Created: 6/27/1968

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Cuba: Castro's Problems and Prospects Over the Next Year or Two

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Concurred in by rbe UNITED STATES INTELLIGENCE BOARD Ai Indicoted overleaf8

Tn* following intelligence organizations participated in the preparation of this estimatei

The Central Intelligence Agency and tha intelligence organiiatians of the Depart-merit* of State, Defense, and NSA.


Dr. Edward W. Proctor, for the Deputy Director of Central Intelligence Mr.ughes, the Director of Intelligence and Research, Department of State

It. Gen. Joseph F. Carroll, Director, Defense Intelligence Agency Dr. Louis W. Tordella, for the Director, National Security Agency


Dr. Charles H. Rescbordt, for the Assistant General Manager, Atomic Energyand Mr. William O. Cregar, for the Assistont Director, Federal Bureau of Investigation, Ihe subject being outside of their Jurisdiction.


material contains Information within the meaning of the esplonc mission or revelation of which

the Notional Defense of tho United StatesSC,, the trorn-Inonner to an unauthorised person Is prohibited.







problems haveum for the worseevere drought has depressed sugar productiongenerally. Living conditions have become moreof reduced food suppliesariety of other factors,new attempts by Castro to overcome his economicforcing the population to work harder. There has been anpopular cliscontcnt and ln the number of small, local disorders.

we see little prospect that economicsignificantly weaken Castro's position over the next coupleA return of more favorable weather, already inin itself somewhat relieve domestic pressures. Even ifwere to deteriorate further, Castro would still haveof charismatic appeal political skill, and ultimately,military -security apparatus.

there probably will be fluctuations in the levelSoviet aid to Cuba, we uhink it unlikely that the USSRthe Cuban economy toritical so even if Soviet-Cuban tensions continue lo develop.

doubt that either Castro's economic ciifficulties orrelationsliip with the USSR will cause him to tumUS. He will, however, seek to expand his trade with othercountries. There will be an increasing reluctancecountries to maintain Castro's diplomatic and economichis limited financial credit will restrict his trade with them.


L Id out last estimate one noted the ability ol the Castro regime totrong hold on power despite economic adversity. Now, in thetenth year, conditions haveurn for the worse. There hasurther decline in living conditions and an increase in grumbling and minor . .

new demands upon )

the people, while subtracting from their lives diversions and services which have been part of tbe Cuban culture. Tbe genesis of these events and the meaning for the Castro Revolution and for US interests over the next year or wo are considered below.


uba's current problems stem in Luge measure from the raggedof the economy. In the early days of the Castro regime, the US eoooornic denialthe elimination of the Cuban sugar quota and the embatgo on spare parts for US-builtclearly harmful to the Cuban economy. The much- heralded plan for forced industria Uzation was abandoned, and the swing back to concentration oo sugar and agriculture4 lowered and simplified the regime's economic objectives. Nonetheless, continued balance of payments problems, coupled with recurrent problems of bad weather, poor planning and management, shortages of agricultural labor, and low labor productivity, have meant that the economy has grown little since Castro took power.'

roduction of sugarey determinant of overall growth, but Castro's efforts to expand output have foundered repeatedly. Although he clings to his goal of producingillion tons of sugarhisittle moreillion tons will be well below last year's, and somewhat smaller than the average during the pastears. (See Table L) The severe drought of the past year, one of the worst in Cuban history, has been the single most important factor limiting current production. But even with the return of good weather, Cuba could probably not harvest enough cane to produce moreillion tons of sugarecause of labor shortages and the slow pace of mechanization.

gricullure ls the foundation of the Cuban economy not only becauseupports most other domestic lectors, but abo because sugar provideser-

'T. 'Key Issue* and Prospects for Castro'sECRET. CONTROLLED DISSEMINATION.

