Cuba’s New Reforms Bode Shaky Future

By Ron Ridenour

HAVANA TIMES, Nov. 30 — With the November 2010 publication of 291 proposals for reforms in 12 areas of economic and social life Cubans are once again faced with a national debate on policies. A key question is if the 800,000 Communist Party (PCC) members’ discussion, plus that of non-members, will affect the policies to be taken at the forthcoming PCC VI congress, in April 2011. There is no proposed mechanism to assure such in the 32-page document.

The essence of these guidelines, which aim to increase efficiency and production, and decrease the budget deficit, balance exports-imports, and pay the foreign debt ($20 billion), is to reduce the state’s role, delegate more authority to local governments and work sites, increase taxes and other revenues while cutting back on social benefits and subsidies.

In addition, there will be more private enterprise and foreign investment openings, and integrating more with progressive neighboring governments. Nevertheless, the document maintains that “only socialism is capable of overcoming the difficulties and preserving the conquests of the Revolution”.

The state will continue to be the central economic planner using the budgetary method but it will permit more farm land as usufruct property, greater self-employment (in 178 areas) and small businesses which, for the first time, will be allowed to employ people outside the family.

Several times in the last half-century of revolutionary Cuba have citizens been allowed to discuss national policies (not international ones) but the results have been consultative rather than binding—with the exception of adopting the new constitution in 1976, and modifying it in 1992.  Three years ago, shortly after Raul Castro took over the presidency, a widespread national debate was launched about the future of the revolution. Millions contributed ideas, but there was no real mechanism to implement anything debated.

I participated in the PCC’s fourth congress preparatory discussion, in 1991, while working as a volunteer on an oil tanker in Santiago de Cuba. The seamen passed two motions concerning democratization of decision-making and in the media. Most later said these discussions were a waste of words. They saw no results from their motions, but the party did listen to some of the one million complaints and proposals.

In the spring of 1994, the National Assembly called upon a “workers parliament” to discuss economic policy. The then national CTC union leader, Pedro Ross, said that these discussions would form the basis for permanent workers input with the objective of “finding and implementing solutions,” to “increase work efficiency and greater production”. However, greater worker input has not occurred since, and efficiency and production have never reached acceptable levels.

In Overall Terms

I find positive and worrisome aspects in the guidelines. First, I will sketch the major points, and then go into details in each arena.

Positive goals are those aimed at becoming self-sufficient in foodstuffs; uniting the two currencies into one so that all can buy what is offered; some decentralization of decision-making and use of more finances by local governments and companies. Then there is the admission of too much dependency on foreign capital and imports, the need to cut back on excessive costs and wastes, strengthen the desire to work, eliminate work centers operating at a loss that constantly produce less than their expenditures.
On the down side are several proposals which would continue mono-culture dependency, joint ventures-foreign capital investment, a dual economy and class inequalities generally viewed as necessary tactical setbacks in the early days of the Special Period (1990-96+). Many analysts including myself when working in Cuba, expressed the fear that these retreats could become permanent (1).  Our fears were warranted as it is clear today that these retreats have deepened and become entrenched.

The greatest lack in these proposals is the failure to propose a transfer to workers power (real democracy), in which workers actually manage the state and the economy. Because workers do not have real decision-making power, nor do the majority have sufficient foodstuffs and essential consumer items due to low wages and little supply, there is rampant demoralization-apathy-cynicism-alienation, which results in epidemic thievery of needed items from work places and state warehouses, and an omnipresent black market. Coupled with out-of-control thievery and corruption among some government officials and in the bureaucracy, the now stagnant revolution is on the verge of self-destruction.

There have been some leftist-oriented writings about Cuba’s economic and political discrepancies, mostly published by non-Cubans who support greater socialism. Cuban media will not publish such critiques by non-Cubans or Cubans—other than by Fidel and Raul. (See especially Fidel’s “Self-destruct” speech at Havana University, November 17, 2005, and Raul’s speech, July 26, 2007.)

Recently, however, Esteban Morales, a prominent Cuban Communist economist and leading researcher on race relations in Cuba, wrote a critical article from a left socialist perspective, “Corruption, the True Counter-Revolution” (published abroad but also allowed, for a time, on the website of Cuba’s writer-artists association (UNEAC), for which the PCC expelled him, as if affirming the widely held view that ordinary Cubans can’t have real influence. It seems some leaders took umbrage at Morales view that: “Corruption turns out to be the true counter-revolution, which can do the most damage because it is within the government and the state apparatus, which really manage the country’s resources.” (2)

This does not bode well for the PCC congress discussion.

Another problem is that many of the state’s leading economists actually propose so-called “market socialism”, believing that the solution to scarcity is more capitalist investment and supply-demand pricing. And in the proposals are aspects oriented in that direction, coupled with so-called “socialist” self-management of individual work centers, which would result in competition between work centers.

