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Cuba's government is relaxing its grip on the economy with a host of reforms. But for many, the change is too slow. The revolutionary island is still a world away from a free market, and even far from China's market-driven model. GlobalPost takes a close look at Cuba's rickety economy and what may be in store for it.
Despite Raul Castro’s market ‘updates,’ making money is still viewed with suspicion.
HAVANA, Cuba — Let there be no doubt: Cuba’s Communist Party has declared the island’s socialist system “irrevocable.”
But the nod to market principles at the core of President Raul Castro’s economic reforms has brought a new degree of ideological ambiguity to Cuba, leaving many to wonder just what model, exactly, the island is really following.
With Cuban authorities seeming ready to embrace new forms of private enterprise but not liberal democracy, the comparisons inevitably point to China and Vietnam. In those countries, a one-party, authoritarian political system has endured thanks to a dynamic, globalized economy that delivers steady growth.
The 81-year-old Castro made a rare trip abroad to visit China and Vietnam in July, adding to speculation that Cuba is eager to adopt the development model charted by Asia’s business-friendly communists.
But Cuba doesn’t even come close to emulating those countries, said University of Havana economist Julio Diaz Vazquez, who was educated in the Soviet Union and now studies contemporary China and Vietnam.
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In Cuba, “there is an acknowledgement that we have to fix the basic structure of our economy,” said Diaz Vazquez. “But the mentality of the old model is still present: How do we keep [entrepreneurs] under control?”
Three years after Castro announced the reforms — “updates” is the official euphuism — Cuba has taken significant steps toward creating a larger role for private business.
Nearly 400,000 Cubans now possess self-employment licenses that allow them to work independently. The government has attempted to boost food production by leasing nearly 3 million acres of state-owned land to private farmers and independent cooperatives on a no-cost, long-term basis. Thousands of little snack bars and restaurants have transformed the physical appearance of Cuba’s cities and towns. Cubans can buy and sell their homes and apartments for the first time in a half-century.
All of these measures, and others, have brought significant change and subtle shifts in the way Cubans perceive their opportunities and their relationship to the government.
But in other, fundamental ways, Cuba’s Communist Party leaders and the massive government bureaucracy below them remain stuck in the Soviet-era dogmas that China and Vietnam disposed of decades ago.
The main difference, according economists like Diaz Vazquez, is that China and Vietnam follow a high-productivity model in which the state encourages, rather than impedes, the country’s entrepreneurs and professionals. Torrents of foreign investment and booming exports have made those countries global economic players, raising living standards and providing political stability. While the state steps in to moderate the inequalities that result, it does not view individual prosperity with suspicion.
In contrast, Cuban authorities are a long way from endorsing the Deng Xiaoping maxim “to get rich is glorious.” Making money in Cuba is still essentially viewed as a crime, as some hapless entrepreneurs have recently discovered.
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Raul Castro’s reforms, Diaz Vazquez said, continue to be weighed down by an old model that keeps entrepreneurs on a tight leash and says: “You can start a business, but I can take it away from you at any time.”
Some 78 percent of the Cuban labor force is still employed by the state. Workers struggle to survive on salaries that average $20 a month and fall far short of providing for their basic needs. Many turn to stealing from their workplaces or selling goods in Cuba’s vast black market, activities that the government wants to curtail by moving workers off state payrolls.
Cuban officials say their goal is to create millions of new jobs in private businesses and cooperatives, referred to on the island as the “non-state” sector. Last year 22 percent of Cubans held non-government jobs, up from 16 percent in 2010, according to the island's national statistics office.
But to date Cubans who go to work for themselves must choose from 181 occupations, an astoundingly-circumscribed list that includes jobs like palm-tree trimmer, birthday clown, mule-driver, knife-sharpener and funeral flower-arranger.
Such a list would probably be laughed at today just as much by the market socialists in China or Vietnam as it would be in places like Miami or Mexico City.
For Cubans who might want to start a software company, architectural firm or manufacture tractor parts, the only way to do so is leave. And so many of the island’s best and brightest go abroad.
Three years into the reform process, the kinds of small businesses now permitted in Cuba do not leverage the skills of educated professionals, or allow them to work on their own. And there is no discernable recognition that manufacturing and most forms of commerce are more efficient in private hands, despite China and Vietnam’s achievements, not to mention decades of ample evidence in Cuba to the contrary.
New start-up businesses in Cuba still can’t import supplies or equipment directly from abroad. They continue to face elaborate bureaucratic obstacles to the most trivial operational needs, like banking services and advertising. Investment capital from foreign partners can only come in secret.
Such barriers have deep roots in the Cuban economic model that dates back to the 1960s and has long equated socialist “perfection” with maximum state control. Such thinking has measured success according to the degree to which private property can be eliminated and administered by the state.
That model has been failing in Cuba for decades, but it’s only under Raul Castro that the government has begun to openly acknowledge that abysmal economic output cannot sustain the health and educational systems that are held up as the crowning achievements Fidel Castro’s 1959 revolution.
But Cuba continues moving slowly, even as Castro insists the changes will come “without hurry but without pause.”
While Cuba’s octogenarian leaders may not have time on their side, they do have Hugo Chavez. The Venezuelan president provides the island with billions in hard currency and two-thirds of Cuba’s energy needs, lessening the need for urgent change.
Chavez claims to have beaten cancer with Cuba’s help, and he’s also beating rival presidential candidate Henrique Capriles in most polls.
With Chavez’s continued financial backing, Cuba’s leaders may see little need to embrace the Chinese model, and stick with their tropical one for as long as possible.