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Cuba shuts factories, cuts energy to save economy

(Agencies)
Updated: 2009-07-31 17:25

HAVANA: It's hard to find a spare tire in Cuba these days, or a cup of yoghurt.

Air conditioners are shut off in the dead heat. Factories close at peak hours, and workers go without their government-subsidized lunches.

A worker weighs pumpkins before their sold in a government store in Havana, Thursday, July 30, 2009. [Agencies]

Cuba has ordered austere energy savings this summer, and the Council of Ministers and Communist Party Central Committee met this week to consider more cuts to cope with budget deficits and plummeting export profits.

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More likely, the shortages result from a global recession that hit an already struggling economy still reeling from last year's hurricanes. President Raul Castro told Cubans in a national address Sunday to work harder because they have no one to blame but themselves.

"The only thing I know is that we're screwed," said one 27-year-old who only gave the name Raul because he sells cement and housing materials on the black market. "I don't work. I find a way to survive."

The latest cuts are small compared with strict measures imposed during the "special period", when Cubans nearly starved after subsidies dried up with the collapse of the Soviet Union. Nor are they as severe as the blackouts of 2004, when technical problems at power plants left much of the island in the dark for hours at a time. Fans and water pumps were idled. Milk and food spoiled, while electrical surges damaged refrigerators, televisions and other costly appliances.

The price of nickel, Cuba's chief export, is down more than 50 percent from last year, according to Toronto-based Sherritt International Cooperation, Cuba's largest energy partner.

The company's oil production on the island was down 19 percent last quarter compared to the second quarter of 2008, mainly because Sherritt suspended drilling earlier this year when Cuba fell behind on its payments.

The government and Sherritt have worked out a plan to pay down the debt, and the company says Cuba has been sticking to it. But the situation could have spurred the mandatory energy savings. Neither Sherritt nor the Cuban government would provide more details.

Or Cuba may be trying to save unused oil to bolster strategic reserves while prices are still relatively low, said Dan Erikson of the Inter-American Dialogue in Washington.

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