Examination of the reformulation of Castro's economic model attempted by Fidel's successor

Next April, a year and a half after Fidel Castro's death, his brother Raúl plans to leave the presidency of Cuba, where he has been for a decade. His bequest is an attempt to lengthen the Castro regime by forcing the island's economic recovery. But the restrictions of the reforms themselves, the slow pace of their implementation and the fact that they are not accompanied by greater political freedom, have limited the effect of the changes. Nevertheless, they may be a good starting point for the next president if he really wants to move towards full openness.

article / Valeria Vásquez

Raúl Castro replaced his brother Fidel as president of Cuba's state committee in 2008. Since then, the island has undergone changes in its organisation, although without abandoning its communist structure or the revolutionary principles set in motion in 1959. On coming to power, Castro decided to embark on a path of structural reforms in order to "update" Cuba's socio-economic model and emerge from the serious economic crisis.

As part of this programme, Raúl Castro approved a series of social and economic reforms of a "transformative" nature, which tended towards the introduction of market mechanisms, while maintaining adherence to socialist principles based on centralised planning (and without accompanying these changes with political liberalisation). Revitalisation was the main goal of the reforms in the economic sphere, turning around what had been a fully socialist approach policy and rejecting free market reforms.

Ten years after the changeover between the Castros brothers, the Cuban regime is preparing for the arrival in April of the first president from outside the family. Although it has not yet been confirmed who the new president will be, it is expected that the current vice-president, Miguel Díaz-Canel, will be appointed as part of a continuity of power.

The country is currently at a disadvantageous status , with political uncertainty over the new phase that is opening up, the serious economic difficulties that Venezuela (the island's main benefactor for more than a decade) is going through, and the truncated foreign expectations that the arrival of Donald Trump in the White House a year ago brought with it.

update from model economic

Since 1959, Cuba's economic model has been based on revolutionary socialist principles. Since Raúl Castro came to power, however, a process of transformation has been undertaken, considered necessary to move forward a Economics that was stagnating and immersed in a serious crisis.

In reality, there was no substantial modification of the economic model , but rather a update of it, maintaining the predominance of central state planning and state ownership over the laws of the free market. The goal of this process has been to guarantee the continuity and irreversibility of socialism, as the Cuban authorities have declared, as well as to promote the country's economic development and improve the standard of living of the population.

The framework reforms were approved at the VI congress of the Cuban Communist Party, held in 2011. Among other points, the approved agreements established the submission of a usufruct to peasants and cooperatives, and opened the door to the mass dismissal of hundreds of state employees. The reform guidelines, however, did not set out the specific role that the state and state-owned sector should play in the Economics.

The so-called update of Cuba's model has led to the expansion of the market and non-state ownership, but in a Economics that is still conditioned by state planning this measure is still inefficient, as it was in China or Vietnam. While the state business still prevails (in a more decentralised form, through self-financing and without fiscal subsidies), the private sector has become more flexible, but heavy taxation of the private sector still hampers development.

Land in usufruct

One of the main pillars of the Castro government's reforms was the submission usufruct of idle state land to peasants and cooperatives, with the purpose aim of reducing imports and increasing production. The usufructuaries have obtained the right to cultivate the land and to keep what they harvest, but the state retains ownership and can terminate the contract for reasons of public interest.

Regulation was carried out through two laws: a first, in 2008, subject to many restrictions and actually disadvantageous for farmers; and a second, in 2012, more flexible, whereby the government expanded the size of the plot (from 13 to 67 hectares), approved the planting of orchards and forests, and also allowed the construction of houses next to the land (previously forbidden).

In March 2011, the government reported that 128,000 usufructs, totalling 1.2 million hectares, had already been handed over. However, although the 2012 law was less restrictive than the previous one, as mentioned above, it still included certain hurdles that discouraged farmers from getting involved: farmers made gains, but only after overcoming various obstacles.

Mass dismissal of civil servants and self-employment

At the beginning of 2011, the state payroll presented an "inflated" rate, with millions of state employees in precarious positions and conditions at work . For this reason, Raúl Castro promoted the dismissal of 500,000 surplus state workers between October 2010 and March 2011, which raised the unemployment rate to 12%. To counteract this measure, 250,000 self-employed jobs were initially created and other private activities were also promoted.

