Cuba’s
parliament—the National Assembly of People’s Power—concluded
its session in Havana on Aug. 2. The economy was the centerpiece of
deliberations. Delegates approved an extensive series of economic and
accompanying political measures that have been discussed throughout
Cuba since November 2010.
In
November, the “Project of Guidelines on the Economic and Social
Policy of the Party and Revolution” was published for national
debate before its formal presentation at the Sixth
Congress of Cuba’s Communist Party (PCC) in April 2011. The
consultative process has continued since then.
The
objectives of the sweeping proposals are to stimulate the economy and
raise production. Some measures are already under way: distributing
unused lands for cultivation; decentralizing some state services
(beauty parlors, barbershops, tire repair, taxis, and more);
reassigning thousands of state workers to jobs in construction,
teaching and agriculture and reducing the state work force by tens of
thousands more. Opportunities for self-employment and small-scale
enterprise have been expanded. Payroll and income taxes will be paid
by those engaged in this activity.
Debating
the changes were 8,913,838 Cubans—out of a population of 11.5
million—who participated in work and neighborhood meetings to
discuss the Guidelines. More than 3 million Cubans commented during
the meetings.
Of
the original 291 guidelines in the document, 181 were modified and 36
new ones accepted, making a total of 313 guidelines.
Cuban
President Raúl Castro said at the National Assembly session, “[W]e
can characterize with total certainty the Guidelines as an expression
of the will of the people, contained in the policy of the Party, the
Government and the State, to update the Social and Economic Model,
with the objective of guaranteeing the irreversibility of socialism,
as well as the economic development of the country, together with the
necessary formation of ethical and political values of our citizens.”
Economic
situation requires action
External
and internal factors have placed Cuba in a precarious economic
situation that requires the government and Communist Party to make
major changes to grow the economy. The U.S. economic blockade,
hurricanes and drought, the volatility of capitalist markets and
prices, as well as domestic inefficiencies, have severely impacted
Cuba’s economy.
From
1998 to 2008, according to the Guidelines report, 16 hurricanes
caused $20.5 billion in damages. Cuba is still recovering from three
major hurricanes in 2008 that caused more than $10 billion in
damages.
Between
1997 and 2009, changes in export and import prices cost the country
$10.9 billion. With nickel ore for example, Cuba’s second major
source of export income, the international price dropped from $50,000
per ton to only $9,000 to $10,000 per ton in 2008.
Rising
food prices worldwide have created a huge problem for Cuba, which
buys up to 80 percent of its food from abroad. Cuba’s plan to spend
$1.2 billion on imports for the year 2011 had to be revised up to
$1.5 billion for the same quantity of food, due to price increases
alone. This year’s economy is expected to grow 2.9 percent overall,
and 6 percent in agriculture.
The
Special Period
The
new economic strategy is not a sudden change in the direction of the
Cuban socialist revolution.
It
is a continuation of the process—although more far-reaching
today—that Cuba undertook at the cusp of the “Special Period,”
starting in the 1990s.
At
the start of that decade, Cuba’s main trading partner, the Soviet
Union, canceled overnight all trade with the island nation, just
before the USSR’s demise. Almost 85 percent of Cuba’s trade had
been with the USSR and socialist Eastern Europe.
Plunged
into the realities of an imperialist-dominated world, Cuba urgently
needed new sources of income. Severe shortages in fuel, raw materials
and spare parts caused the country’s production to drop 34.5
percent between 1989 and 1994. Aggressive U.S. laws were passed
against Cuba in 1992 and 1996, tightening the U.S. blockade.
The
new shortages forced Cuba to adopt major economic reforms. Before the
Special Period, most Cuban agriculture was organized in state farms,
which require the large-scale use of machinery, fuel and other inputs
to be efficient and productive. Most state farms were converted to
cooperatives, where the land remained state-owned, but the product
was owned cooperatively by the farm workers. The aim was to spur
production through private incentive. This was a step back from a
higher form of socialist property, which was the state farm where
both the land, product and “profit” (which in a planned economy
is transformed into social or collective surplus) from agriculture
belonged to society through the medium of the workers’ state.
Opening
up to capitalist foreign investment was another step accepted by the
Cuban leadership as necessary to bring more resources into the
country. So, too, was a major expansion of tourism. Many new hotels
took the form of joint ventures with foreign corporations. The
legalization of self-employment was needed to absorb workers laid-off
in state industries.
