Academic journal article The International Journal of Cuban Studies

Reforming the Cuban Economic Model: Causes and Prospects

Academic journal article The International Journal of Cuban Studies

Reforming the Cuban Economic Model: Causes and Prospects

Article excerpt

Abstract

Facing the global financial crisis, Cuba has been obliged to reform its socio-economic system in order to preserve its social model. The serious difficulties which confronted the island are explained both by external factors (mainly the sanctions imposed by the United States, the global systemic crisis and natural disasters) and by internal factors (the bureaucracy, corruption, low productivity, hypertrophy of the public sector and the lack of a culture of debate, among others). This article examines the proposed causes and prospects for the reform of the economic model presented at the 7th meeting of the Cuban Communist Party Congress and adopted by the Cuban Parliament in August 2011, after major changes resulting from a widespread popular debate.

Keywords: Cuba, economic model, reform, structural revolution, future

Introduction

Faced with economic sanctions imposed by the United States over 50 years ago, a global financial crisis and recurring productivity problems, Cuba is compelled to make far-reaching reforms to its socio-economic system if it wants to save its social achievements and lifestyle. While the current troubles can be partly put down to external factors, there's no denying that Cuban society has its own share of responsibility. As Cuban President Raúl Castro said to the 9th Congress of the Young Communist League on 4 April 2010, 'today more than ever before, the economic battle is our main task and the focus of the ideological work of our cadres, as it is on this work that the sustainability and survival of our social system rest'.1 A few months later, on 18 December 2010, he delivered a more alarmist speech to the Cuban Parliament, trying to make the government and the population aware of their roles: 'Either we straighten things up or accept that we don't have any more time to live on the edge and leap into the void, and at this rate we will.'2 Fidel Castro, the historical leader of the Cuban Revolution, approved the discussion and offered his help to update the island's economic model.3 In order to avoid collapse, Cuba had no choice but to make significant structural and conceptual changes to its economic system. It was as simple as that.

The External Factors

Coming into force in July 1960, and continuing, Washington's unilateral sanctions remain the greatest obstacle to Cuba's economic growth, as they affect all sectors, and especially the most disadvantaged social groups. Condemned unanimously for the nineteenth time in October 2010 by 187 countries gathered in the General Assembly of the United Nations, these economic sanctions not only prevent any substantial trade between the two nations - except for a small number of foodstuffs sold since 2000 - they're also of a retroactive and extraterritorial nature. Indeed, since the Torricelli and the Helms-Burton Acts were passed in 1992 and 1996, respectively, together with other restrictions concocted by the Bush Administration in 2004 and 2006, Cuba's trade with third countries has been on a downward trend.4

Accordingly, since 1992, every ship docking at Cuba risks a six-month ban from US ports, which gives rise to heavy surcharges to an island whose trade depends basically on sea transport. Likewise, since 1996, everyone who invests in property that Cuba nationalised in 1959 is bound to see their assets frozen in the United States. Besides, since 2004, for example, car makers - regardless of their nationality - willing to sell in the US market must prove to the Department of the Treasury that their products have not even one gramme of Cuban nickel. And the same goes for all food and agricultural companies worldwide. Danone, for one, will have to provide evidence that its products have no Cuban raw materials. Hence the retroactive and extraterritorial effect of these provisions, designed to deprive the Cuban economy of a huge income and Cuban exports of the world market.5

Throw in the economic, financial, energy, food and environmental crisis and its terrible impact on developing countries in general and Cuba in particular. …

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