A careful reading of what the Cuban government said then and since makes clear that its fundamental aim is to increase economic efficiency by separating the controlling role of the state from enterprise, through giving the latter the freedom to manage and act independently on all but the most important strategic matters. By creating better managed, more efficient and viable enterprises operating in a quasi-competitive environment, Cuba’s objective is to guarantee, it hopes in perpetuity, the continuance of its social system.
To achieve this, President Castro made clear that it will be necessary to “dismantle the paternalist state.” What this direct language describes is a policy that may eventually involve up to one million workers losing their state jobs and becoming self-employed in taxable non-state agriculture or services-oriented occupations. It also requires most non-strategic state and corporate decision-making being dealt with at an enterprise or provincial level; it will result in loss-making state companies being closed or restructured, and will require a new approach being taken towards foreign investment.
Achieving this will not be easy. Unsurprisingly there have been and still are differences of opinion at all levels and ages between reformers and conservative elements within the government and the Communist Party, as the extent and implications of the changes become clear and as the inter-relationship between the party and government is adapted.
In this latter respect, a little over a week ago the first national conference of the Cuban Communist Party took place. The event reasserted the party’s original role as the body that exerts moral authority over all aspects of Cuban life and set out how it will address matters from defeating corruption, described by President Castro as “the principal enemy of the revolution,” through ensuring implementation of the country’s new economic and social guidelines, to encouraging a commitment to national unity.
At the meeting no attempt was made to identify the next generation of political leadership although significant changes to the composition of the Central Committee were confirmed and time limits were set on the period over which office could be held. However, it was made clear that a process of preparation was underway for those who might assume “complex leadership responsibilities in the party, state and government.” What all this means is that irrespective of differences, no one in a position of power in Cuba’s collegiate leadership realistically can reject what is now happening. The sense is that without delivering the significant changes agreed the likelihood of political renewal, future economic growth or the consequent financial resource it should create, it will not be possible to sustain the social character of the Cuban model.
A corollary of Cuba’s now pressing need for rapid economic growth is that it is expected to become more engaged with external investors. In a clear signal of its renewed intent, Cuba and Brazil announced in the last week during a visit by Brazilian President, Dilma Rousseff, that Brazil’s private sector will help modernize Cuban sugar mills in Cienfuegos, establish manufacturing facilities around the port of Mariel where other major projects are expected to come on stream soon, and that its government will provide substantial trade credits.
As this year proceeds, it is expected that Cuba will formally begin to promote further the establishment of special development zones aimed at encouraging new foreign investment under terms and conditions that will be different from those in the domestic economy. Foreign investment in such zones will likely operate under more beneficial principles relating to property and other matters, than those applied to national territory in the domestic economy.
Much of Cuba’s new emphasis in these development zones will be on using foreign investment to promote the inflow of human capital and technology by forming strategic partnerships to produce high quality value-added goods and services exports with a preference for those with the highest technological content. This reflects a desire by government to make use of Cuba’s advanced scientific and technological achievements in health care, pharmaceuticals, genetic engineering, biotechnology and the high levels of education that have been achieved. The intention is to also encourage in these areas linked projects including leisure and real estate development.
Cuba’s ministers also make clear that the wish is to more closely integrate their economy with that of neighbours in a manner that is complimentary rather than competitive, all matters reflected in the positive exchanges that took place at last year’s Cuba-Caricom meeting between Caribbean heads of government in Trinidad.
Understanding Cuba’s internal dynamics is far from easy. It is on the one hand a nation that constantly brings the need for higher social values and actions to the world’s attention while on the other is prone to excessive control in response to a conviction that US hostility has created special circumstances.
It is proud that it has survived against the odds. It has withstood constant external pressure from the US and the collapse of the Soviet Union, but has suffered from mistakes of its own making.
At the highest levels of the state and at the level of level of the street virtually all Cubans remain committed nationalists determined that they alone will continue to manage change in their own way. It is this that explains Cuba’s resilience, survival and sometimes puzzling determination to find uniquely Cuban ways to deliver what others are already doing in terms of economic management.
Much less clear, however, is how the introduction of a new more efficient, better managed, taxed and regulated economy will change thinking, commitment and individual aspirations or, going forward, the relationship between citizens and the state. If as seems likely both those involved in non-state and state controlled economic activities come to recognise that further reforms and deeper economic integration between enterprises will be required if Cuba is to increase efficiency and growth to fund its social commitments, one challenging outcome could well be pressure to further loosen centralised planning to create and capture the benefits of a more vibrant economy.
These are not challenges for now, but are likely before long to face the coming generation of Cuban leaders.
Previous columns can be found at www.caribbean-council.org
