Cuba: Raúl Clarifies the Lack of Clarity on Future

By Fulton Armstrong

raul pcc congress

Photo Credit: Alexandre Seltz and Sarumo74 (modified) / Google Images / Creative Commons

The report that Cuban President Raúl Castro delivered to the 7th Party Congress last weekend walked a tightrope between pressing harder for change – embracing the importance of the small, emerging private sector – and reassuring party conservatives that the basic tenets of the revolution will not be touched.  He reiterated his commitment to step down in 2018 and promote younger cadre, but he left unclear what he proposes the Cuban system look like in the future.  He defended his decision to normalize relations with the United States, but used Washington’s continuation of the embargo and “democracy promotion” and immigration policies as a rationale for not letting down the Party’s guard.  Among key points:

On Conceptualización.  Castro said this Congress was basically to give “confirmation and continuity” to policies set five years ago to update Cuba’s economic and social model,  but it kicks off a process of consensus-building around a conceptualización, which he said “outlines the theoretical bases and essential characteristics of the economic and social model that we aim for as result of the updating process.”  Private property is a major topic, and Raúl sought to reassure the party that respect for it does not mean – “in the slightest bit” – a return to capitalism.

On reforms approved previously.  The road has been difficult, he said, held back by “an obsolete mentality that gives rise to an attitude of inertia and an absence of confidence in the future.”  He referred to the foot-draggers as “having feelings of nostalgia for other, less-complicated moments in the revolutionary process,” such as when the USSR and socialist camp existed.  But he insisted that the reforms have continued advancing at a steady pace – “without hurry but without pause.”

On upcoming reforms.  Castro talked more about what will not happen rather than any new vision.  He firmly ruled out “shock therapies,” and he said that “neoliberal formulas” to privatize state assets and health, education, and social security services “will never be applied in Cuban socialism.”  Economic policies can in no case break with the “ideals of equality and justice of the revolution.”  But he confirmed that one of the potentially most disruptive reforms – unifying currencies and exchange rates – must be done as soon as possible to resolve and many distortions.  On foreign investment, he called on the party “to leave behind archaic prejudices about foreign investment and to continue to advance resolutely in preparing, designing, and establishing new businesses.”

On Cuba’s economic model.  Castro acknowledged “the introduction of the rules of supply and demand” and claimed they didn’t contradict the principle of planning, citing the examples of China and Vietnam.  “Recognizing [the role of] the market in the functioning of our socialist economy,” Castro said, does not imply that the party, government, and mass organizations stand by and watch abuses occur.

On private and state enterprises.  He said the “non-state sector” – which includes “medium, small, and micro-enterprises” – is providing very important goods and services, and expressed hope for its success.  This sector will continue to grow, he said, “within well-defined limits and [will] constitute a complementary element of the country’s economic framework.”  Castro also called for greater reform efforts to strengthen the role of – and, simultaneously, the autonomy of – state companies, telling managers to overcome “the habit of waiting for instructions from above.”    He noted that the creation of cooperatives outside agriculture “continues in its experimental phase,” with some achievements and shortfalls.

On U.S. policies and intentions.  Castro criticized Washington’s efforts to drive political change in Cuba, which he called “a perverse strategy of political-ideological subversion against the very essence of the revolution and Cuban culture, history, and values.”  He said, “We are neither naive nor ignorant of the desires of powerful external forces that are betting on what they call the ‘empowerment’ of non-state forms of management as a way of generating agents of change in hopes of ending the revolution and socialism in Cuba by other means.” Castro said that U.S. officials recognize the failure of past policy toward Cuba but “do not hide that the goals remain the same and only the means are being modified.”

Rhetoric about forever rejecting capitalism (and multi-party democracy) is standard, especially for a Party event meant to assuage anxieties of conservative factions reluctant to give up their familiar, if failed, models.  The re-election of 85-year-old Vice President Machado Ventura is another sop to the aging right as the country inches each day to its biologically imposed transition, as Fidel Castro made explicit in his closing remarks.  The pace of change in Washington is also slow in some areas, particularly the embargo and the Administration’s “democracy promotion” strategies,  but pro-normalization voices cannot be faulted for lamenting that Cuba could more effectively influence U.S. policy through simple regulatory measures encouraging business deals that will give momentum to embargo-lifting initiatives in the U.S. Congress.  All politics is local, however, and both governments seem content holding off on changing their paradigms for now.

April 21, 2016

Venezuela: The True Scope of Chávez´s Legacy

By Andrés Serbin and Andrei Serbin Pont*

Hugo Chávez / Photo credit: ¡Que comunismo! / Foter / CC BY-NC-SA

Hugo Chávez / Photo credit: ¡Que comunismo! / Foter / CC BY-NC-SA

Chávez’s legacy for Venezuela goes well beyond the Bolivarian government he left in Nicolás Maduro’s hands.  Three conflicts overshadow the country’s future and contribute to many uncertainties:

  • The first, and most urgent, is the standoff between the two main factions of the ruling PSUV over how to overcome the current economic crisis, characterized by the IMF as “difficult and probably unsustainable.”  The pragmatists focus on making currency controls more flexible, and the ideologues are oriented toward increasing state control over the economy.
  • The internal party conflict between President Maduro and his supporters, committed to building the “socialismo del siglo XXI,” on the one hand, and the pragmatic sector of the governmental party (pragmatic in the sense of ensuring their businesses operate without interruption) led by the President of the General Assembly, former army officer Diosdado Cabello, with the support of high ranking military and businessmen who benefited from the “revolutionary” process through legal and illegal business.
  • The conflict between the PSUV, wielding the power of the government, and the opposition, which it accuses of being an “enemy of the revolution” linked to the “external enemies” (basically the United States) who want to derail the revolutionary process.