This would lead to petty-bourgeois production relations and individualistic mentality—worker-capitalists in the making, such as what the Solidarity union in Poland advocated. If one is to be paid according to what one produces and sells, as proposed, then nickel and sugar cane workers would be poorer than workers in citrus farming, for instance, when global capitalist pricing fluctuates so that mining nickel is not profitable, as is often the case in inevitable endemic cycling. Thus the basic principle of solidarity and equality is in serious danger once again.

The continued reliance on capitalist foreign trade and tourism limits investments in agriculture and other necessary goods for the population.

Furthermore, the proposals do not call specifically for greater trade with ALBA (Bolivarian Alliance of the Peoples of America) countries, although there is a vague statement that ALBA is a priority. With the exception of Venezuela, there is little trade with ALBA. Most trade is with major capitalist countries, including the US, which is Cuba’s number one food supplier (25-30% of all foodstuffs) and overall its fourth leading importer.

Twelve Major Guidelines

1. Economic Management Model

Cuba’s Communist party leaders propose the continuation of the socialist budgetary planning system while being flexible in allowing “new forms of management”: mixed capital, cooperatives, usufruct farmland, renting of establishments, self-employment and other forms that will improve efficiency in social work.

Some elements include wholesale markets that sell to all production units without subsidies; companies can “decide and administer their working capital and investments” according to new rules; firms that consistently fail to balance their budgets can be liquidated; worker income based on final results; after paying taxes and costs of production, enterprises can create their own development funds and bonuses to stimulate workers; prices are to be flexible and transparent with possibility of discounts.
Cooperatives will be able to sell directly to the population thereby avoiding the middle man distributor (acopio), which causes delays, wastes and thievery. This must be a major priority!

My concerns about this model are: where will sufficient goods come from for wholesale markets to sell to all productive units? How much say will workers actually have within the companies? Who will be the managers and how will they be selected?

2. Macro-economic Policies

The general aims are to balance the budget, export-imports trade, decrease state subsidies, and prepare to unify the two currencies, plus greater taxation based upon incomes.

There seems to be a contradiction between proposal 62, which calls for maintaining the centralization of prices of production and services, with that of proposal 23, which allows for enterprises to be flexible in establishing prices and discounts.

The unification of the two currencies is hoped for but is dependent upon “increased production”, which is not a given. The discriminatory situation of today could well continue indefinitely.

3. External Economic Policy

The goal is to export more and import less. In the introduction to the guidelines, it is stated that between 1997 and 2009, Cuba lost $10.1 billion pesos in trade imbalance, about ten percent of its current GNP. It is unclear how Cuba judges the value of its pesos when publishing figures of gross national product and state budget, but I believe it is on a one-to-one basis with the US dollar. Cuba’s Office of National Statistics (ONE) does not explain currency values but CIA Factbook calculates Cuba’s economic figures in $. For 2008, it claims (without citing sources) that exports were but $3.68 billion while imports were $14.25 billion—an imbalance of nearly $9 billion, which is almost what Cuba claims is the difference in a 12-year period.

Cuba’s imports come first from Venezuela, 31%, followed by China, 10% and Spain, 9%. Cuba’s exports go mainly to China (25%), Canada (20%), Spain (7%) and the Netherlands (4.5%). Oddly enough 6% of all imports are from the US, which officially continues a blockade but since 2000 sells foodstuffs and medicines on a cash-on-line basis in US dollars. This places Cuba at a security risk by depending upon the whims of its main enemy for food.

Cuba continues its policies of relying on exports for its main growth. It states priorities in nickel, sugar, oil (?), foodstuffs (?), coffee, cacao, shellfish (proposal 71)—and tobacco. All this reliance on an export mono-culture economy plays into the vulnerable world capitalist market. Furthermore, it makes no obvious sense to export oil and foodstuffs when it is a major importer of both—as much as 80% of its foods are imported and much of what it grows in fresh vegetables and fruits is sold to tourists. A saner export is Cuba’s excellent bio-technology.

Apparently nothing will change regarding the Free Zones and Industrial Parks Law 77 of 1996, allowing export-import without restrictions and without any taxes on products or labor, just like in many underdeveloped capitalist countries.

Proposals 107-8 emphasize participation with ALBA and integrating the economy with Latin America. But there are no specifics proposed. And most of its trade is in exporting “human capital”—medical personnel, teachers, technicians, sports instructors—while buying petroleum from Venezuela. Cuba also sends medical-teacher aid to many other Latin America countries, and elsewhere in the world. This is positive internationalism. At the same time Cubans’ welfare services are curtailed due to the vast numbers of professionals sent around the world.

