determine eligibility of the world's poorest countries for subsidized International Development Association (IDA) loans. At any rate, Cuba was not eligible because it was not a member of the Bank.

The Cuban economic crisis in the 1990s was augmented by the United States' trade embargo. Although the embargo began in the early 1960s, its negative impact was offset for many years by favourable terms of trade and other aid from the Soviet bloc. But in the 1990s the US trade embargo became a costly obstacle to Cuba's reinsertion into the world economy on sustainable terms. Moreover, restrictions were tightened to bar trade with Cuba (including food and medicines) by subsidiaries of US companies abroad, to penalize third countries trading with or investing in Cuba and to refuse entry to US ports by ships stopping in Cuba.

During the 1970s and 1980s Cuba imported nearly half its food supplies as well as over 90 per cent of its petroleum, which was almost the only source of commercial energy. With the collapse of the USSR and subsequent disruptions in trading arrangements, the quantity of food produced on the island fell by one third and food imports decreased by nearly one half. Official estimates suggest that food availability per person per day dropped from 3,000 calories and 73 grams of protein in the 1980s to about 1,860 calories and 46 grams of protein by 1993 — less than the amount available per person in Haiti or Bangladesh. Famine and serious malnutrition were averted only by careful use of food and a continued emphasis on its equitable distribution, although this equity is beginning to erode in the face of access by only part of the population to convertible currencies from tourism, remittances and other sources.

It is remarkable that in spite of the economic shocks of the early 1990s, Cuba continues to rank among the top 5 per cent of 125 developing countries on indicators of social development such as life expectancy, infant and maternal mortalities, adult literacy, primary and secondary school enrolments and many others. In fact, according to these social indicators, Cuba stood in 1996 among the top fifth of all countries — including the most highly developed. Health indicators especially sensitive to food shortages or lack of imported medicines, such as the incidence of low birth weights and of underweight expectant mothers, as well as the incidence of infectious diseases and symptoms of vitamin deficiencies, deteriorated. But most social indicators have continued to improve during the 1990s, although at a slower pace than during the previous four decades.

How has this been possible? A general answer is that commitment to meeting basic needs has not wavered. Improvements in education and health, as well as the virtual elimination of absolute poverty, were among the proudest achievements of the Cuban revolution. These social gains also helped provide legitimacy and widespread popular support for the revolutionary state. Therefore public expenditure on health, education and other social programmes was maintained near pre-crisis levels, even after total state expenditures had been cut by over 15 per cent. Social expenditures increased from less than one third of GDP in the late 1980s to about two fifths of GDP in the 1990s. This was supplemented by a great deal of popular participation at local levels in the administration and delivery of social services. At the same time the government carried out several institutional reforms during the crisis, including the conversion of most state farms into smaller co-operative units, the reintroduction of farmers' markets, legalization of foreign currency holdings among Cubans, encouragement of many foreign investments and the expansion of self-employment.

Cuba's economic prospects for the immediate future remain rather bleak. The continued US trade embargo worsens economic difficulties arising from other causes. Nevertheless, Cuba has demonstrated that given enough priority attention from the state, as well as determined support by the people, popular social programmes do not have to be sacrificed to pay the costs of painful structural adjustments.

Solon Barraclough

This is a summary of a chapter by the author in the forthcoming book, Social Development and Public Policy: A Study of Some Successful Experiences, edited by Dharam Ghai, to be published by Macmillan (London).