But the disputes within the revolutionary movement concerning the composition, nature, and goals of the new party were intensifying. A first ORI governing council was named on March 9. It consisted of thirteen Fidelistas and ten Communists, though some of the former were more loyal to the Party than to Fidel. The following weeks witnessed several attempts to restructure the leadership. Various public incidents, and a prolonged disappearance of Fidel, Raul, and Che, pointed to a bitter internal struggle.*4 It came to a head on March 27, when Castro issued a violent diatribe against Aníbal Escalante, accusing him of “sectarianism” (which encompassed all conceivable political sins) and ousting him from the ORI leadership. This led to a general easing of the hard, orthodox, Stalinist line which had prevailed in Cuba for several months.
Che had never approved of the ORI’s creation under the aegis of the PSP and Escalante. Along with Juan Almeida, Raúl Castro, and Osmany Cienfuegos, he played an active though discreet role in the investigation of Escalante’s activities, which led to his ouster from the new party.33 In an interview with an Egyptian magazine four years later, Che explained:
Escalante gradually began to take over all important positions. He used isolationist ideas which did not allow the building up of a popular party. … Some of them reached leadership positions and enjoyed various privileges—beautiful secretaries, Cadillac cars, air-conditioning, keeping the warm Cuban atmosphere outside.34
Despite the accusations against Escalante, little changed. Che did not yet distance himself from the Communists, though he began to view them differently. Something similar would occur a few months later with the Soviet Union—after the October crisis, especially once he detected the difficulties inherent in Socialist assistance to Cuba. The two issues were not unrelated. For many observers and participants, it was no coincidence that Castro launched his offensive against Escalante just a week after he instituted rationing for a large number of basic goods. The step was necessitated by a shortage of imports, due to pressure on the foreign-trade balance and a trade deficit with the U.S.S.R. Under the leadership of Ernesto Guevara, the Cuban economy was sinking rapidly.
Che was a man in a hurry—and not just in terms of the economy. As Fidel Castro confided to Régis Debray in January 1967, he was always one step ahead of the beat, both on the dance floor and in history.35 Che’s triumphant claims in Uruguay were only the tip of the iceberg. In Cuba he set foolishly ambitious goals, both for himself and for the island’s unhinged economy. Not without reason: the backwardness, shortages, poverty, and neediness of the masses, now dignified and emboldened by the Revolution, seemed to require immediate action—even if it eventually proved unsustainable. In Che’s view, with “85 percent of the economy in the hands of the people, as well as all the banks, essential industries, and 50 percent of agriculture,”36 the planning phase could now commence.
In mid-1961, he announced an ambitious four-year plan with outlandish goals:
the adoption of an annual growth rate of 15%; to be self-sufficient by 1965 in food and agricultural raw materials except in those areas where material conditions make it impossible; to multiply tenfold production of fruits and other raw materials for the canning industry …; to build 25000 rural homes and 25000 to 30000 urban homes …; to reach full employment within the first year of the Plan …; to keep consumer and wholesale prices stable; to attain a harvest of 9.4 million tons of sugar by 1965; to achieve an overall growth of food consumption of 12% annually.37
In a nutshell, Che sought to double living standards by 1965. The objective was to produce in Cuba most of the products previously imported; to increase consumption, if only of basic goods; and to extend education and health coverage to the entire population—all without reducing sugar output. The goals were admirable in themselves, but mutually incompatible. Che paid a heavy price for his lack of training and experience as an economist, but also for his eternal political flaw: there always prevailed in him a gap between strategy and tactics, the long and the short term, the grand vision and the daily workings of bureaucracy. Thus came about the collapse of the Cuban economy toward the end of 1961 and especially in 1962–63, as a consequence of both structural factors and management errors, largely acknowledged by Che himself in 1963.