The dire state of the economy is aggravating each of these conflicts.  By the end of September, according to government data, inflation rates hit 4.4 percent per month, and rose to 38.7 percent in 2013 so far.  The opposition estimates an annual inflation rate of 49.4 percent—the highest since 1997.  According to the 2012 UN Economic Commission for Latin America and the Caribbean (ECLAC) report, an increasing number of Venezuelans are living under the poverty line – with a 29.9 percent increase in the poverty rate last year – with income no longer enough to fulfill basic needs.  Shortages of food and other necessities are severe; the depreciation of the Bolívar has accelerated in the currency black market, and the Central Bank is printing paper currency in an attempt to cope with the financial deficit.  Within this context, the struggle between the pragmatic and the ideological fronts of the PSUV only contributes to the chaos.

Caracas’s international relations are also a factor in the internal tensions and are fueling concerns within the armed forces, according to NGOs and others with good contacts in the military.  The economic crisis has affected the government’s ability to continue its “petro diplomacy” – diminishing its influence – and the opposition has continued persistent accusations of inadequate management of the relationship with Guyana and the claim over the Essequibo, contested territory along their common border.  In addition, a recent incident involving a maritime exploration ship of Panamanian flag with a U.S. crew detained by the Venezuelan Navy in waters under dispute with Guyana aggravated the current national and international political scenario.  The government usually resorts to nationalist appeals, but criticism of its handling of these problems is likely to grow.

The core issue in all of these situations continues to be the potential scenario of a social outbreak driven by the shortages, rising inflation, the broad sense of insecurity, and perceptions of blatant corruption in government.  These frustrations appear to cut across all sectors of Venezuelan society regardless of ideological identity.  Given the historical reluctance of the armed forces to intervene (particularly since the experience of the “Caracazo” of 1989), most observers still wonder when and if a social explosion will move them to action.  The economic and social crises, the internal tensions in the government, and the polarization with the opposition, along with the possibilities of an international incident, may add up to enough to move the military, perhaps with the support of several state governors, to act, but determining that breaking point – the Venezuela analyst’s greatest challenge – remains elusive.

* Andrés Serbin and Andrei Serbin Pontare members of the analysis team of the Coordinadora Regional de Investigaciones Económicas y Sociales (CRIES), a Latin-American think tank.

Impasse in U.S.-Cuba Relations Enters 54th Year

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 bilateral relationship.

Flags in front of U.S. Interests in Malecón.  By: Luiza Leite "Luiza" | Flickr | Creative Commons

Flags in front of U.S. Interests in Malecón. By: Luiza Leite “Luiza” | Flickr | Creative Commons

U.S. and Cuban experts at a conference in Havana in December observed that, despite important areas of mutual interest, the Obama Administration has so far shown little inclination to accept a dialogue.  Some experts opined that the imprisonment of USAID contractor Alan Gross has become a convenient excuse for Obama to avoid any serious engagement.

Other key points:

  • There is no effective political channel for resolving bilateral problems – indeed, no contacts at all at political levels.  The Interests Sections in each other’s capitals handle routine matters, but Washington has rejected Cuban requests to continue semi-annual migration talks.  Cuba gave the United States a proposal for resolving the Gross situation, which the State Department has not even acknowledged receiving.
  • In addition to reiterating longstanding frustration that U.S. policy is stuck in the regime-change mode forged by President George W. Bush, Cuban experts lamented that many Americans latch onto every challenge Cuba faces – such as whether the passing of Venezuelan President Chávez will lead to reductions in oil supplies – as evidence that the Cuban government will “collapse” and therefore that dialogue with it would be foolish.
  • Cuban rhetoric espousing the swap of the “Cuban Five” for USAID contractor Alan Gross has fueled powerful political expectations in Cuba, but Havana’s bottom line on the elements of a humanitarian release is far from clear.  Experts from both countries are perplexed that Washington will not have a dialogue at any level to discuss whether a deal is possible.
  • Many Cuban and American experts believe that one incentive for the United States to improve relations is to rebuild its image in Latin America.  But they note – ruefully – that Latin American does not seem to be a priority for the Obama Administration anyway.

The Gross situation is merely the most recent of a long string of issues blamed for the dysfunctional relationship.  The real causes of the impasse at this point are whether Washington can shift away from policies and well-funded programs fashioned to achieve regime change in Cuba, and whether the two governments can manage the influence that both have given ultra-conservatives unprepared to broach compromise – be it Cubans opposed to releasing Alan Gross while four of the “Cuban Five” remain in U.S. jail, or Cuban-Americans benefiting from the sort of regime-change operations that Gross was conducting.  The lack of a reliable channel for political leaders above both bureaucracies to talk creates the risk of manageable problems spinning out of control, to the detriment of both countries’ interests.

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.