Amid Economic Woe, Cuba Wins New Deals On Trade, Investment

AS Cuba struggles to keep its foundering economy from sinking into the azure Caribbean, some old friends were tossing it life preservers this past week.

On Nov. 5, Mexican businessman Mauricio Fernandez Garza revealed a signed deal to invest $50 million in a $500 million project to build 15 textile plants in Cuba. The deal was described in the Mexico City newspaper La Jornada as the biggest foreign investment in Cuba since Fidel Castro Ruz took power in 1959.

Mr. Fernandez praised Cuba's investment in equipment, its educated, healthy, and low-cost labor force, and its excess manufacturing capacity coupled with a need for raw materials, transport, and logistics as making the island an "impressive launching point, well above any other country in Latin America."

United States Ambassador to Mexico John Negroponte expressed his disappointment at any project that might rescue the Cuban economy. "It will only have the effect of postponing the day when the country will be democratized," he said.

Meanwhile, Russia, like Mexico, does not seem too concerned about US approval or disapproval. Even as it is fishing for US credits to aid its ailing economy, Russia is making deals with its old communist partner.

On Nov. 3, Russia and Cuba signed a major trade and shipping agreement. Details of the oil-for-sugar deal were not released, but Cuba expert Antonio Jorge at Florida International University in Boca Raton, Fla., says Russia has been shopping for about 2 million tons of sugar. Russia is facing an acute sugar shortage, in part because Ukraine has cut deliveries of sugar-beet products. Sugar is one of the most valued commodities in the Russian diet.

"At market prices, Cuba should get about 2.4 [million] to 2.6 million metric tons of oil in exchange for 2 million tons of sugar," Professor Jorge says.

While characterizing the agreement as "one economic basket case helping another," Jorge adds that it is the most significant trade pact between Moscow and Havana since the two went their own economic and political ways. The Soviet and Eastern European countries once accounted for up to 85 percent of Cuban trade. But Russia adopted a multiparty system and free-market reforms. Cuba stuck with a single-party political system and a centrally run socialist economy.

In addition to the trade pact, the two nations agreed that it was in "their reciprocal interest" to keep open a Russian military electronic eavesdropping facility in Cuba. Washington has asked that the Lourdes spy center be closed now that the cold war is over.

The Russian daily Isvestia quoted Russian Deputy Prime Minister Alexander Shokhin as saying the telecommunications center was useful for maintaining contact with Russian embassies in Latin America. Isvestia also noted the station is used for tracking US space launches and "electronic monitoring." Signals intelligence analysts say that for several years former Soviet spy facilities have increasingly focused on commercial spying.

The Russian press also reports that Russia will be helping Cuba find a third partner - probably France - to finance an unfinished nuclear power plant Cuba desperately needs for energy. In September, Castro announced construction would be halted because Cuba could not meet the financial terms imposed by Russia on the project.

THE Mexican and Russian deals were announced as Cuba brought to a close the week-long Tenth International Trade Fair in Havana. This year, Cuban officials say about 800 firms from 33 nations attended. Cuban officials say 76 projects have been approved using foreign capital during the past two years. But these deals alone will not be enough to keep the economy afloat, analysts say.

Indeed, Carlos Lage, executive secretary of Cuba's Council of Ministers, made an unusually open assessment of Cuba's challenges on television Friday, saying the effort to attract foreign investment was lagging. He blamed the 30-year-old US trade embargo (tightened last month) and harassment of foreign investors by US ambassadors.

Mr. Lage, Cuba's leading economic strategist, also warned Cubans that tough times remained ahead. In 1989, when Cuba was getting subsidized trade deals from the Soviet Union, the island bought $8 billion in overseas goods, he said; in 1992, it bought just $2.2 billion worth of imports. The 6.1 million tons of oil imported (down from 13 million tons in 1989) accounted for about $850 million of the import costs.

Raul Castro, Cuba's first vice president and armed forces minister, also warned Friday in a speech that Cuba was engaged in a "war without shots" to survive against the US. Castro's brother also said "fifth columnists," internal political dissidents, can expect "the crushing blow ... of our revolutionary justice."

Although the official Communist Party newspaper Granma hailed "the fall of Emperor Bush" in the Nov. 3 US election, Lage later dampened expectations of a US policy change under Bill Clinton, saying, "It was Bush that was defeated, not imperialism."