The first error was to seek industrialization at top speed. Based on the Stalinist experience of the 1930s in the Soviet Union, it was further inspired by Cuba’s victory at the Bay of Pigs, by Socialist-bloc assistance, and by political haste. Even if the Eastern-bloc countries had delivered on time the factories needed to produce previously imported goods, creating the new working class Che prayed for, two critical problems persisted. The first, and most intractable, was the shortage of raw materials. Where was Cuba to obtain the coal and iron to produce steel, the oils to make soap, the material for clothing, the leather for shoes? A certain quota of raw materials could be covered by the Socialist camp, but many had to be imported from hard-currency countries. And there were no foreign reserves—which was precisely the second problem. This had two causes. One was the very success of the Cuban Revolution: consumption rose substantially, thanks to the downward redistribution of income and wealth, as well as literacy and vaccination campaigns. The second reason, like so many things in Cuba, had to do with sugar.
Notable advances had been achieved in education. Before 1959, 40 percent of all children aged six to fourteen did not go to school. By 1961, the proportion fell to 20 percent. That year’s literacy campaign reduced illiteracy from 23 percent to 3.9 percent (though these figures might not be entirely reliable). Altogether, almost 270 thousand teachers participated in the campaign, including 120 thousand adults.38 By 1965, the percentage of children enrolled in school surpassed the Latin American average by 50 percent, and was higher than in any other country of the region.39 Cuba built hospitals and clinics, organized vaccination campaigns, and made an enormous effort to train physicians, in order to replace those gone to Miami. All of this cost a great deal of money, generated further demands and aspirations, and provided few economic returns in the short term. But the political benefits were considerable, helping the Revolution overcome a severely trying economic situation.
Many foreign observers dismissed these advances. Some particularly perceptive ambassadors, however, like that of Britain, detected them and drew the relevant conclusions:
Since our own lives have become so much less pleasant, western diplomats here tend, I think, to forget how this section of the population sees the Revolution. Our social contacts are restricted to the few remaining upper middle-class counter-revolutionary Cubans—all naturally enough burnt up with prejudice and wishful thinking. We see little or nothing of the enthusiasm of peasants living in their new settlements, of the working class using former luxury clubs and the new public beaches for the first time, their children enjoying absurdly well-equipped kindergartens and sports grounds. Still more important are the natural and perfectly healthy emotional reactions of youth, most of it under-privileged, responding to a call to work together for a brighter future and a cause they believe to be just. We are badly placed to assess the strength of these emotions, of their convictions and of their feelings of loyalty.40
The problem resided in the meager domestic supply of goods and services, in the face of an ever-greater demand. This led to increasing imports which ate into already depleted foreign-currency reserves. Furthermore, exceptional projects like the literacy campaign or creating militias and sustaining them in a state of combat-readiness (independently of their social and political effects) also drew resources away from the domestic production of basic consumer goods.*5 Such goods soon became unobtainable in Cuba. Almost a year before rationing was introduced, on April 14, 1961, Che confided to the Soviet ambassador that it would be necessary, though politically disastrous, to ration cooking oil and soap.41 There had also been food shortages since the end of 1960.