'We estimate that Cuba's grot* cations! productT was some IS percenthe best rire-IUvocatM year, bur8 it probabl) will decline nearly to useCuba's population, which is now about 7fl million, has grown some 20




CUBAN PRODUCTION OF RAWin Thousand Metric Toot}



Crop year esdir

une of


ol Cuba's export income. In bad crop yean, or when sugar prices are low, Cuba's ability to Biiance through its own exports the purchases ot*raw materials, semifinished goods, fuels, machinery, and certain foods necessary to ecoesornic devekipenerit and popular well-being is severely limited. Under Castro, export earnings have remained below) average, and Cuba has incurred at5 billion of foreign debt, mostly with the USSR and mostly to finance imports. Agricultural and transportationof US origin has largely been replaced by substitutes from Commuidst countries or Western Europe, and new power, shipping and Industrial facilities have been added. Shortage of convertible currencies has, however, limited access to spare parts for other US equipment In mining, sugar milling, and industry, and has restricted purchases of desired foods, chemicals, and new equipment Thus, Cuba's adoptionadically different economic system9 has not relieved its need for international relationships which guarantee thesupport of the regime.ajor source of frustration for Castro is his ecflcwnic dependence upon the Soviet Union:7 the USSR and other Communist countries furnished nearlyercent, and the Soviets finariced by subsidies and credits nearlyercent, of total Cuban imports.

lie fact of his dependence is doubly frustrating for Castro because he-has tied himselfartner with whom he cannot agree on many issues. He refuses to accept Sovirt cipcrieoce or advice on questions of economic policy, as illustrated most recently by his increasing emphasis upon "moral' rather than material incentives for workers. Furthermore, he tries to equate Cuba's role In Latin America with that of tbe USSR in Europe and of China In Asia. Castro's denigration oi the Communist Party's role In the revolutionary process

irritates both tbe Soviet Union and China. His diehard promotion of violent revolution in Latin Americaajor cause of tension with the Soviets, who believe that under present conditions violence is not the most effective vehicle for an expansion of their own Influence. Instead, they are trying to increase their diplomatic and commercial ties with Latin .American government* and to enhance the respectability of pro-Moscow Communisthey are embarrassed in these efforts by Castro's policy, and by the contentious fashion in which he makes his disagreements known. Castro has bitten the hand that feeds him by declaring that the USSR's tactics illustrate the impurity of Us socialism and the insinceritv of its interest ia the fundamental needs of the Latin American people.

hough the Soviets apparently are increasingly bothered by Castro'stotal Soviet aid to Cuba (including some refinancing of past deficits) wtll probably increase substandally8t also appears, however, that they are pressing Cuba to maintain sugar exports to themevel at least approaching theillion tons of Last year Probably- onlyillionillion tons of this sugar will be used within the Soviet Union. It is not clear how much this demand is motivated by economic and how much byconsfderudons; yet,ime when drought has limited sugar production, it will force Cuba to cut significantly its exports to non-Communist countries. Cuban trade wiD be further restricted by other Soviet actions, such as theof the amount of credit which Soviet banks in Western Europe will extend to help Cuba finance imports from hard-currency areas. Cuban efforts tohree-year aid and trade commitment from the USSR were rejected by the Soviets Ino Castro's evident disappointment He almost certainly finds such Soviet pressure oppressive, and it Lsajor (actor in has imposition of policies which have the effect of complicating his position at home.


t first, the Castro Revolution brought an improvement in the livingof most Cubans. Though drastic changes in the distribution of personal income deprived the upper and middle classes of their luxuries as well as their pnvilegcd status, the poorer classes benefited from such things as impioved housing and diet,ignificant expansion of education and medical care., however, population growth and economic stagnation haveeneral decline in the level of living of nearly all Cubans, especially in the towns Shortages of food and clothing have become common, in pert because of production failures and inefficiency of distribution, and inidespread rise in purchasing power. Campaigns of "volunteer" labor in agriculture have forced the urban population to work harder than ever before, and have proved upsetting to the traditionally close Cuban family life.

