Cuba’s slow path to the future

Raul Castro’s reforms include the right to buy and sell private property, but so far there has been no migratory reform.

Although Cuba’s government has attempted to implement new reforms, progress is slow [GALLO/GETTY]

Leeds, United Kingdom – When the Cuban parliament met in Havana’s Palacio de las Convenciones just before last Christmas, the main issue in the agenda was the plan of reforms launched in 2009 with the aim of renovating the economy of the island. The reforms, if limited, still constitute a way of opening up to the private initiative while finding a way around the US embargo that continues to linger over the island’s destiny.

Fifty-two years after John F Kennedy’s administration put the embargo in place, Cuba is still dealing with a world in which US institutions are, for the most part, unreachable. The IMF and the World Bank, for example, are no-go places. Having to depend on short-term loans with high interest rates has transformed the island into an international credit pariah, intensifying the deterioration of Cuba’s economy.

In recent years, as Cuba has gradually emerged from the Special Period – the economic tribulations that followed the disappearance of the Socialist markets and Soviet subsidies on which Cuba depended – new measures have been taken to steer the ship in the right direction.

After Fidel Castro resigned in 2008 and his brother Raul became head of state, the process of economic reform stepped up a gear. With a well-educated, active labour force of almost five million people, most of whom were until recently on the government’s books, Raul Castro began to privatise parts of the economy to foster growth.

Suddenly Cubans had new possibilities that, although restricted, gave them some respite. First, the new administration allowed all citizens who could afford them to have mobile phones and to buy and sell small private property (houses, vehicles, etc).

Then came the proliferation of small businesses, the distribution of unused land among farmers and more recently start-up credits were approved in order to stimulate the creation of even more new businesses.

Although the changes have been taking place since 2009, Raul Castro has made it clear that they should not be rushed, invoking national security as the main reason for caution. Only some weeks ago he reiterated this position in his remarks during the most recent opening session of Cuba’s parliament. For the majority of Cubans, however, the reforms cannot come soon enough.

2011 reforms

Last year, the economy did not perform well, even though there was a renewed effort in turning things around. According to the figures released by the Comision Economica para America Latina y el Caribe (CEPAL) Cuba had the second lowest economic growth in Latin America, with 2.5 per cent. Only El Salvador did worse. More worryingly, CEPAL predictions for 2012 are quite negative too, forecasting another year of growth less than three per cent.

Many Cubans unhappy with pace of change

On the island, Adel Yzquierdo, minister of economy, recently admitted that “some of the major tasks that were to be accomplished as part of the reforms in 2011 were not achieved”. Among these were the unsuccessful attempt to substitute food imports with local produce, and the failure to take steps to bring the two-currency system to an end.

Of all the new measures adopted by Castro’s government, without a doubt, the establishment of credit facilities for new businesses is the one that steals the headlines. Cuban academics and intellectuals have already debated the extent to which this new policy will revolutionise Cuba’s economy.

Oscar Espinosa Chepe has suggested that this measure could lead to a deep transformation of the country’s banking system, while Arturo Lopez-Levy considers it another step in the direction of implementing a mixed-economy with elements of both socialism and capitalism.

Another area that could potentially transform the Cuban economy is the much talked about migratory reform. Since August 2011 there have been rumours about the impending end of decades of high migratory fees and the abolition of travelling documents that hinder the free movement of people coming and leaving the island. Disappointingly, for now at least, these rumours remain just that, rumours.
That is not to say that progress has not been made. Castro’s plan was designed to follow three stages of implementation that will only conclude in 2015. However, this slow pace is also disappointing; for the majority of Cubans, the changes are needed now. The economic situation of the island has hardly improved in recent years and Cubans find themselves struggling to make ends meet month after month.

Ever-present excessive regulatory measures have been the chief reason behind the sluggish implementation of these reforms. In order to raise the levels of efficiency and exports the government must limit the impact of well-entrenched bureaucrats and rising levels of corruption. Providing a boost to the efficiency and productivity of the economy is then crucial.

Migratory reform is key

Although the increase of agricultural production will not solve the food provision problem by itself, higher efficiency levels in the sector should eventually lead to the desired goal of meeting most of the local consumption.

Tourism and biotechnology have been touted as possible life-saving sectors. Nevertheless, they both face constant challenges. The prioritisation of the tourist industry, though important, it is not sufficient for stimulating economic growth in a medium-sized economy such as Cuba’s.

On the other hand, proposals made by local economists suggesting biotechnology as a potential industry which could propel economic growth are perhaps too optimistic. The impact of this sector is limited by diverse factors such as controlled world markets, intellectual property rights, the lack of a solid reputation and the US embargo.

Undoubtedly, the ace in Castro’s sleeve is migratory reform. Abolish all the existing permissions tomorrow and things will change for good. To start with, the impact of the US embargo will be lessened with immediate effect. Cuban-Americans and Cubans living in the US will not hesitate in boarding airplanes and spending time and money in Cuba, likely investing in Cuba’s economy and providing a much needed lift.

Here Raul Castro’s government has a priceless opportunity to put something right. By reforming Cuba’s migratory laws he will offer new generations of Cubans not “a one way ticket” from, but the much needed “return ticket” to Cuba. In turn, free movement of highly skilled labour will bring to Cuba not only investment, but also innovative and entrepreneurial ideas which have proven integral to economic development elsewhere.

In contrast to some apocalyptic views that go around among those who oppose each of Castro’s measures, I consider that, in spite of the world financial crisis, Cuba’s economy has a significant chance of improving on its current condition over the coming years.

The creation of regional forums and organisations such as the Alianza Bolivariana para los Pueblos de Nuestra America (ALBA) and the Comunidad de Estados Latinoamericanos y Caribenos (CELAC), should serve to inject some fresh ideas and cash, and will unquestionably help the island achieve a higher level of regional integration than ever before. They will also constitute an upgrade on the current relations with ideologically similar governments, such as those of Evo Morales and Hugo Chavez.

It is in the hands of Raul Castro’s government to implement the indispensable changes at a pace that will allow Cuba to climb up those CEPAL tables before long, improving the standards of living for millions of Cubans. More excuses won’t lead the country anywhere.

Manuel Barcia is Senior Lecturer in Latin American Studies at the School of Modern Languages and Cultures, as well as Deputy Director at the Institute for Colonial and Postcolonial Studies at the University of Leeds.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.