Difficult times for 'unreforming' Cuba

Cubans are used to living with crises, limits, shortages, emergency plans, ‘special’ — and less ‘special’ — periods. That may be why for a number of months many Cubans have been watching with detachment the economic and financial crisis that has been battering the world for two years now. Even politicians and the media contributed to this sense that in Cuba there would be no job cuts, no foreclosed homes, and no gutting of social programmes.

However, three savage hurricanes that devastated half of the island in 2008, prolonged and acute systemic economic inefficiency that makes it necessary to import 80 per cent of the food consumed on the island, in addition to oil price fluctuations, the difficulty of obtaining international credit, the choking of trade by the American embargo, as well as the waves of economic depression that reached Cuban shores as well, all have reduced the economy to near paralysis and convinced those minding the state coffers that they are headed for bankruptcy.

The caution with which Raul Castro introduced changes in the country’s economic and financial structure during his three years as president seems to have ended: circumstances now require Cuba’s leaders to approach the economy with greater realism and, as a consequence, to reshape certain structures inherited from the old Soviet-style socialist model which, though they vanished with the USSR, lived on in Cuba.

New socialism?

What then is the new socialism that will be adopted on the island? Perhaps the Chinese model? What can be predicted is that even if no major political changes are introduced — altering the single-party system is not on the table — and even if the state monopoly remains in place, in the social sphere there will be transformations that, as the president has warned, will involve cutting ‘unsustainable’ subsidies and spending.

Thus far it has been announced that a sector as sensitive as healthcare will not be touched, though it is certain that the Cuban healthcare system has greatly deteriorated in past years because of the lack of personnel — thousands of Cuba’s doctors work outside of the country — and the alarming state of many medical clinics and shortages of supplies and medicine.

In education and culture, perhaps there will be changes beyond the simple and much hoped for elimination of the system of pre-university institutes located in rural areas and cuts in various subsidies and free programmes.

But where cuts are most certain to be felt is in social benefits directly related to consumption and the economy. For months there has been discussion of the unsustainability of the system of ration cards, which assures the entire population of the island a certain quantity of subsidised goods that the state must buy on the international markets and then sell at low prices. There is also talk of eliminating the dual currency system — an emergency measure introduced in the crisis of the 1990s when the possession of currency was decriminalised — which resulted in the creation of a dual economy, one using Cuban pesos, the other, the convertible Cuban peso (CUC). The problems created by the dual system can be resolved only by weakening the Cuban peso vis a vis the other currencies or maintaining the CUC at its current level of 24 pesos, or about  USD 0.90.

Changes in tax system

With  prices of services and products likely to rise, there has also been discussion of broadening taxation, given that now only the self-employed and employees of foreign companies pay taxes.

The announced official elimination of the egalitarian system is more than a necessity: it is a well-established reality. Those in Cuba who have access to currency — whether because of work, corruption, or remittances from abroad — have a standard of living that is infinitely superior to those who must live on state salaries alone. What is most sad is that in the majority of cases, these economic differences have nothing to do with hard work, inventiveness, qualification, or talent but merely the flaws of an economic structure that makes it more profitable to be a porter at a hotel  than a neurosurgeon.

Whatever changes or economic cuts are in the offing, it seems clear that the time for protectionism and egalitarianism is long passed. Cuban socialism will reduce subsidies and perks and impose stricter rules for a society that is taking in water from every side. In the end, Cuba’s new model seems to be this: more socialism, but with fewer social benefits.

IPS