In the past tbe Soviets supported the violent path to socialism In Latin America when the oppnrtuMHes looked prooustngn Vertezuela endnd they may do so againutureseems to favor suchapproach.

it least unbl recently, manytbe many mouaands of students supplied with lodging, food, dothing, and other needs by thewere better off than before the revolution.

uring the pastariety of factors has made living condition* more stringent. The drought affected not only sugar, but other crops as well. Theion of food may also have been depressed by the reaction of private farmers to new government pressures to sell all their produce to the state rather than reserve some for sale on the privatebe effects of loweron the food supply probably have been compounded by some dcteriora-tion of the distribution system over the past iii months or so. The campaign to conserve fuel, and the increased efforts to draft labor from ncttiagiicultural occupation! for farm work, appear to have caused some dislocation of thestrained and inefficient transport and distribution networks. The situabon may have been affected further by some hoarding and try the scare buying of foods which normally have been freely available. All these factors have added appreciably to Cuba's food shortages, despite the substantial increase in food imports tbat apparently has occurred over the past year. Thus, more often than In the recent past, Cubans in the towns find tbat their full rabon is un-


Since the startastro haseries of measures which, coupled with worsening food supplies, have caused some open discontent and small local disorders The first of these new moves was the rationing offuels, an action which has not only Lmited the public distribution of commodities, but has also restricted individual mobility. Once again, many thousands ol "volunteers" were conscripted to bring in the cane harvest, but this year the campaign seems to have been more disruptive both of family life and of iionagncultural production. More workers were conscripted and sent long disursces from home, the working conditions of the harvest have been more onerous, and the pressure for greater revolutionary commitment and sacrifice has intensified.

In March, Castroumber of restrictions which herevolutionary offensive against the last vestiges of capitalism andhey were, inontinuation of Ihe assault againil the traditionallyCuban style of life. He nationalized0 small businesses; he then closed some of them (including most bars) which had provided muchservices and diversions for the populace. In addition, Castro ended cockfighting and the national lottery, charging that they were breeding grounds for greed, and be imposed some forms of military- discipline at Havanawhere he had previously tolerated some "mod* habits and Uxness oL behavior among students. Paralleling these changes has been an increased

'Aboutercent of Cuba's agricultural land sol!he hands of private larnrav who produce the great bulk of crops Other than sugar.


dobyTL progress of the Revolu

robably been ,0

the clraboess and inconvenience of evcrvdav^


m His regime offered the poorer oerrl-

a sense of personal dignityhance ton the maionT of HL

fits have been raamfullyoming, and popular enthusiasm for the Revo-

olutionary caudX ha, proved durable even when his regime has usedZs agaiml

P^n- I" any case, most Cubans probably see

aWtudeeofto helpless

nirm hold

ReTtT the objectives of Ae

Revolution, and on .ts failures as well as its successes. Thus, he has general avoided the kinds of outbursts which might have been based on suL^or sudden disappointment So far he has succeeded in focusing discontent with mtenal progress on external causes, and in insbtutfonalizing the belief that

less Nonethe-

less, the effectiveness of these tacticsiversion from mountine persona)

dissatisfaction with the fruits of the Revolution probably has begunM. Through the organizationepressive force which is recognized by all Cubans as proficient. Castro has discouraged both impulsive

someds more are in rehabilitation

camps. Unlike most Communis,astro has made no move to prevent large-scale emigrabon, though the drain on Cubes malified professional and

managerial manpower has been severe.umber equal to Eve or six percent of9 population, have settled in the US alone,arge backlog awaits assignment to the two daily flights for Florida. Thus, both the harsh penalties for opposition to the Revolution and Castro's Uberal emigrabon policy have diminished the prospects for resistance.

inally, Castro has surrounded himself In the regime almost entirely withh of July partisans who recognize that they owe their commanding pojitiooj and well-being to him. This year be purged tbe so-called "nucrofac-Don" from the Cuban Communist Party for their criticism of his domestic pobcies and of the "export ofe thereby not onlyroup of relatively ineffective critics, but also warned members of the regime to sustain their loyalty. Thus, to the top echelons of the regime be remains tbe undisputed leader, and he retains his power to establish both the asnlrations of thean<4 heiracluevement.


