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Cuban economy's rocky road

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Cuban economy's rocky road


One of the first major acts of Cuba’s revolutionary government after it took control was to nationalise 90 percent of industry and 70 percent of agriculture. Soon amid plummeting relations with Havana, Washington declared its trade embargo. It played a large part in the country’s economic difficulties in the years to come but was not the only factor. The collapse of the Soviet Union took a heavy toll, the cold war superpower being Cuba’s most important trade partner. Desperate times called for desperate measures. Fidel Castro loosened the state’s grip on the economy a little. Limited private enterprise was tolerated and the use of the dollar allowed.

Making the most of its assets Cuba began to encourage tourism with the creation of new infrastructure. Within a short time it became the island’s principal industry, attracting some 2 million foreign visitors every year. But these changes were at odds with the core values of the revolution. Newfound relative wealth for some created inequalities. There were those who had the dollar and those who did not.

On top of this, agriculture on the island began to decline. A quarter of the population remains employed in the agricultural sector, but it represents only around 6 per cent of GDP. The oil industry is another story. In 1984 it produced 16,000 barrels a day. Today it has grown to around 75,000.

Not quite enough to ensure self-suffiency but in Venezuala’s leftist President Hugo Chavez Cuba has a hugely important friend. Under an agreement signed in 2000 Venezuela supplies its ally with oil at a very favourable price. In return Cuba sends much needed health care staff to Venezuela. New oil reserves were discovered two years ago and some estimates suggest Cuba’s oil production could be doubled by 2008.

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