Purge aims to halt Cuba's economic free fall

March 9, 2009

Frances Robles and Wilfredo Cancio, Miami Herald

Cuba's new Cabinet members named in a surprise political shake-up last week are a cadre of unknowns who share a history of cracking down on waste and running a tight ship.

The sweeping Cabinet shuffle underscores Cuban leader Raúl Castro's eagerness to bring military-style discipline to an economy that a top U.S. intelligence official recently called ``a basket case.'

Facing a $10 billion hurricane destruction tab, soaring food prices and declining revenue, Castro wiped out nearly his entire economic team, sacking some of the country's most visible rising stars.

Theories abound -- some contradictory -- about why most of the ministers dismissed were in the economic arena. Some experts say Castro sought to purge loyalists to former head of state Fidel Castro, getting rid of the people who may have stood in the way of reforms. Others suspect that Raúl Castro simply wanted to restructure his government, tackling economic problems by first tightening up the country's massive bureaucracy.

This much is clear: Cuba's economy is in a free fall. And as Raúl Castro finally steps out of his brother Fidel's shadow by putting his own team in place, he must soon take drastic measures to reverse the slide.

'The year coming to an end has been without doubt one of the most difficult since the special period began,' then-Economy Minister José Luis Rodríguez told the National Assembly at the end of 2008, referring to the era of economic crisis that followed the 1991 collapse of the Soviet Union.

Rodríguez was among 10 officials fired on Monday.

The economy is going so badly that Raúl Castro cut travel spending in half and stopped offering bonuses and other perks to government workers.

In the last hurricane season, Cuba suffered several devastating storms. The recovery bill came as the nation paid a record $710 million for food imports to the United States alone -- a 61 percent rise in a single year.

The majority of ministries affected by the shake-up were related to food-buying.

The government has said it expects the economy to grow by 4.3 percent this year -- about half the earlier government forecast of 8 percent. Castro has been busy traveling the world, seeking to diversify Cuba's financing so the nation is not so dependent on Venezuela. Castro has inked deals with China, Iran, Russia, Brazil and oil-producing nations.

Although tourism and some exports were up last year, the price of Cuba's top export -- nickel -- dropped by 41 percent, and the cost of imports increased by more than 50 percent.

The island imports more than 80 percent of what it consumes, and efforts to increase domestic production have failed.

'Raúl Castro inherited a legacy of complete neglect -- not benign neglect,' said Miami economist Jorge Sanguinetty, who monitors Cuba's economy. ``Raúl Castro has to be very worried. Cuba is in a very precarious situation.'

The Cabinet changes affected the ministers of foreign trade, foreign investment, food industry, finance and prices, domestic trade, and iron and steel industry. Two of those ousted, Rodríguez and Vice President Carlos Lage, were linked to the transformation and economic planning that began in 1990 as a result of the collapse of the socialist camp.

Lage was replaced by Gen. José Amado Ricardo Guerra, who, as secretary of the Armed Forces Ministry, developed a special talent for organization. He is essentially a bureaucrat who earned his stars at an office desk, under the protection of the current defense minister, Gen. Julio Casas Regueiro, and Raúl Castro, who held that post for more than 45 years.

The new ministers of food industry and of finance and prices are women forged in party discipline. Both worked in the secretariat of the party's Central Committee, whose task it is to reinforce the party's influence.

The new food industry minister is María del Carmen Concepción González, who was called the 'Iron Lady' by her close aides from the days when she was party secretary in the municipality of Consolación del Sur.

She later became the party's first secretary in Pinar del Río province and was in charge of the agricultural foods department of the party's Central Committee.

Minister of Finance and Prices Lina Pedraza has a degree in economics. While she was founder and minister of Auditing and Control from 2001 to 2006, she had a reputation for being rigid and controlling, which earned her a promotion to chief of the economics department of the party's Central Committee.

In short, the top two economic ministers are known for hard party discipline.

'This is in keeping with the military mentality Raúl Castro has,' said Florida International University economist Antonio Jorge. ``As I see it, this is trying to make things efficient, tighter, leaner.'

More puzzling was the decision late last year to tap Gen. Ulises Rosales del Toro, once a member of Fidel Castro's rebel army, to be minister of agriculture.

'He did an awful job as sugar minister,' said Carmelo Mesa Lago, an expert on Cuba's economy. ``Does that make sense? No, but Rosales is an army general, and Raúl Castro trusts him.'

A general was also named to take over the steel ministry, and a former colonel was named minister of the economy and planning. Marino Alberto Murillo had been in charge of cracking down on theft at state businesses at the domestic trade ministry for the past two years.

The new head of the steel and mechanical industry ministry is Gen. Salvador Pardo Cruz, who ran the military companies that supply the armed forces.

Those military assignments show that Castro is still a firm believer in his military reform project known as 'business perfection,' which he brought to other state industries in a quest to boost their efficiency.

Last week's military appointments join seven other top Cabinet changes decreed by Raúl Castro since his appointment to the presidency last year, illustrating a trend toward government centralization and the placement of military figures in key jobs.

Among the vice presidents of the Council of State and the vice presidents of the Council of Ministers -- Cuba's cradle of power -- there are four generals, two revolutionary commanders who retain military rank, and a former army colonel.

Experts say the last time Cuba changed this many posts was in 1980, when 30 percent of the Cabinet members were ousted. Monday's changes affected about a third of the Cabinet.

'I happen to think that just because he is surrounding himself with hard-liners does not mean he is not going to bring economic change,' said Jorge Piñon, an energy fellow at the University of Miami's Center for Hemispheric Policy. ``It means he needs people who will bring law and order while the changes are taking place.'


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