The Cuban government wants to radically change the island’s economy and has undertaken unprecedented reforms since the triumph in 1959 of the Revolution led by Fidel Castro.
This year began with the implementation of the “monetary unification” that led to the disappearance of the CUC , one of the two legal tender currencies, and resulted in an inflationary spiral on the island.
And at the beginning of this same month of February, an expansion of the activities was decreed in which Self-employment is allowed, which go from 127 to more than 2, 000, which would significantly increase the role of the private sector in the economy.
Attached for decades to a Soviet-inspired central planning model, Cuban reforms seek a modernization of the economy whose design has actually been reflected in the doc for years Official elements of the Cuban Communist Party (PCC).
The government calls it “Task Ordering”, a program to “make the economy more productive and efficient.”
Cuban economist Juan Triana Cordoví describes the reforms as “ambitious” although, he says, “they should have been approved long ago.”
BBC Mundo requested comments from the Cuban authorities, but received no response.
Why now
Cuban analyst Carlos Alzugaray told BBC Mundo that “these measures have taken a long time.”
“The crisis of the pandemic and the four years of Trump’s sanctions have brought the economy to a situation in which there is no other choice but to implement the changes,” says Alzugaray.
Hit by falling tourism revenue from the coronavirus pandemic, the island’s gross domestic product contracted by 2020 a 11% and Cubans s have become accustomed in recent months to living with the shortage of basic products and long lines to get supplies.
The situation is reminiscent of the so-called Special Period of the decade of 1990, when the fall of the USSR left Cuba without its great international supporter and forced the government to adopt draconian economic measures.
The strategy of controlled opening of the economy saw the light in the Economic and Social Policy Guidelines approved by the Congress of the PCC already in 2011, but a decade later only a few partial reforms have taken place. Others were reversed after the arrival of Donald Trump to the White House in 2017 and the end of the Obama-era rapprochement with the United States.
Arturo López-Levy, professor of International Relations at the Holy Names University in the United States, believes that “the government lost many opportunities to undertake reforms in a more favorable context. ”
What economy does the government want in Cuba
When the guidelines were approved, the PCCC declared that the The objective was to “update” the Cuban Revolution, but without renouncing central planning.
Raúl Castro, its other historical leader and great promoter of the reforms, has made clear on more than one occasion that, As established in its Constitution, Cuba is a socialist State.
In recent years, the debate on which economic model to bet on and how far to open the economy to private initiative has intensified within the Cuban ruling party .
References to the “Chinese model” and the evolution of the Asian superpower towards a booming and dynamic economy are repeated without this implying a political opening nor put an end to the one-party system, a fear rooted in the Cuban leadership and that Fidel Castro expressed several times throughout his life.
But Cuba does not have the huge population or the China’s incipient technology, which raises doubts that it will be able to imitate its model.
“Cuba is moving towards a mixed economy, in which private initiative coexists with the State, It will continue to control strategic sectors, ”says Alzugaray.
Indeed, the authorities reported that activities such as oil and gas extraction, or the production of sugar, tobacco and medicines will continue to be reserved exclusively for the State.
Triana points out that “foreign investment should play a key role” and that is why the government has already taken steps to facilitate it.
Will the reforms be successful?
There are many obstacles and experts agree that, at least initially, the effects of the reforms will be painful for the population.
The abolition of the CUC, for example, aimed at To eliminate accounting distortions that prevented knowing the true situation of many state-owned companies, it has been accompanied by a sharp rise in prices that the agreed wage increase is not enough to compensate.
And the economy drags accumulated imbalances for decades that will take time to correct.
“Many state companies are not viable. How are they going to become viable if they don’t lay off workers? ”Asks Alzugaray.
- “People almost killed themselves for buying a pork tongue”: the tails and the scarcity that make Cubans fear a new “Special Period”
- “A sad bread costs 20 times more ”: the high inflation that Cubans must face after the end of the“ double currency ”´
Triana points out another handicap: “There is no fiscal space to support companies” that embark on a conversion process.
State-owned companies still employ millions of workers and employment alternatives are not yet envisaged in a private sector that has not finished starting up.
In many of them, “bureaucracy and corruption” nest, along with that the Cuban president, Miguel Díaz-Canel, has identified as guilty of obstructing the s reforms.
Added to all this is an unfavorable international environment. “It cannot be forgotten that Cuba continues to be a country persecuted by the sanctions of the United States Department of the Treasury.”
- What impact does it have on Cuba that the US has included it again in the list of countries sponsoring terrorism
The limits of change
Despite all the clouds on the horizon, the experts They agree that Cuba has no choice and must reform its economy.
And yet, the leadership that has designed the new economic policy has also drawn red lines.
López Levy predicts that “it will be a market economy, but not a free market economy. ”
“ If that were the tone, the resistance of those who oppose the reforms from within the system would increase, ”he says.
To the Zugaray appreciates a “great fear in some sectors that a capitalist model will be reached in which large companies with foreign capital may have more power than the State” and believes that “carrying out these reforms without this implying a political change is the great challenge ahead of the Cuban Communist Party. ”
A challenge that will have to be faced with renewed leadership when this spring Raúl Castro permanently leaves his post as Secretary General, thus symbolizing the transition to reserve of the so-called “historical generation” of revolutionary leaders that, nevertheless, according to most analysts, will retain their influence in decision-making.
How much and how to implement the reform program promises to remain the essential question , both for Cubans from on foot who dream of improving their living conditions, as for Díaz-Canel and the new batch of Party cadres.
Remember to what you can receive notifications from BBC World. Download to our app and activate them so as not to miss our best content.
- Do you already know our YouTube channel? Subscribe!
