On June 18, Manuel Marrero Cruz, the Cuban prime minister, unveiled a 176-point program to radically restructure the Cuban economy. Marrero appealed to his audience at the National Assembly of Popular Power with the argument that “socialist planning does not exclude but must incorporate and regulate the rules of the market.” As it is customary in Cuba’s one-party state, what political leaders do not openly declare can be more important than what is explicitly stated.
Thus, Marrero said nothing about the reforms being motivated by the repeated ultimatums of President Donald Trump and Secretary of State Marco Rubio to the Cuban government to make radical changes towards the market and capitalism. Otherwise Cuba would face even more drastic escalations of the blockade implemented by Trump, which included blocking the Cuban government from importing oil, thereby extending the blackouts that the Cuban people have been suffering for months. Moreover, Trump effectively pressured several shipping companies such as Hapag-Lloyd and foreign hotel chains like the Spanish Meliá to abandon Cuba. In the context of Trump’s loud support for the rightward move of Latin American countries such as Argentina, Chile, Bolivia, Colombia, and Peru, the measures against Cuba must be seen as part of what the Cuban writer Rafael Rojas aptly called “the road towards a recolonization of Cuba.”
A central element of the 176 reforms presented by Premier Marrero is to bring Cuban state enterprises as close as possible to regular capitalist enterprises while avoiding the Cuban state’s total loss of economic control. Thus, while the government will maintain majority control of the state enterprises, these will be able to buy stock in other enterprises as well as to sell their own stock to any investor including foreigners and Cubans residing abroad. Businesses established with foreign capital no longer have to select and employ personnel with the government acting as a monopolistic employment agency and can freely import from abroad whatever they need to run their enterprises.
Since cooperatives will also be allowed to directly import from abroad, this measure will deal a major blow to the Cuban state’s monopoly of foreign trade. Considering the present crisis of Cuban agriculture—80 percent of the food is imported—the government will invite private enterprise to invest in government-owned land that will be granted to them in usufruct, i.e. they can be cultivated for profit but not bought and sold. Other measures round out the clear market orientation of the proposed reforms such as the elimination of price controls and the replacement of the universal subsidy of basic products through the tarjeta (ration card), the value of which had already been declining with income-tested aid limited to the most vulnerable people.
Marrero also promised to significantly reduce the activities in which private businesses have not been allowed to operate from the current 125 to 55. Until now the so-called PYMES (small and medium private enterprises) were not allowed to employ over 100 workers. That limit will now be lifted while enterprises that hire over this limit will no longer be referred to as PYMES but simply as private enterprises. Marrero also vowed to implement critically important proposals that had not been put into effect such as the establishment of bankruptcy, liquidation, and restructuring procedures for companies with sustained losses. The introduction of bankruptcy in China in 1986 (later elaborated in 2007) was a major step in that country’s evolution towards a form of state capitalism.
Not surprisingly, Cuban workers in the new entrepreneurial order will become its sacrificial lambs, as the veteran Cuban economist Pedro Monreal called them . In his speech introducing the reforms, Marrero made it clear that the salary levels negotiated by the workers and their unions must depend on the economic and financial capacity of the individual enterprises, very possibly making industry-wide or nationwide salary levels irrelevant. Bearing in mind that these unions are not free but totally dependent on the Communist Party and that there is no right to strike in Cuba, the planned reforms bodes ill for Cuba’s workers.
Cuba’s proposed changes reflect the influence of the economic changes introduced by China after 1978 and by Vietnam after 1986. Although the state will retain control over strategic sectors of the economy, the role of private capital and the market will be greatly enhanced. Soviet perestroika (economic restructuring) was accompanied by glasnos t (political liberalization), but this has not been the case in either Vietnam or China. Nor is the Cuban government even considering such a political course for the country. Of course, there is the far-from-remote possibility that these proposed changes could soon degenerate into widespread managerial self-dealing and open corruption to produce a Putin-type regime on the island.
Will these proposed changes persuade Trump, Rubio, and company to alter their current policies towards Cuba? Will Cuba be Venezuela 2.0?
Besides the absence of great oil riches in Cuba, the island has other important differences with Venezuela. In the first place, the Cuban regime is more firmly implanted in Cuban society than was the case for Maduro’s or even Chavez’s Venezuelan governments. In addition, there is no Cuban opposition focused on a particular Venezuelan leader such as Maria Corina Machado who has been able to rally Venezuelans behind her (right-wing) opposition banner. Most important of all, Trump and Rubio have reason to worry about major bloodshed in Cuba that would very likely provoke a massive wave or refugees reaching South Florida. The great majority of Venezuelan refugees ended up in Colombia and Peru (4.4 million people) instead of the United States (approximately 600,000 individuals). Currently, the Trump administration is busy deporting Cubans, more than 4,000 of whom have been sent to Mexico.
Finally, the Trump administration has many other things to worry about besides Cuba. Contrary to Washington’s claims, the situation in Iran has not been fully settled while the midterm elections when the Republican Party may lose the House of Representatives and perhaps even the Senate are getting closer. Moreover, Trump must be concerned with the mostly conservative Cuban Americans that account for approximately 5 percent of the Florida electorate. These factors may act as deterrents to Trump engaging in another foreign imperialist adventure, at least in the next several months.
But that does not at all mean that he will be satisfied with the recent Cuban economic concessions. In fact, the State Department recently dismissed the proposed reforms as “modest” and “ultimately superficial smoke signals,” announcing that it “would continue to pressure for much more substantial reforms that would make Cuba investible.” Thus, it is difficult to predict whether Trump will substantially modify if not entirely abolish his harshly reinforced U.S. blockade even in response to possible further Cuban reforms.
On the Cuban side, the government may not even carry out the proposed changes. In fact, many Cubans doubt that they will be implemented considering their government’s past record of promising far more than it was willing to deliver. However, this time is different since the U.S. government is very seriously threatening the Cuban leadership unless they change their policies. Of course, there might be bureaucratic passivity or even resistance that might be motivated by bureaucratic ambitions and by fears regarding their employment security. On the demand side, foreign or Cuban investors abroad might not be interested in investing in Cuba because of a lack of trust in the Cuban political legal and political systems as guarantors of property rights. Moreover, the poor state of Cuban infrastructure—indispensable for efficient transportation and for the effective provision of electricity, sanitation, water, and other public services—may act as disincentives for new investments from abroad.
The Cuban people have had no say either in the preservation of the old antidemocratic bureaucratic order or in the design of the new state capitalist arrangements. The mostly peaceful nationwide protests of July 11, 2021, and the more local protests that followed resulted in the imprisonment of over a thousand Cubans, some with long prison terms, but have had not brought about a democratization of the country. It is time for a democratically elected Constituent Assembly to decide for itself the nature of a post-Communist system, and whether it will consist of capitalism from above or political and economic democracy from below.
Should such a new economic order carry an intolerable price in terms of growing U.S. control and increasing inequality? Should it also weaken public health care and education by privatizing them for the well-off? Despite their substantial decline, most Cubans still treasure these services. The Cuban people and not the market should democratically decide such hugely important questions.
The post A New Cuban Economy? appeared first on Foreign Policy In Focus .