Communist Cuba: 50 Years Of Failure

By INVESTOR'S BUSINESS DAILY

Communism: New Year's Day marks 50 years of communist rule in Cuba. The Castro oligarchy will trumpet its survival and celebrate. But the reality, up close, is that it's the longest-running failure in the New World.

Spare us the fireworks and media-parroted claims of Fidel Castro's dictatorship bringing universal health care and education to Cuba. The real story is that a prosperous Cuba was turned into ruins in just five decades.

Its inflation-adjusted gross domestic product is a mere 5% of what it was in 1958, the year before Castro took over, according to Jorge Salazar-Carillo of Florida International University.

"It's a major failure," Carmelo Mesa-Lago, a University of Pittsburgh economist, told IBD. "Cuba is unable to increase food production to meet its needs and now imports 84% of its food. Cuba produced 7 million tons of sugar in 1952. This year, it's 1.5 million tons. This is the result of economic policy of collectivization, killing of individual incentive, inefficiency, constant changes of policy."

Reliable data are hard to come by. S&P refuses to rate the country for that reason. The regime conceals its failures. But if long lines at the Spanish embassy seeking immigration aren't enough of an indicator, the chronology of Cuba's economy tell an important story:

1957: Cuban GDP is about $2.8 billion, unadjusted for inflation.

1959: Castro and his guerrillas take over and begin confiscating U.S.-owned private businesses.

1960: President Eisenhower imposes trade embargo, excluding food and medicine; Castro responds by "rapidly nationalizing most U.S. enterprises," as he himself wrote.

1961: President Kennedy tightens the embargo. Castro blames it for plant shutdowns, parts shortages and 7,000 transportation breakdowns a month, leaving 25% of public buses inoperable. He then targets Cuban companies for expropriation.

1962: Begins food rationing. Half of passenger rail cars go out of service from lack of maintenance.

1963: President Kennedy freezes Cuban assets in the U.S.

1965: Signs deal with USSR to reschedule $500 million in debt.

1966: Signs new deal with Soviets for $91 million in trade credits.

1968: Begins petroleum rationing, says Soviets cut supplies.

1969: Begins sugar rationing in January, announces state plan to produce 10 million tons of sugar by the following year.

1970: Castro announces only 8.5 million tons of sugar produced. Blames U.S. Diverts 85% of all Cuban trade to the USSR.

1973: Tries for the first time to tie wages to productivity.

1974: Ramps up wartime spending to send 3,000 Cuban troops to Africa. It hits $125 per person, highest in Latin America, by 1988.

1975: President Ford announces softening of the embargo, letting foreign subsidiaries of U.S. companies sell products in Cuba.

1979: President Carter lets Cuban-Americans visit family in Cuba. Soviet aid totals $17 billion from 1961-79, or 30% of Cuba's GDP.

1980: Economic hardship forces Castro to permit farmers to sell surplus to state quotas in private markets with unregulated prices. 100,000 Cubans flee the island for the U.S. via the Mariel boatlift.

1982: Cuba doubles military spending. President Reagan re-establishes travel ban and prohibits spending money on the island.

1983: Cuba signs accord in Paris to refinance its foreign debt.

1984: "Armed Forces of Latin America" yearbook says: "Cuba is probably the world's most completely militarized country."

1985: Cuba signs new debt restructuring, blaming Mexico's crisis for its debacle. Permits selling of private housing for the first time. Total aid from USSR since 1961 hits $40 billion.

1986: Castro defaults on $10.9 billion in Paris Club debt. Blames sugar prices. Abolishes coffee breaks, cuts subsidies. Soviets give $3 billion more in credit and aid. Castro bans farmers markets.

1987: Stops paying entirely on $10.9 billion Paris Club debts.

1988: Forbids release of inflation data, making it impossible for researchers to assess Cuban economic performance.

1990: By official statistics, GDP per capita declines 10.3%.

1991: Sugar crop falls to 7 million tons. Politburo purged. USSR ends $5 billion in subsidies. "Special Period" of austerity begins.

1992: Horse-drawn carts replace cars, oxen replace Soviet tractors. Time magazine reports tin cans are recycled into drinking cups and banana peels into Cuban sandals.

1993: World Bank says GDP contracts 15.1% per capita, as industrial output plunges 40% per person.

1994: Some private-sector activity permitted. GDP per capita shows no growth, but Castro hails "recovery." Agricultural output down 54% from 1989, with sugar at 4 million tons. Castro blames bad finances, and "errors and inefficiency." Food consumption, according to USDA, falls 36%. Some 32,000 Cubans flee for Florida.

1995: Havana admits GDP fell 35% from 1989 to 1993. Vice President Carlos Lage claims GDP grew 2.5%, as inflation hits 19%.

1996: Castro hikes private business taxes. President Clinton tightens embargo. Castro claims GDP rose to 7% in year.

1997: GDP reported up 2.5%, falling short of 5% projection. Failed sugar harvest, bad weather, crop pests, foreign debts blamed.

1998: GDP growth claimed at 1.2% with no inflation. U.S. embargo, global financial crisis, low commodity prices, too much rainfall, Hurricane Georges and severe drought blamed. Castro urges other debtor nations to form a cartel.

1999: GDP claimed at 6.2%. Subsidies from Venezuela begin. Castro blames U.S. dollar for woes and urges use of the euro.

2000: Cuban court rules U.S. owes Cuba $121 billion for embargo.

2001: 3.6% GDP growth, output remains below 1989. Blames loss of subsidies, second-worst sugar harvest ever at 3.5 million tons.

2002: Freezes dollar sales to preserve foreign reserves. Shuts down 118 factories due to power shortages. Buys $125 million in U.S. food. Defaults on $750 million in Japanese debts.

2003: Earns more tight sanctions from President Bush and European Union over dissident roundups. GDP rises just 1.8%.

2004: Castro declares GDP a capitalist instrument, adjusts calculations, declares GDP growing at 5%.

2005: Foreign firms asked to leave and market liberalization scrapped. Imports hit three-times the level of exports. Hurricanes blamed for falling farm output. Sugar figures not released. Castro calls economic crisis an "enemy fabrication." Claims GDP up 11%.

2006: Castro claims 12.5% economic growth, "despite the crippling effects of the U.S. embargo," Luxner News notes.

2007: 7.5% GDP growth claimed; adverse weather said to have affected construction and agriculture.

2008: 4.3% GDP growth claimed, far short of 8% forecast. "One of the most difficult years since the collapse of the Soviet Union," economy minister says. Hurricanes and fuel prices blamed.

That, in sum, is Cuba after 50 years. But lest you get the wrong idea, Cuba hasn't failed at everything: "Given their goal — to destroy capitalism and entrench themselves — they're a success," said Humberto Fontova, an expert on Castro's regime.

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