ACCESSION NUMBER:297504 FILE ID:LEF502 DATE:07/30/93 TITLE:CONGRESS TOLD CUBA ON THE ECONOMIC ROPES (07/30/93) TEXT:*93073002.LEF *LEF502 07/30/93 CONGRESS TOLD CUBA ON THE ECONOMIC ROPES (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 problems. "Earning from nickel and other traditional exports are unlikely to rise much above the levels of recent years because of faltering production and low prices." 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 rise." "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." 1 NNNN .