Cuba's Rescue Plan Opens Doors To Market Reforms

Cuba's Rescue Plan Opens Doors To Market Reforms
by Nick Miroff
November 18, 2010

With President Raul Castro warning that Cuba will fall "off a cliff" if
it does not fix its floundering economy, his government has issued a
rescue plan to pull the country back from the edge, offering some of the
most significant policy changes in a generation.

In a 32-page booklet titled "Guidelines for Economic and Social Policy,"
the Western Hemisphere's last communist government has laid out a
291-point plan for a reformed Cuba.

It doesn't exactly embrace capitalism, but still represents a major
departure from the egalitarian ideology that has ruled the country for
decades. Copies of the booklet have been sold out at newsstands in
Havana since its release on Nov. 9.

The guidelines call for an expanded private sector and opening the
country to greater foreign investment, as well as the elimination of the
long-standing food ration system and a liberalization of the real estate
market.

They propose to build golf courses and marinas for tourists, liquidate
state-owned companies that don't turn a profit and create
Vietnamese-style "special investment zones" to attract global industry.

The Economist magazine calls the measures "bold changes intended to
preserve Cuban communism" that, nevertheless, "may herald the beginning
of its end."

Sensitive to such I-told-you-so jeers from critics abroad, and stung by
detractors on the left who accuse Cuba of "abandoning" socialism, the
guidelines insist the firm hand of central planning will remain at the
tiller, not the market's invisible one.

"The economic policy in this new phase will follow the principle that
socialism is the only way to overcome our difficulties and preserve the
gains of the Revolution, and that as we update our economic model,
planning will be paramount, not the market," it states.

Failing Economic Model

Still, the measures aim to reduce state bureaucracy and create a more
heterogeneous economy, with a mix of public-private business,
cooperatives, private leases on state property and self-employed
entrepreneurs, while making clear that the government won't allow
anybody to get too wealthy.

"The concentration of property will not be allowed," the guidelines
firmly declare, lest anyone think Cuba might try to copy China.

The proposals were printed after Castro announced that Cuba will hold
its sixth Communist Party Congress in April, the first since 1997. The
occasions are typically used to unveil new policy and personnel changes,
and are supposed to be held every five years.

While some have speculated that 84-year-old Fidel Castro may use the
event to formally retire from his position as the Communist Party's top
official, his 79-year-old brother said economics, not politics, would be
on the agenda.

Over the next five months, Raul Castro has said, Cubans will have a
chance to weigh in on the proposals in their neighborhoods and
workplaces, calling for "open discussions with the people on any topic,
no matter how sensitive."

The guidelines present a grim portrait of a failing economic model.
Exports have plunged. Fifty percent of state-owned land is idle and
unproductive. The country suffers from "inefficiency, underinvestment in
infrastructure and productivity, and an aging population that is
stagnant," the booklet reads.

Cuba plans to lay off 500,000 state employees by April, and another
800,000 might also be trimmed in coming years, so the proposals indicate
how the government expects to create jobs for those workers. Even after
the cuts, some 60 percent of Cubans will continue to be employed by the
state.

University of Havana economist Juan Triana called the proposals the most
important government document since 1975.

"It reaffirms the revolutionary essence of our political system, but
changes the philosophy of our economic management," he said in an
interview with Venezuela's TeleSur TV network.

Skepticism About Proposals

Several of the proposals would have an immediate impact on the everyday
lives of Cubans, such as the government's plan to eliminate the food
ration system that has been the cornerstone of the Cuban diet since
1962. The guidelines describe the ration system as one that "caters to
those who need it as well as those who don't, encouraging barter, resale
and black market practices."

Item No. 278 proposes to allow Cubans to buy, sell and rent properties,
transactions that now occur largely through underground, off-the-books
deals. That would create the potential for a much more dynamic real
estate market, but it's not clear whether Cubans will be able to sell
their properties to foreigners, or to Cuban emigres looking to return to
the island or invest there.

Dissident economist Oscar Espinosa Chepe said he thinks the proposals
amount to a "wish list," and calls the proposed measures "superficial,"
saying they don't go far enough to deliver the radical changes Cuba needs.

"They don't get to the root of the problem," he said. "The mentality
continues to be the same: tight control by the state and the party."

"These are changes designed to make sure that nothing really changes,"
Espinosa Chepe added.

http://www.npr.org/2010/11/18/131413123/cuba-s-rescue-plan-opens-doors-to-market-reforms