SUGAR AND SOCIALISM — CUBA’S ECONOMY
Brian Pollitt is a lifelong socialist activist and an Honorary Senior Research Fellow at the University of Glasgow. Brian spent many years in Cuba and in this article he looks at the challenges facing the Cuban economy. This article was originally published in the magazine Cuba Si.
It is widely known that the implosion of the USSR and the end of COMECON devastated the Cuban economy, primarily via their impact on Cuba’s export and import capacity. Average export values between 1985-89 and 1991-95 fell from 5.5 billion pesos to 1.7 billion pesos and imports from 7.8 billion pesos to 2.5 billion pesos. From their peak in 1989 to their trough in 1994, imports fell by 76 per cent – a fall greater than that experienced in the worst years of the Great Depression of the 1930s.
In the 1990s as in the 1930s, Cuba’s economy foundered on the changed fortunes of one commodity – sugar. In 1985-89 more than two-thirds of her total sugar exports were sold at premium prices to the USSR and East European members of COMECON. By 1993, however, East European purchases had fallen from one million tonnes to only 50 thousand tonnes, and while Russia and the other republics of the newly established CIS generally maintained their demand, it was at prices well below those paid during the Soviet era. As a result, while there was only a modest fall in the volume of Cuba’s sugar exports between 1989 and 1992, their earnings fell from nearly 4 billion pesos to less than 1.5 billion pesos. Moreover, the generous Soviet credits that had financed Cuba’s long-standing balance of payments deficit were also curtailed.
The collapse of Cuba’s import capability was the dominant cause of the drastic fall in gross domestic product, employment, investment and popular living standards in what became known as the “Special Period”. Exacerbated by a tightened U.S. trading embargo that further restricted Cuba’s foreign trade, the bulk of the island’s shrunken revenues from sugar exports were perforce deployed to finance imp