Cuba: Opening Pandora’s Box?

By Fulton Armstrong

Cuba constitutional reform

Reading about the constitutional reform project in Cuba. / Twitter: @SoberonGuzman

The constitutional reform process that the Cuban government is undertaking — controlled and cautious — and adjustments to one or two regressive regulations may be setting in motion political dynamics that will fuel pressure for more change.  After months of consulta popular, the constitutional drafting committee is preparing a new draft for consideration by the National Assembly during a two-day session beginning December 21.  Current plans are still for it to be subjected to a referendum vote in February 2019.

  • Skepticism about the real impact of the consulta, which reportedly resulted in hundreds of thousands of written comments, is deep, but most non-governmental observers believe that participation was so strong that the popular input had an impact. Debate about Article 68 — establishing the constitutional right of same-sex marriage — was most obvious.  Evangelical churches, with Catholic support, led the push against it, organized demonstrations, and circulated posters easily visible on Havana streets.  Local observers report that government officials were surprised by the mobilization and, fearing the article will spark abstention from the referendum or votes rejecting the whole constitution, now face the challenge of balancing the forces for and against it.
  • Debates are reportedly also taking place, including among senior officials, about the role of the Communist Party. Observers say that the party has accepted its subordination to the constitution and laws of the country, but — while it will remain the “fuerza dirigente superior de la sociedad y del Estado” — there reportedly is no consensus on its exact role and relationship with the government.  Another controversial provision deals with vague limits on the “concentration of property” versus the “concentration of wealth.”

The government’s handling of opposition to regulations announced last summer (but scheduled to take effect this month) has also left opponents — justifiably skeptical about any government signals of compromise — wondering where process and policy are headed.

  • The day before a regulation tightening controls on private sector businesses was to be implemented on December 7, the government rescinded several harmful provisions. Under the original version, Cubans could hold only one business license, and private restaurants could have no more than 50 chairs, but both measures were overturned as a result of private sector complaints, according to Labor and Social Security Minister Margarita González.  In a speech to law students, President Díaz-Canel reportedly emphasized the importance of cuentapropista input as well.  There were also hints of a softening of a regulation increasing government control on artists — requiring their credentials to hold shows be validated by a government office — when the government delayed implementation and said it was subject to further elaboration.  With both regulations, officials tried to appear to be listening to the strong opposition they faced.
  • The government has left in place, however, new controls on private transportation operators, particularly the ancient private vehicles (almendrones) running on established routes where public buses are lacking. The government claimed drivers were overcharging, not paying taxes, and not maintaining their cars adequately.  The measure itself, as well as many private drivers’ work slowdown and surrender of their special transport licenses in protest, have significantly hindered Havana citizens’ ability to get around the city.  The government has announced that it is importing several hundred microbuses to cover the routes but has given no sign of compromise on the regulation.

The road to reform in Cuba is littered with unfulfilled expectations; the skepticism of common folk affected by the revised constitution and various regulations, as well as government opponents, is not unwarranted.  It is impossible that the National Assembly could give the thousands of proposed changes to the constitution draft serious consideration in a two-day session.  But some aspects of the ongoing processes, such as the government’s recognition of affected sectors’ concerns, appear likely to create new expectations of government attentiveness and even civic participation.  Non-fulfillment of those expectations may not lead to destabilizing protests in the short term, but it would be yet another negative signal about the Party’s willingness to allow the country to evolve toward the new and more stable model it has claimed interest in establishing since 2011.  The public statements of former President Raúl Castro, President Díaz-Canel, and others suggest awareness that, in the post-Castro era, legitimacy will come from economic results and improved living standards – which require broader and deeper public inputs into policymaking.  Everyone will be watching whether the recent, partial consultations were a short-term show, an experiment, or a hint of a shift in approach.

