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Cuba's economy: Blaming the victim:
 Few places have been hit as badly by the tourist drought

The Economist

It is not without irony that the accidental victims of the terrorist attacks of September 11th should include Fidel Castro's Cuba, one of the United States' staunchest adversaries for the past four decades. Almost unnoticed, Mr. Castro's communist regime now faces its stiffest economic challenge since the collapse of the Soviet Union a decade ago. For that, blame in part the industry to which it turned to replace Soviet subsidies: foreign tourism.

Cuba is far from alone in suffering a drop in visitors since September 11th, but it has become unusually dependent on the foreign exchange they bring. Some 1.8m tourists visited the island last year, and the industry's gross revenues of $1.9 billion outstripped its total exports of goods (worth $1.7 billion). Recently, however, at least 20 hotels have closed, taxi drivers are being laid off, and restaurants are empty. Don't panic, says Ibrahim Ferradaz, the tourism minister: some of the hotels are merely shut temporarily for renovation, foreign investors are planning new ones, and the tourists will soon return when they realize that Cuba is a haven of peace and security in a troubled world.

Maybe, but there are other problems. After tourism, the island's biggest source of dollars is remittances to Cubans from relations abroad, mainly in the United States. But some say that the slowing American economy, and expatriate Cubans' greater reluctance to part with cash, have led to a sharp drop in remittances. Money sent from Mexico has fallen by half, according to a diplomatic source.

All of this comes as Cuba's traditional exports are suffering, too. This year's sugar harvest was exceptionally poor, and world prices of nickel and coffee are low. On top of that, Vladimir Putin, Russia's president, announced last week that his country would close a listening post at Lourdes, south of Havana, ending 40 years of military co-operation between the Kremlin and Mr. Castro's government. Apart from the blow to its prestige, Cuba will lose $200m in rent. Livid Cuban officials accuse Russia of breaking a contract and bowing to American pressure.

Officials are said to be discussing emergency economic measures. Workers have been told to prepare for further sacrifices—not easy when the average wage is less than $20 a month. Mr. Castro has got out of plenty of tighter corners. But his regime appears to be preparing for hard times.

The government was quick to condemn the September 11th attacks. It says that since it no longer promotes revolution abroad, it should be removed from the American list of “terrorist states”. But on the other hand Mr. Castro and the state-run media have criticized the American attacks on Afghanistan. They claim that Cuba has long been the victim of American-inspired terrorism. A million demonstrators were bused to Havana's Revolution Square earlier this month to commemorate a 1976 attack by two Venezuelans (CIA-backed, say the Cubans) on a Cuban commercial jet which killed 73 people. Mr. Castro has always blamed the United States for most of Cuba's problems. But this time that rings a bit hollow.

November 25, 2001

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