From Paltry Sugar Crop, Cubans May Reap Political Change

A CENTURY before communism, Fidel Castro Ruz, and the United States trade embargo, the lifeblood of the Cuban economy was sugar.

It is still the No. 1 source of income.

But one of the world's biggest exporters of raw sugar is suffering its worst harvest in decades. Cuba's sugar-cane crop is estimated at just 4.2 million tons, down 40 percent from last year, officials say.

No one disputes that this is a major setback. But analysts disagree on the economic and political implications of the latest blow to the already-damaged economy of this Caribbean island.

"Cuba faces a catastrophic year," says Antonio Jorge, a professor at Florida International University in Miami and a former chief economist under Cuban dictator Fulgencio Batista. "This will be the worst year since inception of the revolution, and it may lead to the paralysis of the Cuban economy before the year's end," he says.

The sugar shortfall is due to severe storms and shortages of spare parts and fuel. But Cuba cannot afford a poor sugar crop because the hard currency it generates is crucial to the purchase of oil.

In 1989, under favorable trade terms with the former Soviet Union, Cuba imported 13 million tons of oil. Last year, the Cuban economy sputtered along on half as much crude, secured mostly through sugar-for-oil barters. Nonetheless, the shortage resulted in blackouts, transportation cuts, and factory shutdowns.

Last year, Cuba had 6.3 million tons of sugar to swap for oil, food, and machinery critical to the industrial base.

This year, after domestic consumption, Cuba has 3.5 million tons to sell, according to official reports. Of that, 1.5 million tons of sugar are committed to Russia for 2.3 million tons of oil. Another 700,000 tons are committed to China, of which about 500,000 has yet to be delivered.

But on June 4, Cuba put delivery on those contracts in doubt. Because of heavy flooding that cut road and rail links to ports, Cuba stopped shipment on all sugar contracts for 45 days.

Mr. Jorge speculates that the Cuban government is gambling it can renege on the contracts, signed when sugar prices were lower than they are today, and earn a bit more by selling the sugar on the spot market. But even so, Jorge estimates oil purchases this year will fall to four to five million tons - a third of what the country used to consume.

Andrew Zimbalist, a Cuba specialist at Smith College in Northhampton, Mass., disagrees. He forecasts that rising domestic oil production, plus more tourism revenue, nickel exports, and more bilateral trade agreements for Cuba's pharmaceutical, citrus, tobacco, and seafood products, will allow the country to scrape by. "The situation is desperate, but it will stabilize by the end of the year," he says.

Wayne Smith, just back from Havana, says, "There is an economic crisis. But there is no sense of imminent collapse." Mr. Smith, director of the Cuba Program at Johns Hopkins University School of Advanced International Studies in Baltimore, adds, "Cuba will muddle through, making adjustments all the while denying that it's making them. What you will see in three or four years will be very different - a mixed economy - and it will be emerging from its present situation."

Some see the latest economic blow as a catalyst for political change. "Historically, sugar industry problems have brought changes in Cuban attitudes and mentality," says Teo Babun Jr., president of an investment and consulting firm in Miami. "And this tends to produce political changes. I'm not saying there will be an overthrow of the government. But Cuba will be forced to make changes."

Cuba wants the US trade embargo lifted. Since President Clinton took office, the tone of comments by Cuban officials has been conciliatory. Last week, Cuban officials reiterated their willingness to negotiate payment of US properties confiscated in Cuba in the early 1960s.

But President Clinton won votes in the traditionally Republican Cuban-American community by backing a law passed last year tightening the embargo. State Department officials say change is not likely until Cuba agrees to free, multiparty elections and human rights monitoring.

To get Washington to ease the embargo enough to allow US tourists to visit Cuba and spend money, Mr. Babun predicts a series of moves by Mr. Castro could "generate popular support from the US people to counterbalance Cuban conservatives in the US."

In the coming months, Babun predicts Castro will turn over one of the many hats he wears to another high official, as an indication that control is passing to others. If that produces no US response, Babun says, Castro could announce free elections to take place some years from now or accept human rights monitoring by the United Nations.

"If Castro flew to New York ... and appealed to the American people to at least sit down and talk, that could neutralize the influence of Cuban conservatives," Babun says.