ECONOMY-CUBA:
A New Model in the
Making?
By Patricia Grogg
HAVANA (IPS) -
Preparations for the
sixth congress of Cuba’s
ruling Communist Party (PCC),
to be held in late 2009,
may speed up the
"structural changes"
promised by President
Raúl Castro and pave the
way for a development
strategy more suited to
present conditions,
experts say.
Economists consulted by
IPS say that the
Economic Resolution of
the fifth PCC congress,
held in 1997, has been
overtaken by events and
no longer reflects
reality.
Each party congress is
meant to reflect on the
previous five years and
decide guidelines for
the next five-year
period. The sixth
congress, due in 2002,
had been postponed.
Omar Everleny Pérez
Villanueva, the deputy
director of the Centre
for the Study of the
Cuban Economy (CEEC) at
the University of
Havana, said one example
of change in the Cuban
economy is that the
country now earns
sizeable revenues from
professional medical
services, which was not
the case in the late
1990s.
According to statistics
that have not been
officially confirmed,
sales of medical
services generate
between five and six
billion dollars a year,
which is used to finance
strategic imports such
as fuel and foods, or to
buy equipment and
medical technology for
the national health
service.
CEEC researchers say
that in the last few
years, the economy has
developed in an
improvised fashion in
response to urgent
problems, like the
energy crisis in 2004,
which forced a change of
energy policy towards
savings, greater
efficiency and use of
renewable sources.
According to Pérez
Villanueva, Cuba must
stop going from crisis
to crisis, with
solutions thought up on
the spur of the moment,
and advance towards a
development strategy
that includes a wide
range of simultaneous
measures, from monetary
policy to those directly
related to industrial
and agricultural
production.
"We need a programme, a
set of guidelines that
defines where we are
going and marks the
stages, and that sets
out the tasks involved
in building socialism,"
said economist and CEEC
researcher Armando Nova,
who pointed out that
Cuba has had to work
under the pressure of
the U.S. embargo for
over four decades.
Nova agrees with Pérez
Villanueva and other
academics that, among
other things,
"productive forces need
to be freed up," with
clear rules. The market
needs to expand to
provide incentives for
production and work, and
excessive centralisation
and financial and
productive restrictions
on businesses should be
eliminated, he added.
"It must be recognised
that the domestic market
is a real and concrete
tool that drives
development. Of course,
it cannot be left to its
own devices, but should
be regulated by means of
economic mechanisms, so
that the plan and the
market are compatible,"
Nova told IPS.
One of the measures
being implemented that
could lead to structural
changes in agriculture
is, in fact, the
creation of shops where
small farmers can buy
what they need directly,
instead of having to use
the centralised
distribution system that
existed before, Nova
said.
In mid-2007 Raúl Castro,
then interim president,
announced that
"structural and
conceptual changes would
have to be introduced as
necessary" to boost crop
yields and curb food
imports, which will
absorb an estimated 1.9
billion dollars in 2008.
According to CEEC
studies, it is a good
move to begin with
measures in agriculture
because of the
"multiplier effect" the
sector has on the
economy as a whole.
Among the essential
changes advocated by the
experts are the
decentralisation of
planning and the
creation of an
environment that
stimulates production.
The current plans to
distribute more land to
farmers are important,
the experts say, but
they stress that land
reform must go
hand-in-hand with
markets, credit and an
attractive rate of
exchange. To date the
exchange rate for
businesses is one Cuban
peso per convertible
peso or CUC (the local
hard currency that
replaced dollars), while
state exchange shops buy
CUCs for 24 pesos and
sell them for 25.
The authorities are
considering granting
farmers land, without
title, because it is
estimated that about 50
percent of the
cultivable land on the
island is lying fallow.
According to Nova,
200,000 hectares have
been granted on those
conditions since the
1990s.
In general, the
beneficiaries were
private small farmers
engaged in family
farming, and
agricultural
cooperatives, Nova said.
The government is
prioritising changes in
the agricultural sector,
and regards increased
food production as a
matter of national
security. Specialised
media have said that the
restructuring process
being carried out now is
to be completed by the
middle of this year.
Until the 1980s, Cuba
produced industrial
goods like pressure
cookers, refrigerators
and gas cookers. In
Pérez Villanueva’s view,
these industries should
also be revived, with
the participation of
foreign investment if
necessary, to supply the
domestic market and for
export to other
Caribbean nations, for
example.
"No society can hope to
develop without
important contributions
from agriculture and
industry. Services alone
cannot keep the country
going. A radical reform
is needed, to shift the
foundations of how the
economy has been
operating up to now,
otherwise we’ll always
be in crisis management
mode," he said.
At the beginning of this
year, sales of articles
like computers and cell
phones were allowed for
the first time, in the
shops where only CUCs
are accepted. These
items used to be
available only to
businesses, diplomats
and foreign citizens.
Cubans are also now
allowed to stay at
hotels that used to be
reserved exclusively for
foreign tourists.
"These measures were
taken to correct
prohibitions that should
never have existed, but
they do not constitute
structural changes,
although they might be a
step towards recognising
the way the market can
play a role in helping
achieve better economic
results," said Nova.
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