*LEF502   07/30/93


(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


"Earning from nickel and other traditional exports are unlikely to rise much

above the levels of recent years because of faltering production and low


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


"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."