December 18, 2018

Cuba: Sticking to the Plan

By Fulton Armstrong

Miguel Diaz Canel

Cuban President Miguel Díaz-Canel. / Irene Pérez / Cubadebate / Flickr / Creative Commons

As Cuban President Miguel Díaz-Canel passed the six-month mark in office this month, his administration – not surprisingly – continued to produce no surprises.  His rhetoric and policies, similar to the package of constitutional reforms now undergoing consulta popular and scheduled to be approved by referendum next February, are an extension of Raúl Castro’s tightrope walk between continuity and gradual change.

  • Speaking at the UN General Assembly in September, Díaz-Canel condemned the “selfishness and exclusion” of capitalism as the cause of poverty, instability, climate change, and other ills. He also proclaimed, “The generational change in [Cuba’s] government should not deceive the enemies of the revolution; we are continuity, not rupture.”  He welcomed the almost-friendless Venezuelan President Nicolás Maduro to join one of his biggest public appearances.  Showing his pragmatic side, however, Díaz-Canel also met in New York with U.S. technology companies and icons of U.S. capitalism – Google, Bloomberg, Microsoft, Twitter, and others – declared his hope to “computerize [Cuban] society,” and welcomed the announcement of the first U.S.-Cuban biotech joint venture.  Upon his return to Havana, he launched his own Twitter account.
  • On economic reform, Díaz-Canel has continued the same halting approach toward market socialism as did Raúl. New regulations announced in July, to be implemented in December, seemed designed to restrain the growth of the private sector rather than accelerate the reform program.  New mechanisms to ensure that cuentapropistas pay more taxes and operate within the law will dampen their growth in the short term and aggravate contradictions in current policies – for example, curbing black-market purchases of supplies without creating wholesale markets for them.

Ongoing national discussions on constitutional reforms, launched by the National Assembly in July, are compatible with Díaz-Canel’s approach to change.

  • The new document reaffirms two tenets of the Communist Party’s revolutionary platform – the party’s continued leading role as sole political representative of the Cuban nation, and a commitment to a socialist system in which state property predominates and universal social services remain free. But, importantly, the draft omits the goal in the 1976 constitution of “building a Communist society,” signaling the leadership’s recognition that private property and markets will be a permanent feature of the new Cuban model.  It reconfigures policymaking processes to increase efficiency (such as by formalizing the position of Prime Minister), increases the autonomy of local government, and separates more clearly executive and legislative functions.  An amendment allowing same-sex marriage has sparked heated public debate and given rise to an unprecedented political organizing drive by churches opposed to it.
  • The amended constitution does not significantly expand the space for private enterprise, but it provides a stronger legal foundation for the reforms that have already been implemented in various waves since 1992. The draft also strengthens protections of Cuban and foreign-owned private property and investment, providing guarantees against future expropriation.

When introducing changes over the years, the government has routinely, if not obsessively, emphasized continuity – and Díaz-Canel’s administration is proving to be no different.  The signs of change are often nuanced, whereas hardline positions, which tamp down progressives’ expectations and assuage conservatives’ anxieties, are unmistakable.  Díaz-Canel’s adherence to Raúl’s program gives him both essential political cover emphasizing continuity as well as a platform for continuing gradual change.  That formula doesn’t help him with some major challenges, such as the need to unify the country’s two currencies, that have loomed large for several years.  But Díaz-Canel’s gradualist approach – particularly if enshrined in a new constitution next year – is compatible with the view held by many Cubans that change should be evolutionary, not disruptive, even if they wish it went faster.  Washington’s curtailment of bilateral normalization is depriving the private sector of much-needed resources to drive change, but the country’s continued international outreach and expansion of internet access have given entrepreneurs a moral, if not economic, lifeline.  Cubans have often said they’ll do change “their own way,” and Díaz-Canel, with his abundance of caution, may be leading that process. 

October 31, 2018

Cuba: Change in the Wind

Three American University professors recently traveled to Cuba for research and discussions on Cuba’s reform process – called “Updating Socialism” – and the island’s relations with the United States.  Today’s entry looks at the economic changes.