cene Improvement over this year's economic performance is likely. Tbe prospects are that favorable weather, abeady evident inS, will lead to an increase in production of sugar and food over the next year, and this fact alone would somewhat relieve domestic pressures. Cains may also occur in industry and construction, in which there has been no significant recent down-tum. Export earnings may improve, especially if an international sugarwhich would raise world sugar prices, should be successfully concluded For the first time Castro is interested in such an agreement, and his demandsuota on the orderillion tons have received backingumber of otherew Sugar Council meeting may convene in September, and while many obstacles remain, tbe prospects for an agreement are better than at any time

ecause of Cuba's dependence upon agricultural development, which can proceed only slowly, and upon Soviet aid, which is unlikely to keep onCastro's Revolution almost certainly vill not begin to prosper over the next fewuccessful sugar agreement would improve Castro's prospects for importing from the noci-Cornmuiust countries, and would lessen bis dependence on the Soviets. Failing this eventuality, however, the outlook is for continued severe economic difficultiesignificant increase in agricultural export did occur, the USSR probably would adjust its Cuban aid slightly downward, as if has tended to do in the past in order to moverade balance with Cuba. (Seen no case, however, is It likely that tbe Soviets will allow the Cuban economy toritical condition, if only because tbey wish to avoid being associated with the failure of an enterprise in which they have invested so much.

FOREIGNMiifcon US $)




8 Estimated Projected

coon tries .


Free World






countries ..


Free World


wtth tbe USSR

by Soviet

^oo, .ugxr harvest iWe,.esport* will0

* These figures ioclud* con of delivery.

otfc goal for sugar production would

not by itself endanger his hold, particularlyrice-^porting suRarshould come into effect But tbe ccitinue/sacriEce whichattempt to extract from the Cuban people in trying to meetIT Wf?* several years

he performance of arduous agr?

Each time tbe Revolution has suffered iemands upon the population, but bis popu-larity and political skill have mitigated the negative consequences for his regime and his pragmatism has kept him from pushing the population too bard atany one tune. The men around himrucial stake in the survival of his re-

gime. Forthmnore, the Soviets probably see do potential alternative tov,-hom they could have conEdencc. These advantages will notmanv

But tbe repressive apparatus

stale- has been used to silence opposition, aod this will certainly continue to the extent Castro considers it necessary. We believe that some combination of thesethe possible restoration, albeit under state auspices, of some recently proscribed diversions andprevent the development of any major and threatening dissident movement in Cuba. In short. Castro;will probably continue to doniinate the Cubao scene at least for the period of this estimate, even though the level of discontent may continue to rise.

n the unpredictable event of Castro's death or incapacitation, we believe that the most likely outcome would be some form of collective leadcrshir *

In recent months. Fidelbecause of the harsh economic tuftMfl) developments in Cuba and the loss of his companion Che Guevara in thenshown little interest publicly in the "export of revolution" to tbe rest of Latin America. There is good evidence that would-be revolutionaries continue to receive some training and moral support from Cuba, however, and the propagation of revolutionasic tenet of Castro's philosophy. It is possible that he might try toew approach to revolution in Latin America within the next couple of years.

e believe thatroubled economy nor Soviet economic pressure will drive Castro toward the US for assistance or trade. Bather, he will seek to expand his trade with other noo-Communivt countries. Decisions by their governments about trade or diplomatic relations with Cuba will Increasingly tend to be based upon their appraisal of Cuba's credit-worthiness or their own direct domestic andlit.Va1 interests, taaaaaaaaaaaaaaaeeea

umber of prominent Latin Americans have speculated on the possibility of their governments' eventual recognition of Cuba; one notableof this possibility is the Foreign Minister of Brazil Such talk does not-mean that any Latin American government will reverse its policy toward Cuba over the next vear or two, but it does indicate that the subject is

In recentumber ol Latin American countries were mfluen-tial in bringing about the election of Cubaommission of the UN Economic

and Soda] Cental; thu appear, to reflect an interest in reducing that country's diplomatic isolation.

t seems most unlikely that Castro will unilaterally seekh the US. or that he would be responsive to direct overtures by the US on any sign.ficant issue except graduallyong period. One of the possible opportunities for change in the relationship would arise, under certain circum. stances, from an tatemationa! agreement on sugar. Castro wiD probablyto be interestedugar agreement, and be willing,avorable share of the international marketignificant price increase, to sign one.



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