A second factor complicated things even more: sugar, as always in Cuba’s history. Output was falling, due to drought, t
he early harvest of unripe cane in 1961, a more or less deliberate decision to reduce cultivated areas, and a shortage of manpower following the land reform: the guajiros who had received land refused, quite sensibly, to continue cutting cane.†2 Between 1961 and 1963, cultivated areas fell by 14 percent, mill capacity by 42 percent, and yield per hectare by 33 percent. In 1961, owing to inertia and the unseasonable harvest of immature fields, sugar production reached a record 6.8 million tons; in 1962, it plummeted to 4.8 million, and in 1963 to 3.8 million. A study by English and Chilean economists with full access to the files of the Ministry of Industries described the catastrophe as follows:
The unpredictable factors in the decline of 1962–63 were, first of all, the drought and, secondly, a deliberate government policy aimed at reducing sugar production to promote the longstanding objective of agricultural diversification. This decision … perhaps the single most important mistake in agrarian policy since the Revolution, was made at a time of great success, just after the 1961 harvest and the Bay of Pigs victory.42
The problem derived, in part, from an indisputable fact: the U.S.S.R. was not willing, or able, to bankroll Cuba’s extravagance indefinitely. As Theodore Draper concluded, the Cubans had behaved after 1960 as if the Soviets had extended “not a $100 million five-year credit but an unlimited account.”43 The Soviets were calling in their debts. The Cubans’ propensity for profligacy and negligence—fully shared by Che—is evident in a letter from the Minister of Industries to Soviet Deputy Premier Mikoyan, dated June 30, 1961. It includes a shopping list exorbitant in its cost and ambitiousness, requesting among other things: “an increase in the capacity of the first cast-iron processing plant, built by the U.S.S.R., from 250 thousand to 500 thousand tons; an increase in oil refining capacity from one to two million tons a year; chemical-industry and cellulose plants, valued at 157 million rubles; a thermoelectric plant for Santiago de Cuba, with a capacity of 100 thousand kilowatts; a variety of technicians and specialists.”44
The combination of all these factors had a devastating effect on the economy, leading to an acute imbalance in Cuba’s foreign accounts. Growing domestic consumption, plunging sugar exports, and a limited availability of hard currency bred an unsustainable deficit in the balance of payments, with far-reaching consequences for the future of the Revolution. The basic problem, as described by Hugh Thomas, was never solved—neither then, nor thirty years later. To escape the monoculture of sugar, Cuba needed to industrialize. To do so it required foreign currency, and the easiest way to obtain it, then as always, was by selling sugar. Perhaps Cuba could have saved hard currency by selling other commodities on a large scale. But the market for such an expansion was that of the U.S., which was now closed.45
Over and beyond these structural factors, a series of contingent circumstances also wreaked havoc with the Cuban economy. According to agronomists favorable to the regime, half the total production of fruit and vegetables was left unharvested in 1961 and 1962; bottlenecks in labor, transport, and storage had a calamitous effect on consumption and living standards. In March 1962, Fidel Castro had no choice but to decree rationing for a broad variety of staples: rice, beans, eggs, milk, fish, chicken, beef, oil, toothpaste, and detergent. Che had already presented an initial mea culpa on television, recognizing that he had designed “an absurd plan, disconnected from reality, with absurd goals and imaginary resources.”46
Moreover, aid from the Socialist bloc did not fulfill Cuban expectations. Though the Soviets and their allies delivered what they had promised in terms of quantity, the quality and timeliness of their assistance left much to be desired. Their factories, consumer goods, and industrial inputs were less advanced and of far lower standards than Che had foreseen. Already in 1961, in a meeting with the Soviet ambassador, he unburdened himself. His criticism was directed at the countries of Eastern Europe, but one may assume it was also directed at the Soviet Union:
Guevara noted that certain difficulties in the economy were being created by several Socialist countries. The Czechs, for example, have imposed a very tough trade policy on the Cubans, which in Che’s opinion sometimes resembles a relationship among capitalist and not Socialist countries.47
Finally, a number of administrative choices executed by Guevara himself—based upon his theoretical views—obstructed his management of the economy. They included highly centralized decision-making within Cuban state industries, and his attempt to abolish currency transactions among state-owned companies. The magnitude of the bureaucratic apparatus in his hands was mind-boggling: the entire sugar industry, the telephone and power companies, mining, and light industry—over 150,000 persons and a total of 287 companies, including chocolate and alcoholic-beverage factories, printing presses, and construction firms. Che’s schemes regarding centralization and intercompany relations were evident from the moment he entered the Ministry, though they would not become points of friction with Soviet and Communist technicians until 1963–64, when they would be roundly defeated.
