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.