Cuban
leaders forthrightly explained that these measures did not represent
further steps forward in building socialism, but rather a tactical
retreat aimed at preserving the fundamental achievements of the
revolution.
On
July 26, 1993, Fidel Castro explained Cuba’s situation in the midst
of the Special Period: “Today we have to save the homeland, the
Revolution and the gains of socialism, which is the same as defending
the right to continue building it in the future. We will never resign
ourselves to renouncing that. This is what we mean when we say ‘Socialism or Death.’
“Today
we have to make concessions. … We have had to divide the island on
the map and accept international bids so that foreign companies can
explore and drill. … We would have to share with them a part of the
petroleum that is found. When the USSR existed, we conducted the
exploration ourselves, we did the drilling, the petroleum was all
ours.
“Today
life, reality, the dramatic situation in which the world is living,
this unipolar world forces us to do what we would never have done if
we had capital and if we had the technology to do it.”
Some
“left” enemies of the Cuban Revolution claimed that these steps
signaled the “restoration of capitalism.” Washington harbored no
such illusions, and has not let up for a moment in its drive for
“regime change.”
By
1996, the economy began a slow but steady climb upward. And Cuba
marked many milestones along the way: constantly improving indices of
health, tens of thousands of doctors serving abroad, health
care and education remaining universal and free, energy
policies saving more than $1 billion , an impressive
sustainable-agriculture model, the Latin American ALBA alliance.
The
economic strategy of the Special Period was not imposed on the
population by President Fidel Castro or the National Assembly. In
1993, much like today, 83,000 “workers’ parliaments” were held
with 3,000,000 workers as well as debates in the mass organizations.
The people had a real say on where to cut back and what to preserve.
Cuba’s survival and economic recovery was only possible with
socialist consciousness, a strong will to sacrifice, and the unity of
the Cuban people.
The
process is underway
A
Permanent Commission for the Implementation and Development of the
Guidelines has been formed in the National Assembly. It will be
responsible for controlling, verifying and coordinating activities of
all entities involved, as well as to evaluate and adjust where
necessary.
For
example, on Aug. 5, in response to farmers’ complaints that farm
tools were too expensive to buy, it was announced that all 1,200
farm-supply stores would lower the prices of 93 items, including
machetes, hoes, plows and milking cans, by 60 percent.
Much
of Cuba’s arable land has been unused or underutilized, while up to
80 percent of Cuba’s food is still imported. Replacing imports with
domestic production through wider use of the land is crucial.
In
July 2008, the agricultural Law Decree 259 was approved for the free
transfer of land to current and new farmers, with renewable 10-year
terms for individuals and 25 years for cooperatives.
For
first-time users, the land parcel will be up to 13.42 hectares (31.8
acres). For existing entities, 40.26 hectares will be granted (95.4
acres). The practice is “usufruct”: the land held by the state
but production belonging to the producer.
So
far, about 2.5 million acres of land has been granted to 143,000
people, out of 171,000 who applied.
One
major challenge for growers is the pervasive and hated “marabú”
weed. An estimated 50 percent of the land is covered with this
deep-rooted and fast-growing thorny plant, which renders the land
useless. This reporter can attest to the challenge of marabú, having
spent exhausting hours chopping marabú with others.
Expansion
of private employment
Before
the new economic reforms, the granting of private employment licenses
had been suspended, with only 174,000 people working as
“cuenta-propistas.” Now licenses have been dramatically expanded
to an estimated 325,000 people. A total of 178 types of small-scale
self-employment have been legalized.
The
license holders are required to pay payroll taxes if employing
others, and taxes on their profits. Some feedback from the people
indicates that many are struggling to break even. So a moratorium on
payroll taxes has been declared through the rest of 2011. Other taxes
have been lowered.
Before
the new policy, the self-employed were legally limited to hiring
family members only. This has now been expanded to include the hiring
of other workers. This is seen as necessary because up to 1 million
workers may be laid off from state employment and cannot be absorbed
completely through other state employment.
When
this reporter traveled to Cuba in May, she spoke with people engaged
in private restaurants, room rentals and private taxis, including
some who had not been working before. Now it takes as little as a
week to receive a license.
