Cuba’s economic and financial situation may become “fatal” within two to three years as the Communist island-nation has been slow to respond to the global financial crisis and accumulates foreign debt, a confidential U.S. diplomatic cable said.

The cable, released yesterday by WikiLeaks, cited Italian diplomats as saying that Cuba may “become insolvent as early as 2011.” It was sent in February before President Raul Castro announced plans to cut more than 500,000 state jobs in a bid to reduce inefficiencies.

The cable described a breakfast hosted by the U.S. Interests Section in Havana for diplomats from most of Cuba’s main trading partners, including China, Spain, Canada, Brazil and Italy. France and Japan, among the country’s largest creditors, were also present.

“All diplomats agreed that Cuba could survive this year without substantial policy changes, but the financial situation could become fatal within 2 to 3 years,” the cable said. “Promised structural reforms remain on hold while the Cuban government wrings its hands in indecision, fearful of the political consequences of these long-overdue changes.”

Chinese diplomats at the breakfast objected with “visible exasperation” to what they said was the Cuban government’s insistence that it have a majority stake in all joint ventures with foreign businesses on the island, according to the cable.

“This is another one of the famous predictions that the U.S. government has made for 50 years to try to discredit the revolution and the Cuban government,” Alberto Gonzalez, spokesman for the Cuban Interests Section in Washington, said in a telephone interview.

Cuba’s economy is suffering its worst slump since the former Soviet Union ended its support in the 1990s. The government stopped making debt payments to foreign countries and companies, according to the cable.

WikiLeaks, an organization that publishes secret documents on its website, last week began posting what it says are more than 250,000 State Department cables. Secretary of State Hillary Clinton said Nov. 29 the disclosures could hurt negotiations and endanger individuals.

State Department spokeswoman Nicole Thompson said Nov. 28 the agency won’t comment on specific documents.