Initially weak, centralization became more and more pronounced. But from the instant the Ministry of Industries was established, every company had to transfer its total revenues to the Ministry’s accounts; in return, each firm received the funds required to continue operating, for both current expenditures and investment. No company was allowed to keep cash. In addition, there were no monetary transactions among companies—so there was no possibility of a market. The Ministry’s visionary projects for expansion bore no relation to reality:
There were complicated plans to exploit the mineral deposits of Oriente so Cuba would become self-sufficient in steel, to build machinery of all types, including mechanical sugarcane cutters, to create a new oil refinery, build new electrical facilities, expand the chemical industry, produce paper from cane trash and rubber from butane. … Since Cuba had such large nickel reserves, why should it not be the second largest producer in the world?48
Che’s remarkable order and discipline served him well at the Ministry; but they also had their serious disadvantages. He expected others to impose the same degree of organization, punctuality, and attention to detail upon themselves as he imposed upon himself, and sincerely believed this would somehow resolve the Ministry’s countless technical problems. One of his assistants recalls how Che administered the agency. He would arrive exactly at eight, and everybody had to be present at the morning meeting. At 8:10 he would close the Council door and nobody else could then enter, not even the deputy minister; and he would end at 12 sharp, even if someone was in the middle of saying, “I know how to overthrow imperialism in two days.” At noon precisely Che would say, “Gentlemen, I’ll see you in the afternoon.” He had an amazing capacity to summarize meetings, presenting the conclusions of a three-hour session in ten minutes, and was in general exceptionally well organized: “Che did things nobody had done in Cuba before.”49 As another colleague, who had in other respects serious grievances against Che, remarked: “Che brought Cuba an administrative competence and diligence it had never achieved before, or ever since.”50
This discipline existed alongside a compulsion to organize and micromanage everything, regardless of the damage done by similar efforts in the USSR and Socialist countries—which were, in many ways, better placed to succeed. According to the same aide, the Ministry’s general policies were discussed at bimonthly meetings lasting the entire second Sunday of every other month, beginning at two in the afternoon and sometimes ending at two or three in the morning on Monday. Factories were grouped together by companies; the companies belonged to sectors, and the sectors supervised the companies. The person responsible for the mechanical sector, which consisted of nine companies, had at his fingertips all the production figures of the companies, as well as all the factories in the companies. He was accountable to a deputy minister of light industry, who had four sectors, and that deputy minister reported to the minister, who controlled all three departments: light industry, heavy industry, and industrial management. On the second Sunday
of each month, rain or shine, Che discussed anomalies company by company—why it had not reached its production goals, in what category, and so on.51
The real origins of this extreme centralization and the ensuing complicated relations among companies were not exactly the ones Che suggested later on, during the dispute with his opponents. When the expropriations began, in 1960, some nationalized companies possessed ample funds of their own, while others were either flat broke or had very meager cash flows. At the INRA’s Department of Industries, and especially at the National Bank, Che decided that all companies should deposit their resources in accounts at the central bank so they could be distributed according to the strategic priorities of the Revolution. The idea was not absurd, especially if one considers that revolutionary cadres tended to be better qualified at higher levels—say, at the National Bank—than within individual companies.
However, Che overestimated the administrative strengths bequeathed by Cuban capitalism to the Revolution, proclaiming real but insufficient reasons to promote centralization: the island’s excellent communications (highways, telex, telephones), as well as its advanced accounting practices and the small size of the country. Once the decision was taken, it was easy to justify with all sorts of considerations that would make centralization more viable in Cuba than in the USSR. For instance:
We are a small, centralized country with good communications, a single language, an ideological unity that is growing ever stronger, a unified leadership, an absolute respect for the highest leader of the Revolution, where there are no discussions, there is a unified management whose power nobody disputes. … The entire country is mobilized on behalf of a shared goal, if our cadres were obliged to travel due to any serious administrative problems, it would not take them more than one day because we even have planes; and there are telephones, telegraphs, now we are going to link all the companies through a telephone and microwave system.52
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