The Cuban Communist Party “surrenders” to the market economy, more space for private individuals and limits on price controls. But economic opening will not be followed by democratization.
After decades of rigid statist communism and while the country finds itself under the growing pressure of the United States, the National Assembly of Cuba yesterday approved a reform that aims to radically change the country’s economynow exhausted after decades of sanctions and failed economic policies.
With over 170 measures approved, the communist government seems to have finally convinced itself of need to opt (at least partially) towards a market economyalbeit under the scrutiny of the Communist Party.
The reasons for the change
Cuba is affected by “slowness, bureaucracy and rules that hinder those who want to produce”, the Cuban President admitted yesterday Miguel Diaz-Canelasserting that the government has postponed crucial decisions for too long and that the current situation requires radical changes in the socialist model.
The island is in fact struggling with the more serious energy crisis since the nineties, above all (but not only) due to the American energy embargo.
So in the end the market economy no longer appears so “bourgeois”, so much so that the approved reforms received the support of the entire leadership of the Communist Party, including the former leader Raúl CastroFidel’s brother.
The reforms
The scale of the reforms is simply “epochal” for the Cuban economywith a package of 176 measures that aims at an unprecedented market opening since the Castro revolution of 1959.
A truly revolutionary change for a country where 70% of the workforce is currently employed by the state.
It starts right from the transformation of state enterprises, which can now be converted into joint-stock or participation companies. With the State maintaining a majority stake only in sectors considered strategic.
On the bureaucratic and administrative side, a reduction in the number of ministrieswhich will go from 27 to 21. There is also room for greater local autonomy; provinces and municipalities will in fact receive greater powers, including the ability to export, import and hold currencyas well as being able to directly manage foreign investments in its territory.
He comes the maximum limit of 100 employees has been eliminated for micro, small and medium private enterprises (the so-called Mipymes), which currently employ around 30% of the population but generate only 15% of the GDP.
Other approved reforms will allow ausame natural person to be the owner of more than a private company. While the list of activities prohibited to the private sector is significantly reduced.
For the first time, they will be allowed Mipymes in the agricultural sector and participation in buying and selling of fuels. Private companies and cooperatives will also be able to import and export directlywithout necessarily passing through the state monopoly.
Last, but not least, is the drastic reduction of state control over priceswhile the role of the market in their formation is actually recognized to incentivize production and reduce distortions.
Maintain political control in Cuba
Naturally, the reforms launched do not in themselves constitute the beginning of broader liberalization. Indeed, the Cuban President wanted to specify that the party intends to maintain its iron political control.
“We are not giving up on socialism”Diaz-Canel said yesterday, underlining that economic reform does not equate to an abandonment of the socialist model, but the beginning of a new path towards “Cuban socialism”, a vocabulary borrowed from China and its “socialism with Chinese characteristics”.
On the other hand, the President himself admitted it very candidly, the reforms are directly inspired by those of China and Vietnamcommunist countries that introduced market mechanisms while maintaining political control.
The season of “market socialism” therefore opens for the Caribbean island, in which the economy will be partially liberalized, but which will not be followed by the slightest democratic opening.
