Despite US Coercion, Cuba Dips Toe into Capitalist Zones CASTRO'S COME-ON

Article excerpt

If Cuban authorities have their way, this quiet port an hour west of Havana will soon become a center of international commerce, the first free-enterprise zone in this Communist country.

Manuel Pacheco, a technician in the town of 20,000, can't wait.

"For 30 years we've had a Soviet-style economy," he said, sitting in a rocking chair on his porch. "Now we need to have elements of capitalism in order to solve our problems."

Today, the country's economic health depends on foreign investment. But US pressure, especially the Helms-Burton Act, which targets foreign investors in an effort to force democratic reforms in Cuba, has begun to take a toll on an economy already made stagnant by President Fidel Castro Ruz's policies and the loss of trade with ex-Communist nations.

To avoid collapse, Cuba has moved in recent years to allow foreign investment, self-employment, and the possession of dollars.

The proposed free-enterprise zone for foreign investors and traders is the latest evidence so far of Cuba's move toward a mixed economy. But a dependence on foreign investment has made the Castro government more vulnerable.

Despite continuing American pressure, Cuba has little choice but to continue to try to attract foreign investment, which has reached $2 billion, according to official statistics.

The acceptance of free-trade zones - once seen as a symbol of capitalist exploitation - suggests the extremes to which Cuba is now willing to bend its communist principles in its attempt to woo foreign investors.

Under the Law for Free Trade Zones and Industrial Parks, approved last month by the Cuban legislature, maritime, commercial, and industrial zones are being considered. Companies that set up factories in free-trade zones will be granted the right to ship raw materials into Cuba, assemble them using Cuban labor, and export them tax free.

With a highly educated work force and basic wage of about $10 a month, the Cuban government is confident that the proposal will take off. Mariel residents say that the government is planning to build a massive complex of warehouses, shops, and factories. Cuban officials, meanwhile, have kept mum about their plans.

BUT questions remain whether investors will flock to Cuba, given the economic climate created by the Helms-Burton Act. Congress passed it after Cuban MiGs shot down two civilian planes in February. The law targets foreign investors in Cuba who profit from properties expropriated from American citizens or companies after Castro took power in 1959.

"The Helms-Burton law will slow our economic growth, but it will not push back our recovery," Cuba foreign relations official Carlos Fernandez de Cossio said. …