Photo by: Globovisión | Flickr | Creative Commons

Photo by: Globovisión | Flickr | Creative Commons

In offices, shops and on the street in Havana, “change” seems to be one of the most commonly used words.  Billboards proclaim “The changes in Cuba are for more socialism” and “Updating socialism is the answer.”  But the words “reform” and – in some conversations – “privatization” pop up with significant frequency.  Party members previously reluctant to talk about change now speak of introducing “elements of capitalism” to make Cuba a “mixed economy” patterned closely after the “Vietnam model,” with its economic loosening but one-party rule.  Previous reforms have brought better, if sometimes expensive, food to many Cuban dinner tables, but the strong consensus in and outside the party is that a lot more needs to be done.

  • The law-decree on “non-agricultural cooperatives” provides a politically correct way ahead for the formation of small and medium private enterprises.  Cuentapropistas were given a prominent place in the May Day parade, and some are being nominated for office on the Communist Party slate.
  • The government is making another run at tearing down the barriers between hard-currency and peso purchases, with an eye to unifying the currency in the future.  Price tags at at least one major Havana store list prices in both convertible and national currency, at a 23-to-one conversion rate.
  • The law already allows Cubans to hire workers – a right previously given only to the state – and a draft labor law will further legalize private workers’ activities and integrate them into the economy.
  • Some 200-plus state enterprises are being put on a sink-or-swim program in which new management selected by the workers will be given a year to transform the firms into businesses closely resembling private cooperatives.
  • In January, the National Assembly will take up amendments to foreign investment laws.  Under consideration are direct foreign sales to non-state cooperatives and the direct hiring, firing, and paying of Cuban workers by foreign companies.
  • The travel reform law that goes into effect on January 14, ending the necessity for an exit visa and removing restraints on most Cubans from obtaining a passport, will also stimulate interaction with foreign countries.

The macro situation is still a mess, and the reforms have a long way to go to attain even the level of Vietnam’s prosperity.  Cuban stores sell Vietnamese cookies, not vice versa.  As the rhetoric indicates, the government – long expert at managing popular expectations – continues to emphasize continuity as the changes proceed.  But while no one is expecting a fast shift to capitalism, many middle-aged and elderly Cubans have a renewed sense of hope that life ahead will be better, which has political benefits and risks for the government.  One thing for sure is that the socialism that is being “updated” is a far cry from the communism that Cuba attempted in the 60s, 70s and 80s.

Cuban National Assembly Takes Modest Steps on Reforms

Photo by Nathan Laurell via Flickr http://www.flickr.com/photos/nglklm/7146331353

Speaking to the two-day semi-annual session, President Raúl Castro reiterated the leadership’s commitment to undertaking the reforms outlined in the Sixth Party Congress last year.  He didn’t explicitly address concerns reported in international media that implementation of the reforms has been halting, but he announced several concrete steps to be undertaken this year.  Among them is the creation of non-agricultural cooperatives – allowing a new form of private enterprise in 222 business areas and announcing government loans for them – and greater decision-making autonomy for state enterprises.  The Assembly passed a new tax law, details of which have not yet been published.

Castro was a little defensive about the lack of an “updating of migration policy” – widely understood to include lifting the requirement for exit visas – while “ratifying the will of the Party and State leadership to carry out the reformulation.”

From the beginning of the current round of reforms, Raúl Castro and the Communist Party have cautioned that the changes will be introduced gradually and adjusted during implementation.  The credible reports of frustration with the pace of change notwithstanding, the National Assembly appears to have validated that getting the reforms “right” is more important than doing them fast.  The government probably calculates that the new cooperatives and tax law are important elements of an infrastructure for change, but slow or partial implementation will undermine them.  The perennial question remains whether the government’s concern with control discourages important energy among the individuals it is counting on building the new limited private sector.