Recent failures to meet export commitments to the Soviet Bloc, and a steady decrease in the share of trade with the West have pushed Cuba toward a massive drive to increase exports and end what President Fidel Castro has described as a "squandering" of resources at home.
In an interview here last week and in speeches during the past two months, Castro has outlined problems of low productivity, misplaced investment priorities and unrealistic budgeting that have caused the 26-year-old Cuban revolution to rethink its economic planning.
As a result, the planned $552 million increase in spending this year has been cut in half. Many of the trims are in hoped-for expansion of social services, while outlays for steel, nickel refining, nuclear power and electronics are to increase.
Although the economy has grown steadily for years, Cuban officials say the increase has not been enough. Adding world recession, U.S. economic pressure, and agricultural disasters to inadequate planning and wastefulness, they paint a picture of an economy ever more beholden to the Soviet Bloc. Western trade has slipped from 40 to 13 percent of Cuba's total during the past decade, they say, and they describe growing trade problems with Moscow.
As part of a recently signed five-year economic cooperation agreement, the Soviets have suspended repayment of a debt estimated at $9 billion and pledged to continue aid to Cuba at current levels, estimated at $4 billion a year in subsidized trade, oil and cash, until the end of 1990.
According to some diplomats here, however, the Cubans had hoped for more, and the new austerity-productivity campaign is one tangible result of their disappointment.
One diplomat speculated that the Cubans were so taken aback by what he described as Soviet refusal last spring to make up Havana's budget shortfall that Castro refused to attend the summer meeting in Moscow of Comecon, the Soviet Bloc's trade organization. Asked in the interview why he did not attend, Castro said he was busy with problems at home.
But while Cuban officials categorically deny pressure from the Soviet Union to straighten out their economy, or threats to cut aid, they readily acknowledge problems from having fallen down on their trade commitments to the bloc.
Under existing agreements, the Soviet Union and Eastern Europe buy Cuban goods at inflated prices and supply Cuba with vital commodities at rates vastly reduced from those of the world market. The most visible component of this exchange is the Soviet purchase of guaranteed amounts of Cuban sugar, at 30 cents a pound rather than 4 cents on the world market, and the guaranteed subsidized daily sale to Cuba of what is now nearly 200,000 barrels of Soviet oil.
In addition to what the Soviet Union provides, however, Cuba needs hard currency to make payments on its $3.2 billion debt to the West and to purchase such goods as spare parts and medicine that are in short supply in the Soviet Bloc.
Officials from Castro on down noted that in recent years they have shorted the Soviets on promised exports that instead were sold to the West, including sugar to Western Europe, tobacco to Spain and nickel to anyone who would buy it in the face of what Cuba describes as U.S. pressure on its western trading partners.
"We say we have to fulfill our exports in products to the Soviet Union," Castro explained in the interview. "Then, what happens? Well, say there's a problem with drought or some agricultural disease, and then, if we didn't make our production goal in sugar, what did we do? We'd pull back sugar from the U.S.S.R. and send it to the world market. That is, we didn't fulfill our delivery quota , yet we still demanded that they fulfill their deliveries to us" of oil and other products promised on a barter basis.
"We said, this can't happen again, and it won't happen again," Castro said. "Since our most advantageous trade is with the socialist countries, we've said this is not the way to look for hard currency."
Vice President Carlos Rafael Rodriguez, who handles most of Cuba's trade negotiations with the Soviets, said in a separate interview: "It's not that the Soviets demanded" that the Cubans review their priorities "but that we decided to meet our obligations. Fidel has said that the Soviets have unlimited patience with us. In no case have they retaliated, and we have defaulted at various times, for different reasons, on our obligations.
"It doesn't mean that I don't have a headache" during negotiations with Moscow, Rodriguez said. "Sometimes I feel ashamed . . . sometimes they say that the more we meet our obligations, the better our relations would be."
Rodriguez insisted that there was no question of Soviet willingness to continue to fund Cuba at current levels. While "I was of the view that it was going to be difficult," he said, negotiations over a new five-year plan were completed with Soviet Premier Nikolai Tikhonov without incident during meetings in Havana last October.
"There are still some elements of discussion," Rodriguez said, concerning funding for joint Soviet-Cuban investment projects in Cuba in the next five years. "Our expectations were for 4 billion rubles nearly $5 billion in combined new and continuing projects." He said Cuban planners had reduced their requests "to more realistic amounts. But that realistic amount might not seem so realistic to the Soviets."
