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The Cuban model

What Fidel Castro — and everyone else — knows is broken.

Fidel Castro
Cuban former President Fidel Castro gives a speech, on Sept. 3, 2010, at Havana's University. (Adalberto Roque/AFP/Getty Images)

HAVANA, Cuba — Since his off-the-cuff comment that “the Cuban model doesn't even work for us anymore,” Fidel Castro has tried to retract that statement and prevent its rapid spread across the internet.

The remark was misinterpreted by the visiting reporter Jeffery Goldberg of the Atlantic, Castro insists, claiming what he really meant was the opposite: it’s Washington’s free-market model that wouldn’t work for Cuba.

That explanation was not only unsatisfying — it also didn’t really make sense. While Castro’s statement may not have been the endorsement of free-market economics that some were eager to interpret it as, it also defies logic that when the commandante combined the words “Cuban model,” “doesn’t work” and “anymore,” he was somehow talking about global capitalism.

So what was Castro really trying to say? Was it a spontaneous, unfiltered observation? A misstatement? A casual aside he didn’t expect to see in print?

A more plausible interpretation is that Castro was simply stating something that many here have been saying for some time, including his younger brother and successor Raul: the Cuban government needs to fix its socialist model to stay afloat.

As Cuba expert Julia Sweig of the Council on Foreign Relation said to Goldberg, who’d asked her for clarification, Castro "wasn't rejecting the ideas of the Revolution.”

“I took it to be an acknowledgment that under 'the Cuban model' the state has much too big a role in the economic life of the country," she said.

Castro, then, may have been simply endorsing the limited economic reforms initiated by his brother, easing state control over agriculture and allowing for the creation of worker-run cooperatives and more small-scale private enterprise.

While those reforms hardly represent major changes, they have been accompanied by an unprecedented public debate about the island’s economic shortcomings, with growing calls for more free-market liberties. The discussions have featured relatively frank criticisms of Cuba’s onerous bureaucracy, including the cradle-to-grave entitlements that are basic to the island’s socialist model but increasingly unaffordable for the cash-strapped government.

As Raul Castro sees it, that old model is exhausted. As he recently said in a speech, “We have to permanently erase the notion that Cuba is the only country in the world where you can live without working.”

On Monday, Cuba's state-run media announced that the government intends to lay off or reassign 500,000 workers by mid-2011. Castro said there are a million excess employees on state payrolls, and that the government will continue to make adjustments to the island's socialist system. By creating new opportunities for small-scale business ventures and cooperatives, Castro's goal is to spur productivity by encouraging entrepreneurship, while keeping Cuba's aspiring business class on a tight leash and avoiding missteps.

Part of his challenge will be to find ways to formally recognize the black-market economy that already exists. Unlicensed, informal businesses operate all over the island, run by Cubans who sell imported clothing, fix air conditioners or bake pastries. By bringing those businesses out of the shadows with regulation and taxation, the government could soften the vlow of the large-scale layoffs in the public sector.