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Cubans see light at end of dim economic tunnel

Cuba's Communist Party leaders say they had a special reason to celebrate Friday's 43rd anniversary of the rebel attack that launched the Cuban revolution _ unusually good economic news.

After five years of near-catastrophic collapse following the breakup of the Soviet Union, Cuban officials are reporting healthy economic growth _ 9.6 percent for the first half of this year _ and rising productivity and profits in the country's major industries.

Some economists are skeptical of Cuba's official figures, complaining that reality is hard to judge because Cuba refuses to release the raw data from which economists make their calculations.

But analysts are in broad agreement that while Cuba's economic future remains grim, the Communist authorities have succeeded in halting the island's slide into economic oblivion.

"Today, Cuba is still no paradise. But the situation no longer looks so dire," said an editorial in the July edition of CubaNews, a Miami-based monthly bulletin.

Castro made a point of this in his annual speech to the nation Friday at a ceremony commemorating the Cuban revolution.

"The country is recovering slowly," Castro said. "I say that we are on a good path. . . . I say that we can resist."

Castro said the economic news shows that the Helms-Burton Act, passed by the U.S. Congress earlier this year to tighten a 36-year embargo of Cuba, has not had its desired effect.

"The 9.6 is a salute, is a message to Mr. Helms and Mr. Burton," Castro said.

The anniversary is of the attack that Castro led in 1953 on the Moncada Barracks. It was the first major assault on the U.S.-backed dictatorship of Fulgencio Batista.

The attack was a dismal failure. Eight rebels died and Castro was arrested. He would be released less than two years later as part of a government amnesty, a decision Batista would regret when the revolutionary army seized power in 1959.

The Cuban economy shrank 35 percent between 1990 and 1993 because of the loss of subsidies and commerce with the Soviet bloc countries, according to official figures. The crisis grew so severe in the summer of 1993 that scattered riots broke out in Havana, and some analysts predicted Castro's fall was imminent.

The economy has since rebounded. There are fewer power blackouts, the tourist industry is growing faster than anywhere in the hemisphere, and the production of sugar, nickel, tobacco and agricultural produce is up.

Castro, who will be 70 on Aug. 13, admitted that the nation still needs to make sacrifices to overcome the loss of Soviet aid.

"We remain in the special period . . . in difficult circumstances," he said. "We have to continue working, hard, hard, hard."

Vice president Carlos Lage forecast last week that Cuba's economic production would increase 5 percent this year, up from 2.5 percent last year. "There is a tendency toward more efficiency, a better functioning of the economy," Lage said.

Exports rose 30 percent and imports 50 percent in the first half of this year, according to official Cuban statistics. The chief performers are sugar _ traditionally Cuba's top export and hard-currency earner _ and tourism, the island's big future economic hope.

After disastrous falls in sugar production in recent years, Cuba recently announced a harvest of 4.45-million metric tons, a 33-percent improvement over last year.

Nickel production also leaped 31 percent this year, while tourist visits to the island are up 46 percent, bringing in 38-percent more dollars in tourism revenues.

But experts say these statistics, while they appear to be accurate, give a misleading impression to the untrained eye. Cuba's economy has fallen so far in the past five years that even a slight recovery looks dramatic, says James Whisenand, publisher of The Cuba Report, a Miami-based business newsletter. "The dollar value of the increase is not as significant as the percentage increase," he said. "It's like I give you a nickel, and then I give you a dime."

As an example he points out that Cuba's purchasing power fell 76 percent between 1989-93, from imports of $8.3-billion to $2.1-billion. Imports rose last year to $2.4-million, a small but not insignificant turnaround that appears more impressive in percentage terms.

Toilet soap production is another good example. Official figures report a 63-percent increase in production. But Cuba still only produces a paltry 4.4 metric tons of soap.

Cuban officials remain cautious about the future. That may be in part due to the Helms-Burton law, which seeks to punish foreign companies trading with Cuba.

But experts say the U.S. embargo and other sanctions have consistently failed to put more than a dent in the Cuban economy.

Despite its own trade ban, the U.S. can do little to prevent Cuba from expanding its commercial relations with most Latin American and Caribbean countries, as well as growing trade with Europe and the Far East.

Experts say the biggest problem Cuba faces are its own tight restrictions of free economic activity.

As it is written the Helms-Burton law only affects foreign companies with assets in the U.S. Other Cuban investors with no financial exposure in the U.S. cannot be touched.

While some foreign companies have canceled planned investments in Cuba because of the legislation, few have shut down existing projects, and Cuba has announced 25 new agreements signed with foreign companies since the law passed in March.

The Helms-Burton law could hurt Cuba in the short term by drying up potential sources of foreign financing. "Foreign investment is Cuba's lifeblood," says Whisenand. "A very small amount of money makes a significant difference to the quality of life or the ability to provide services to the public."

Cuba's economic recovery has come at considerable social cost. Spending cuts have been achieved by closing inefficient factories, leading to unemployment, previously unheard-of under the communist system. Other reforms, including taxes and tight controls on self-employed workers, have driven some businesses underground. That has fueled an ever more pervasive black market in stolen goods.

Wary of the country's precarious situation, most Cuban officials are not gloating over the latest statistics. That is recognition perhaps of calculations by economists who forecast that even if Cuba's economy continues to grow at its current pace, it will take until 2012 for the island to return to the levels of per capita income in 1989.

"We're very cognizant that the life of the population continues to be very hard," said Lage. "We can't overcome that over the short-term."