Overall, Rodriguez said, "you can be assured that the substantive elements of our relationship with the Soviet Bloc for the next five-year plan is assured." In particular, he pointed with approval to the continuation of a "reexport" oil facility that allows Cuba to collect dollars from the Soviet Union for any unused oil from the Soviet allotment, an arrangement worth $500 million to the Cubans last year.
In his recent speeches, Castro consistently has praised the Soviets. He said in a Dec. 4 discourse, "The system alone wouldn't have been enough, because when you start out from underdevelopment, under the conditions of Cuba, neither the revolution nor the system alone can suffice. . . . As important as the system was, just as important and decisive was the existence of the socialist community."
Occasionally, Castro said, "the western countries wonder if we have debts with the Soviet Union. Yes, we have debts with the Soviet Union: the first one is a huge debt of gratitude.
"There have been imbalances in the financial sphere many times. There are credits every five-year period, but never have we had financial difficulties with the Soviet Union. . . . The debts resulting from imbalances, and the credits do not harm us in the least.
"Every time we have proposed a 5-, 10- or 15-year postponement and without interest, this has been conceded without any difficulty. . . . As they see our efforts, I would say they are going to have an even more respectful and favorable position toward us . . . if we do not waste and squander but make a maximal effort."
However cooperative the Soviets have been, however, Cuba must to some extent participate in the world market, as a borrower and a spender of hard currency to make up for what the Soviet Bloc cannot supply. Cuban planning officials -- prodded, in the view of some diplomats, by the Soviets' concern over their own economy -- have been preoccupied with diversifying their exports to the West and expanding their markets.
According to Alberto Betancourt, the Cuban trade official in charge of "capitalist" trade, the 1985 budget was redrawn in part to avoid "a balance-of-payments problem in hard currency, to try to normalize trade without the need to restructure" Cuba's western debt, which was partially renegotiated in 1982.
The new plan, he said, places priority on increasing trade with the West from 13 percent to 20 percent of Cuba's total, with a focus on expanding exports to existing western markets in the European Community, Canada and Japan. Among targeted industries, he said, were textiles, tobacco, leather goods, construction materials, coffee and oil.
Cuba, Betancourt said in an interview, currently produces approximately 14,000 barrels a day , selling about 2,000 barrels a day, mainly on the spot market to Western Europe. Within the next five years, the Cubans hope to increase production to 40,000 barrels daily.
The more oil Cuba can save out of its Soviet allotment through conservation and the Soviet-funded development of nuclear power -- one reactor is under construction and two more are planned -- the more hard currency it can earn through the "reexport" facility.
In addition, the government hopes to expand its tourism capacity, which last year netted close to $70 million from 150,000 visitors.
While hoping to export more to the West, Betancourt said, Cuba also hopes to decrease its imports from that market, focusing on improving locally produced substitutes, "particularly in mechanized industries."
But trade with the West, he said, will never serve as more than a complement to Soviet Bloc trade. "We have a socialist economy, and that will not change."
The key to meeting those commitments, increasing trade with the West, and keeping up an adequate domestic living standard, Cuban officials said, lies in reassessing Cuba's domestic investment policies to concentrate on those areas that can achieve those goals.
And, Castro repeatedly has emphasized in speeches on everything from housing construction to workplace coffee breaks, none of this will work until the economy and the workers become more efficient. Hence, the nationwide austerity-production campaign.
Cuba's Communist government long has prided itself on its high level of expenditure for health and education, and officials trumpet the country's high growth rates, achievements that successive U.S. administrations have deprecated as the products of huge Soviet subsidies.
While the Cubans do not deny the subsidies, they consistently have congratulated themselves over the years for moral rectitude and a selfless work ethic they cite as principal products of their revolution.
In recent weeks, however, Castro has spent more time chiding Cuban citizens for wastefulness than citing their merits. "We have acquired many virtues over the years," he told a national gathering in December to study energy problems, "but we still need to develop others; thrift is one of them."
While Cuban officials have emphasized that the cuts will not affect the basic standard of living and will be directed toward government expenditures first, the repeated recent public warnings that belts will have to be tightened appear to have confused some Cubans. They note that the austerity campaign comes in the midst of what has been an unprecedently rapid increase in the availability consumer goods during the past few years, the removal of many basic commodities and luxury goods from ration lists, and a visible improvement in the average standard of living.
"Nobody can figure out what all of this is about," said one Havana resident.