Walking
down central 23rd
Street and other roads in Havana, one can see people with small
stands of home-produced CDs and DVDs, movies and music, handicrafts,
as well as a sprouting of more food operations in people’s homes.
Many activities were already operating “underground” without a
license. Now they can operate legally and contribute to the economy.
Many
state enterprises became unsustainable for the state to run.
Barbershops, beauty salons, tire repair, taxis and other services
operated at a loss for too long.
With
extremely limited resources, the government must prioritize its
expenditures in order to guarantee the most vital needs for the
population: health care, education, food, industrial production for
consumer goods and hard currency income.
By
converting services workplaces to “usufruct,” where the workers
own the production and the property remains in state hands, what was
a drain can now render an income to the state.
A
Communist Party member explained to this reporter, “For a long
time, although the price for a haircut in state-run barbershops was
officially 20 centavos, the actual price that the workers charged was
higher, sometimes 5 pesos [there are 100 centavos to a peso.]
“The
state’s income was only 20 cents, yet as owner of production and
property, the state provided electricity and other utilities, the
barbershop and supplies.
Now,”
the PCC member said, “those workers are responsible for the
operation. They have to pay rent, utilities, and taxes. They are
invested in the operation’s success and contribute to the
government budget.
“Although
the workers hold power and the wealth is owned in common, sometimes
an individual worker doesn’t feel that responsibility.”
He
added, “But accumulation of capital, the combining of shops into a
larger operation, will not be allowed. This is true of all the
self-employment enterprises.”
Sale
of houses
Much
has been made in the U.S. media about the announced change allowing
for house sales. Up to now, selling one’s home was prohibited. The
most that could be done was to swap a house or apartment for another
dwelling, or “permuta” as they say in Cuba.
Most
Cuban families are owners of their own home. This did not come about
from a successful real estate market, but resulted from revolutionary
decrees in 1961 and 1962, which converted all the housing stock into
a right, a home for each family.
But
in the five decades since the 1959 Revolution, some families ended up
with more than one house through marriage, death or other
circumstances. House swaps are sometimes difficult to resolve through
a one-for-one trade; a payment will now be allowed to achieve more
equitable exchanges, as well as sale of one’s house. But home
ownership will still be limited to one dwelling.
With
the new regulations, Cubans who live abroad for long periods of time
can now rent their home out. This is expected to help solve the
severe housing shortage.
The
house sales are still restricted. There is little danger of the new
home sale policy turning homes into “investments” or leading to a
huge disaster of foreclosures as in the United States,
Social
security and the ration book
The
law on social security was modified in 2008 and took effect in 2009
to change requirements for retirement. Because of the aging of the
working population, the legislature approved an increase in the
retirement age—to be phased in over five years—to 65 from the
previous age of 60 for men, and to 60 from the previous age of 55 for
women. Without this change, the system’s finances would be heavily
strained for future retirees.
Every
Cuban has been entitled to the rationing system since the early days
of the Revolution. It has guaranteed a food basket of basic items at
a price that has remained unchanged throughout the years. But it has
been heavily subsidized by the government and can no longer be
sustained economically. Some items have been phased out, and at some
point in the future the whole program will be ended.
The
announced phasing out of the rationing system evoked the most
responses in the debates, with pro and con opinions.
At
the PCC Congress, President Raúl Castro stated: “The problem is
not the concept, it is in how, when and how to phase it in. Ending
the ration book is not an end in itself, it cannot be seen as an
isolated decision, but as one of the main measures that will be
essential to apply to eradicate the existing deep distortions in the
functioning of the economy and society as a whole.
“It would not
occur to anyone in the leadership of this country to suddenly decide
the end of that system, without first creating the conditions for
that. This means carrying out other transformations in the Economic
Model with the aim of increasing efficiency and work productivity, in
a way that can guarantee with stability the levels of production and
supply of products and basic services at non-subsidized prices and at
the same time accessible to all citizens. …In Cuba, under socialism
there will never be room for ‘shock therapies…’”
While
millions of people in the world are suffering from starvation, while
the growth of billionaires multiplies, Cuba’s planned and rational
economy is able to channel its resources for the benefit of all the
people.
In
the United States, genocidal wars continue unabated and millions lose
their jobs and homes, and the billionaire bankers make the real
decisions to assure their profits. In contrast, it is clear from the
debates and process over the Cuban economy and society that the Cuban
people are in power.
