U.S. cable foresaw 'fatal' economic situation for Cuba

HAVANA - A newly released confidential U.S. diplomatic cable predicted that Cuba's economic situation could become "fatal" within two to three years, and detailed concerns from other countries' diplomats - including China's - that the communist-run country has been slow to adopt reforms.

The cable was written in February, months before Cuban President Raul Castro announced a major revamp of the island's economy, laying out plans to fire a half-million state workers and open up Cuba to expanded forms of private enterprise.

The cable, sent by the U.S. Interests Section in Havana, which Washington maintains instead of an embassy, was released Friday by WikiLeaks. It was apparently written by the chief U.S. diplomat on the island, Jonathan Farrar.

The Cuban government had no immediate reaction, but the cable's release is not likely to help improve U.S.-Cuban relations already strained by the yearlong detention of a U.S. contractor on suspicion of spying - not to mention 50 years of Cold War animus.

It details a breakfast meeting held by the Interests Section's chief economic officer with diplomats from some of Cuba's main trading partners, including China, Spain, Canada, Brazil, and Italy, as well as France and Japan, which are both among the island's top creditors.

"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 cable said, adding that Italian diplomats cited sources within Cuba's government as predicting that the island "would become insolvent as early as 2011."

The cable said the Chinese were particularly annoyed by Cuba's insistence on retaining majority control of any joint venture, and complained about problems getting loans repaid.

It is no secret that Cuba's financial situation is increasingly dire. Raul Castro has warned that the state can no longer afford to subsidize nearly all forms of Cuban life. The government provides free health care and education, and nearly free transportation, housing, and utilities. All Cubans also receive a ration book that provides them with some basic food, though not enough to live on.

Most islanders work for just $20 a month in a state-dominated economic system riddled with inefficiency.

Yet the country has survived the collapse of the Soviet Union, which caused the near-failure of its economy, as well as a 48-year U.S. trade embargo and the 2006 retirement of revolutionary leader Fidel Castro.

Yet the cable's confidence that Cuba would not enact economic reforms did not pan out. Those announced by Raul Castro in September are considered the most significant in a generation, but it is unclear if they will be enough to save Cuba's perennially weak economy.