Prosperity & Rebellion

Hotheaded partisans of Rebel Fidel Castro tried to close down the Cuban economy last week, and quickly discovered that well-paid workers do not become ardent revolutionaries. For six days, workers in pro-rebel Santiago de Cuba held firmly to their spontaneous general strike (TIME, Aug. 12). then gradually drifted back to their jobs. Most Havana workers, making near-record wages, ignored the call. Going up were four new skyscraper hotels. A new superhighway was snaking west from the city along the sea front, and underneath Havana Bay, a 20-lane tunnel needed only five more months of work before it would open up an entire new city--East Havana--being built across the bay.

Public Works. Prosperity is a key weapon in President Fulgencio Batista's struggle to remain in office. When the strongman moved into the presidential palace in 1952, he inherited an economy weakened by a huge sugar surplus that was depressing world prices. Batista slapped on acreage quotas, gradually unloaded the excess, even shipping sugar to the U.S.S.R. Prices started a gradual climb, now stand 30% higher than in 1953. He imposed greater discipline on the country's labor unions, granted wide tax and tariff concessions to new industry. In a calculated gamble, he began spending part of the country's monetary reserves for public works and to help private capital finance new businesses.

Investors were quick to take advantage of the new terms. In four years, new industrial investment totaled $612 million, including some $70 million of U.S. capital (bringing U.S. investment in Cuba, mostly in public utilities and sugar, to $750 million by last year). Projects completed or under way include the island's first steel plant ($16 million), two tire factories, new oil-refining facilities ($70 million), expansion of the U.S. Government-owned nickel plant at Nicaro ($37 million). The boom shows no sign of slackening. Planned for the future: a $147 million expansion program by a subsidiary of American & Foreign Power Co.. a $75 million nickel-mining operation by a Freeport Sulphur Co. subsidiary. Even tourism, one of Cuba's three top industries, has held up through all the political troubles. For tropical beaches, open gambling and a throbbing night life, an estimated 350,000 visitors will have spent $35 million by the end of this year.

Soft Spots. The boom has had its price. The national debt, only $202 million when Batista took over, now tops $700 million. International monetary reserves dropped from $593 million in 1952 to $333 million by last May. But the budget has been balanced for the past two years, and the reserves are still almost double the necessary minimum. National income this year is estimated at a record $2.2 billion.

One answer to the paradox of prosperity-plus-rebellion is that Batista and Castro supporters agree on many economic issues. Though the men who drop the bombs are often wild young radicals, the brains and money behind the movement come from a group of conservative business and professional men. They want free elections, but insist they intend no swing toward the left. Said one such Castro supporter: "This year I have earned more money than ever before in my life. This has left my mind at ease so I could concentrate on my revolutionary work."

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