Cuba's financial situation ``could become fatal'' within two to three years and the country risks being ``insolvent'' as early as 2011, according to a U.S. diplomatic cable from Havana made public Thursday by WikiLeaks.
The cable, however, was sent Feb. 9, before Raúl Castro's government announced it was undertaking far-reaching reforms that would cut the jobs of 500,000 public employees, slash subsidies and expand private business in a bid to jump-start the anemic economy.
Earlier this year, the U.S. view from Havana was that Cuba's leadership was ``muddled and unclear, in great measure because [they] are paralyzed by fear that reforms will loosen the tight grip on power that they have held for over 50 years.''
The dispatch also predicted the Cuban military would gain economic power, and that the Cuban people would have no choice but to ``endure'' the lean times ahead.
MEETING
The cable reported on a breakfast hosted by a U.S. diplomat in Havana with commercial and economic counselors from five of Cuba's largest trading partners -- China, Spain, Canada, Brazil and Italy -- plus key creditor nations France and Japan.
``All diplomats agreed that Cuba could survive this year without substantial policy changes, but the financial situation could become fatal within 2-3 years,'' the dispatch noted. ``Italy said GOC [Government of Cuba] contacts had suggested Cuba would become insolvent as early as 2011.''
DEBTS
The diplomats also reported continuing problems collecting their Cuban debts, with the Japanese noting that after restructuring all of Cuba's official debt in 2009, Tokyo had not received any payments.
``Even China admitted to having problems getting paid on time and complained about Cuban requests to extend credit terms from one to four years,'' the cable said. ``France and Canada responded with `welcome to the club.' ''
The cable noted, however, that the Brazilians are taking a longer-term view on the return for their investments, and they claimed some success in raising capital for the refurbishment of the port of Mariel, west of Havana.
Despite their grave analysis earlier this year, none of the diplomats foresaw any meaningful economic reform in 2010 because of what the Brazilian representative said was the possibility such a move would be too ``destabilizing.''
``Any discussions around Chinese-style reforms, particularly regarding foreign investment, have been difficult and `a real headache,' according to the Chinese,'' the dispatch noted.
VENEZUELA
Everyone at the breakfast table agreed that without Venezuelan support, the Cuban government would be forced to adopt harsh economic reforms similar to those it enacted after the collapse of Soviet subsidies in the 1990s.
The cable described Raúl Castro as willing to undertake such reforms but lacking the power to push them through that his brother Fidel held before he underwent emergency intestinal surgery in 2006.
``Unlike former President Fidel Castro, Raúl Castro needs the `support of the machine' to make changes, according to the Canadians,'' the cable noted.
In the meantime, the diplomats agreed that the military, widely regarded as an efficient manager of the tourism and other industries, ``will continue to expand its influence'' over the economy.
On the possibility of improved U.S. relations, the cable reported that the French believed the Cuban government ``could not bring itself to take the necessary steps,'' while the Brazilians argued that ``mixed signals from the Cuban regime are a reflection of dissent in the power circles about whether to move ahead.''
The cable noted that the diplomats did not forecast any public unrest in the short term: ``Everyone agreed that the Cuban people could withstand more hardship although the Italians questioned whether further economic tightening would end up weakening and delegitimizing'' the Cuban government further.
