Has Cuba’s Reform gone backward

Has Cuba’s Reform gone backward

Cubans had high expectations for the future when US President Barack Obama visited Havana in March 2016. The Obama administration’s rapprochement of Cuba with the United States will be one of its key achievements as the United States elects its next president.

The slow pace of Cuban reform raises questions about the legacy of President Raul Castro. The frustration has started to build as energy cuts have paralyzed production and caused the economy to shrink.

What’s preventing Cuba from achieving its much-anticipated course of reform?

There are more questions than answers

The socialist government of the country is reinstating price controls to slow down the small-scale, private sector.

Cuba’s decision to reverse course is the result of Venezuela’s dramatic reduction in oil supplies to the country. This has forced Cuba to cut imports and implement austerity measures. Havana fears losing control when the White House’s policy shifts from strangulation towards embrace.

Is the government of Raul Castro retrenchment to tackle its most complex problem, namely the coexistence of two currencies with a high degree of distortion: the dollar-linked Cuban convertible peso and the heavily devalued Cuban Peso?

According to a study I conducted with other European and Cuban scholars assessing the future of Cuba’s model of development for the Third World Quarterly, the answer is probably a combination.

The start of a’very long journey.’

Cuban economics and politics are closely linked. Havana economist Ricardo Torres has emphasized that the economic structure of the island has been transformed in the past ten years since Raul Castro took office.

Raul’s reforms of the last eight years are not ad-hoc; they are part of a strategy of long-term reform, supported by documents of programmatic reform adopted at Communist Party conferences.

Unresolved contradictions within the economy can only have a limited impact on salaries and growth. Torres concludes that it’s becoming clearer that Cuban reforms in the last eight years have only just begun.

The Cuban economy’s most striking contradiction is the coexistence of two currencies. State salaries are paid in CUP, averaging 687 pesos per month. This is usually less than 40 CUC or US$40 at official currency exchanges.

The gap between the salaries of Cubans and their convertible currency wages is widening as they need to purchase more and more items, from cooking oil to hair shampoo. Not only is the economy affected, but the social fabric of the island is also being ripped apart.

The combination of these two currencies is going to be a monumentally difficult task and will have implications for every sector of the economy and society. Raul has been working on this issue for a long time.

Some reports claim that the monetary union, which has been repeatedly delayed, is likely to happen before the end of this year. This may require a reduction in imports to compensate for the reduced Venezuelan supply but also to build reserves to protect the currency from inflationary forces.

The liberalization of the Cuban economy has led to the creation of private restaurants of high-end quality, like this one. However, the average monthly salary is still US$40. Enrique de la Osa/Reuters

It’s (not) just the economy, stupid.

Political factors are very important in Cuba. Laurence Whitehead, from Oxford University, stresses that it is impossible to understand the extraordinary resilience of the Cuban regime without considering its sources of legitimacy and discursive justifications.

Havana’s firm stance against the US has played a major role in supporting the socialist government for half a century. This was true even when this political isolation caused hardship to the Cuban population. Normalization, and in particular the warm welcome Obama received from Havana, weakens that pillar of legitimacy.

Vegard Bye, a Norwegian analyst, argues in his article that Obama’s openness to Cuba could have actually endangered the reform process. Fears that the US’s friendly relations with Cuba, coupled with a stronger entrepreneurial sector in the country, would undermine the revolution project may lead to a reduction.

Foreign observers tend to see the emerging private sector as only restaurants and B&Bs that cater to tourists ( paladares). Still, Yailenis Mullet, from the University of Havana, paints a more complex picture with her analysis of Cuba’s shoe manufacturing sector.

She estimates, based on her field research, that the private sector involved in the shoe production chain is responsible for the employment of over 12,000 Cubans. This makes it an important industry within the shrinking island economy. The lack of wholesale markets, restrictive regulations, and weak legal standings of many of the producers along the supply chain are all obstacles to this amazing domestic sector’s growth.

Cuba imports brand-name footwear to be sold in state-run stores to Cubans who have access to enough hard currency.

US President Barack Obama and Cuban President Raul Castro during his March 2016 visit to Havana at a baseball match. Jonathan Ernst/Reuters

Socialism’more democratic’ and “more participatory”

Raul Castro’s legacy, when he leaves office as president in 2018, as promised, will be determined by the results of his economic reforms and his political agenda.

He has sworn off a transition to multi-party democracy, but he promised to make Cuban socialism more participative, the Communist Party democratic, and the media critical.

Raul Castro has been in charge of Cuba for ten years now. Since then, Cuba’s model of charismatic socialistism has evolved into a bureaucratic socialist one. Depersonalizing politics has been achieved by strengthening national institutions.

Raul’s “Bureaucratic Socialism in Reform Mode,” as I argue in my Third World Quarterly contribution, has altered Cuban politics in at least two other ways.

Cubans can now travel abroad without a permit or relying on the goodwill of the government.

Second, Cuba’s public sphere is the most diverse it has been since the revolution of 1959. State media is still defended as a constitutionally protected Communist pillar. The reach of government publications such as Granma has been eroding.

Cubans, especially young urban Cubans, can now access information through mobile phones and USB flash drives.

Raul Castro’s agenda for political change appears paralyzed as Cuban socialists digest the impact of the US-Cuba reconciliation and the fallout of Venezuela’s political and economic crises.

Many of the projects he announced are still awaiting implementation. These include reforming the constitution of the country, revising the electoral law, and reducing the number of delegates at the National Assembly.

Raul Castro still has a little over a year to go in his tenure as president. Raul Castro knew that the clock was ticking and that he could not leave reforms up to his successors when the post-Castro Cuban era began.

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