- The Washington Times - Tuesday, July 10, 2007

HAVANA

Every day the hotel lobby fills with foreign businessmen and tourists who come with their laptop computers to take advantage of the wireless Internet service that the hotel provides for a small fee.

Most of them are not staying overnight in the posh Hotel Melia Cohiba. They are here because obtaining an Internet connection in Cuba — where the government strictly controls access — can take months of cutting through bureaucratic red tape. And even in the hotels, the service is often spotty and painfully slow.

But balky Web connections aren’t the only problem facing communist Cuba.

Decades of neglect and chronic budget shortages have left the infrastructure crumbling. Aging power plants and an inefficient electricity grid need updating, sewer and water systems suffer frequent breakdowns, houses and office buildings are deteriorated, and many roads are filled with potholes.

Worst of all for average Cubans is a woeful public transportation system. Workers often wait hours to catch a ride, with some routinely arriving late while others complain of nasty conditions on packed, sweltering public buses.

Cuban officials acknowledge the problems and are scrambling to solve them but say it will take time.

“We suffered a serious crisis in the 1990s,” said Leonel Gonzalez, a member of Cuba’s National Assembly, referring to the loss of about $6 billion in annual subsidies after the collapse of the Soviet Union. “The crisis caused a lot of problems with energy, transportation, food production and the economy. Our priorities are to reduce the negative impacts on the people.”

Although progress is slow, there are signs of improvement. Cuba reportedly has invested $1 billion in refurbishing its electricity grid. It has spent hundreds of millions on the water and sewer systems and public transportation.

By the end of this summer, transportation officials hope to phase out the dreaded “camels,” humpbacked, truck-drawn trailers that have long been the bane of Cuban commuters, as 400 new buses arrive from Belarus and China.

A key part of Cuba’s strategy for rebuilding its public works and services hinges on new trade and assistance agreements with China and Venezuela.

China has signed deals to provide Cuba with credit that it can use to purchase buses and other badly needed items.

Venezuela — headed by Cuba’s top international ally, outspoken anti-American President Hugo Chavez — recently signed more than a dozen deals with Cuba valued at more than $1 billion. Cuba will continue sending doctors, social workers and other professionals to Venezuela, while Venezuela will assist Cuba in the tourism, energy and telecommunications fields.

Venezuela is also helping Cuba rebuild an oil refinery and develop oil reserves that, based on preliminary data, might prove large enough to help Cuba reduce its energy costs. Meanwhile, Venezuela is supplying Cuba with 90,000 barrels of discounted oil per day.

But at the same time it is increasing trade ties with Venezuela and China, Cuba has been scaling back the foreign investments it allows in tourism, which since the Soviet Union’s collapse has been a mainstay of the economy.

The Cuban state is now running many of the businesses that it once relied on foreign firms to help start, meaning that Cuba will retain more of the earnings from those ventures that can then be used for infrastructure improvements.

“Private partnerships are not a priority now,” said Mr. Gonzalez. “Instead of joint ventures, we are getting administrative and professional services from foreign firms. But in things like construction of new hotels, we are doing that now ourselves.”

Largely left out of the picture are American companies, most of which are blocked from Cuba by the four-decade-old U.S. embargo. American firms are allowed to ship only food and medicine to Cuba and must be paid cash in advance.

Democrats and some Republicans in Congress have advocated easing the embargo, but the Bush administration remains strongly opposed.

And now with longtime leader Fidel Castro out of the public eye for most of the past year because of a serious stomach ailment and his future role in the government uncertain, Cuba’s exact economic path is not clear.

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