Cuban universities cut enrollment; foreign investors are leaving

 

Juan O. Tamayo, McClatchy

 

MIAMI — Cuban universities have slashed enrollment by nearly 26 percent, apparently because of deep cuts in government spending, while several foreign investors are leaving the island, according to official and news media reports.

 

The two reports reflected the downsides of Cuban ruler Raul Castro's effort to fix the island's doddering economy by cutting state spending on education, health and food rations, and his campaign to carry out tight reviews of foreign investments amid a slew of corruption scandals.

 

Cuba's National Statistical Office, or ONE, reported this week that overall enrollment in universities - all state-controlled - dropped from 473,309 in the 2010-2011 school year to 351,116 in the 2011-2012 period. That's a drop of 122,193 students, or 25.8 percent.

 

The largest group of students, 118,914, was enrolled in medical sciences, reflecting the government's high interest in educating doctors, dentists and nurses - Cubans to staff the domestic health system or work abroad, and foreigners on scholarships to study there.

 

The biggest drop in enrollment was in social sciences, though it remained the second largest group with 77,200, according to the ONE report.

 

Cuba's Ministry of Higher Education sets admission quotas depending on the skills needed, but government officials have complained recently that universities are turning out too few scientists who can help modernize the economy and open new areas of production lines.

 

"Like other developing states, Cuba is trying now to push away from ideologically useful education - the social sciences and humanities - to job- and wealth-producing fields," said Larry Cata-Backer, a professor of International Affairs at Pennsylvania State University who has studied the Cuban education system.

 

Cuba's communist government has long boasted of its achievements in health and education - the record of 711,000 university students in 2008-2009 was a stunning figure in a country of 11.2 million - although both areas have suffered significantly since the Soviet Union halted its massive subsidies in the early 1990s.

 

The Health Ministry announced in January that it had cut its 2011 budget by 7.7 percent, and officials at the Higher Education ministry have noted that each university graduate costs the state 25,000 to 40,000 pesos - roughly $890 to $1,450.

 

Castro has trimmed the food ration card and other government subsidies, allowed more private micro-businesses such as barbershops and announced plans to slash 500,000 workers from state payrolls in hopes of "updating" Cuba's Soviet-styled economy.

 

His reform package, approved by a full congress of the ruling Communist Party last spring, also called for a more positive attitude toward foreign investments - only grudgingly accepted by older brother Fidel Castro before he passed power to Raul in 2006. Cuba generally insists on owning at least 51 percent of any joint venture.

 

The so-called "guidelines" noted that the government was negotiating with foreign investors for several projects, including at least four multi-million dollar golf and condo resorts, some with access to beaches or docks for recreational boats.

 

Cuba's desperate need for foreign investments has been especially clear since cancer struck Venezuelan President Hugo Chavez, whose oil-rich government provides Cuba with subsidies estimated at anywhere from $4 billion to $6 billion a year.

 

Yet Castro's plans to attract more foreign investments are off to a slow start because his government has focused more on inspecting and regulating than in stimulating the investments, according to an exclusive Reuters news agency report Wednesday.

 

The Reuters report cited Cuban and foreign business sources as saying that the island now has about 240 joint ventures and projects between the government and foreign investors, a drop from the 258 reported in 2009 and the 700 estimated a decade ago.

 

In fact, more joint ventures have closed than opened in Cuba since the "guidelines" were approved last spring, the dispatch by the Reuters bureau in Havana added.

 

Among those reported to have left are the London-based consumer product giant Unilever PLC and Grupo BM, a Panama-registered company controlled by Israeli investors that operates citrus groves and juice plants in Cuba.

 

Foreign investors in Cuba have been increasingly uncomfortable since early 2009, when the global financial crisis sparked a shortage of hard currency on the island and led Castro to freeze the bank accounts of joint ventures operating there. Castro has been slowly paying out the money, estimated at more than $800 million, since then.

 

The 2011 "guidelines," while making positive comments about foreign investors, also noted the need to establish "rigorous" regulations on the joint ventures, apparently because of the mounting corruption scandals involving foreign companies in Cuba.

 

In April, government investigators reportedly arrested British architect Stephen Purvis, who had been spearheading an ambitious project by Coral Capital Group Ltd. to build a 1,200-home golf resort just east of Havana.

 

Amado Fakhre, Coral Capital's managing partner and also a British citizen, already had been arrested in October. The firm, registered in the British Virgin Islands, was founded in 1999 to invest in Cuban projects.

 

Also caught in corruption probes have been top officers of the Tokmakjian Group and Tri-Star Caribbean, two Canadian trading companies that have sold foreign items, especially heavy construction and transportation vehicles, to government ministries.

 

Other scandals have hit Cuba's aviation, telecommunications, nickel, juice, cigar and other industries and led to the arrests or dismissals of scores of government officials - including Julio Cesar Diaz Garrandes, boyfriend of Castro's youngest daughter.

 

Most of the top Cuban government officials who handle deals with foreign companies, often worth several millions of dollars, earn much less than $50 a month and can be tempted to pocket bribes in exchange for throwing business to the foreign companies.

 

A dispatch from the U.S. diplomatic mission in Havana to Washington in 2006, made public by WikiLeaks last year, noted that corruption in Cuba was so widespread that the island has become "a nation on the take."

 

 

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