This was necessary to raise labour productivity, reduce costs and increase wages. The agreements of the CCP's VI congress allowed for the approval of 178 self-employed activities: many of them were very specific and unskilled (such as forklift drivers or bath attendants), and a few were skilled (such as translators or insurance agents). This made the private work more flexible.

Thus, in a country with a labour force of 5 million people, out of the total of 11.2 million people living on the island, a total of 4.2 million of those working are state employees and the rest are in the non-state sector, consisting of agricultural cooperatives, private farmers and the self-employed [1]. The latter now number 500,000 people. Despite this development of what is known in Cuba as "cuestapropismo", there are restrictions that prevent most professionals from working on their own in their profession, and this reduces the human capital available to boost the country's Economics .

Openness to foreign investment

The flow of investment from abroad has not accompanied the reforms promoted by Raúl Castro, which has been one of the biggest obstacles to the desired success. In order to attract foreign investment, the Special Zone of development Mariel (ZEDM) was inaugurated in 2013. The port of Mariel, located 45 kilometres west of Havana, was allocated a 465.4 square kilometre industrial zone and an advanced ship terminal. entrance The purpose was to convert the ZEDM, through the existence of incentives to attract investment, into the main gateway for foreign trade and the largest industrial structure in Cuba [2]. However, four years after its inauguration, the results have not been as expected. In an administrative process that has followed an extraordinarily slow pace, today only 33 companies have been set up at C , a far cry from the 2.5 billion dollars that the ZEDM was intended to attract annually.

The restoration of diplomatic relations with Washington at the end of the Obama administration has not accelerated investment from the US or other Western countries. In addition to the US embargo remaining in place, the Trump administration has reversed provisions passed by his predecessor that opened a timid door to greater economic engagement.

status economic

Raúl Castro's reform plan has not been as successful as expected, mainly because of the restrictive Degree that regulates them. The lack of the intended economic revitalisation has manifested itself in the poor performance of Cuba's Economics in recent years. In 2016, Cuba fell into recession, with an economic decline of 0.9%. In 2017, it was able to recover slightly (figures that have not yet been finalised speak of a 1.6% increase in GDP) thanks to a boom in tourism and better agricultural results.

In the last decade, tourism has been precisely one of the assets of the Cuban Economics . agreement According to an ECLACreport , tourism to the island grew by 11.9% in 2017, with 4.7 million visitors. This increase accounts for the largest issue of visits from the United States, made possible by the elimination of restrictions approved by Obama, but which Trump has reimposed.

On the other hand, Cuba maintains its chronic trade deficit. Although in 2016 it managed to reduce it to 9.6 per cent of GDP, the outlook is not good, given Venezuela's difficulties in continuing to supply oil, practically on a non-repayable basis. In 2015, Venezuela was Cuba's main trade partner , with which it maintains 36% of its foreign trade, in a exchange valued at 4 billion dollars. It is followed by China, with 28%, a country that sells under soft credit conditions to the island.

bequest and new challenges

As Raúl Castro's presidency draws to a close, Cuba finds itself in an unfavourable status , with a Economics that is struggling to emerge from stagnation and with a programme of structural reforms that have been insufficient to resolve the problems accumulated over more than 60 years of centralised state socialism. partner-economic problems. The timid nature and slow pace of economic reforms have not helped to revive Economics.

However, during his decade in power, Castro has led changes in the management of model, something that should be taken into account even though in the political sphere he has perpetuated the lack of freedom and the persecution of opposition activity, without undervaluing the moral guilt of the dictatorship. Among the changes that have taken place are the opening up to foreign investment, new diplomatic relations, participation in Latin American forums and the immersion of Cubans in work on their own account.

Probably forced by circumstances, Raúl Castro was able to break down some of the obstacles and ideological barriers that his brother Fidel had implemented on the island for more than 40 years in power. The outgoing president's bequest marks some progress, but it will be the actions of the incoming president that will indicate whether Cuba is truly moving towards the economic - and political - opening that Cubans have longed for.

[1] VIDAL, P. and PÉREZ Villanueva, Omar E. "Se extiende el cuentrapropismo en Cuba". Espacio Laical, vol. 6, n. 3 (2010), p. 53-58.

[2] HERSHBERG, E., & LEOGRANDE, W. M. (2016). A new chapter in US-Cuba relations: social, political, and economic implications. New York: Palgrave Macmillan.