ALBA inter trade was $6.5 billion, in 2009, between the four major countries (Cuba, Venezuela, Ecuador and Bolivia.) “Information export support” website states that when Cuba and Venezuela initiated the alliance, in 2004, their trade was $1.5 billion. (3) ALBA now has its own currency for transactions, the Sucre, which it fixes at $1.25 dollars.

According to a study conducted by Larry Catá Backer and Augusto Molina, “Globalizing Cuba: ALBA and the construction of socialist global trade systems”—presented at Queen’s University, Ontario, May 7-9, 2009—six ALBA countries established a network for Food Trade and Food Security Fund, February 2009, with six countries but Cuba is not listed. Cuba, however, provides the basic ideology for ALBA. (4)

4. Investment Policy

There is nothing new or anything to add to my overview. A major failure here is not to emphasize investments and technology to manufacture products nationally from its natural resources. This has long been an essence of colonialist and imperialist economic relations between the “first” and “third” worlds, and was a feature of USSR-Cuba relations as well. While Fidel has spoken about this in the past, there seems to be no change in conduct. I think Cuba could listen to the beginnings of change in this area from President Evo Morales, who recently stated that lithium reserves would not be exported as raw materials but products will be manufactured in Bolivia.

5. Science, Technology and Innovation Policy

Continue policies in effect, and with a new priority into research aimed at lessening the negative affects of climate change.

6. Social Policy
Continue preserving the “conquests of the revolution” in key welfare areas while reducing “excessive costs”. The party also seeks to recover the role that work should play in contributing to societal development and meeting personal needs. That means: eliminating hustling, thievery, over-reliance on remittances.

In education, the guidelines call for strengthening the role of the teacher in the classroom. But there is nothing stated about allowing teachers more room in deciding what students should read and discuss.

Proposal 143 calls for improving the quality of medical services while eliminating some costs. This does not take into account that the medical personnel inside Cuba earn very poor wages, and much less than those who work in international missions. This dichotomy is a major sore.

Proposal 152 calls for generating new sources of income in the culture arenas. But does this mean continuing the “new critics” approach, which deemphasizes revolutionary analysis and values? As James Petras wrote, “The clearest threat to Cuba is from within, evidenced in the decline in revolutionary cultural production”. He outlines how from posters to films and books, Cuba’s cultural leaders are ignoring their values of solidarity from the times during the wars against Vietnam and in Africa. There has not been a “single documentary about the world-historic struggles of the Iraqi, Afghan or Somali resistance to the US directed imperial wars; the Colombia guerrilla struggle against the death-squad `democracy´; and the struggle of the black masses of New Orleans against capitalist eradication of their homes, schools and hospitals.”

“The new literature in Cuba—in its break with social realism—contains racial and sexual stereotypes…” “One gets the impression from watching, listening and reading current Cuban cultural productions that there are no honest revolutionaries left in Cuba,” says Petras. (5)

Proposal 154 calls for diminishing state financing of social security by extending the contribution of workers in both state and private sectors. How can this be? One of the pillars of social welfare brought about by the socialist revolution is now to be conditioned, in part, on taxes paid by underpaid workers. Until now part of one’s “income” has been free access to health care and education and subsidized low prices for much foodstuffs and clothing. And the ration book, guaranteeing some basic foods albeit fewer and fewer, is to be eliminated (Proposal 162). That means that real wages will decrease, in effect. And where will the poorest of workers, including pensioners, get their food? The food sold in farmers markets, even the state controlled ones, are too costly to provide enough food for most people for the entire month. Will this not result in greater frustration, thievery, and reliance on remittances? Shall more people flee to capitalist countries, in order to send their families some money just to eat?

The state offers a promise of increased wages, first and foremost in the $ equivalent (CUC, which is valid only in Cuba) economy, and in agriculture, once production increases. But hungry, frustrated workers will NOT work harder before they are better paid and treated. He/she is going to be angrier and open to more corruption.
7. Agro-industrial Policy

The main stated goal is to end the cycle of food dependency, to balance export-import trade. New methods of management, already mentioned, are to be employed. There should be “greater autonomy of producers”. But is that for managers or for all workers? Plus “supply and demand” market pricing (177) shall be employed generally accompanied by ending subsidies.

Why can’t prices be based on socialist relations of production, taking into account, as well worker incomes in relationship to their necessary consumption?

While there is talk about greater national production, over half of the arable land still lays fallow! The guidelines point this out on page 6. Fidel and Raul have talked about this dilemma for many, many years. Socialist Cuba has “traditionally” imported most of its foodstuffs, first from the Soviet Union and Comecon, and since from capitalist countries. Why has this incompatibility continued?

Raul Castro said, July 27, 2009, that the 2008 policy allowing fallow state lands to be used in usufruct terms by private persons and cooperatives had already accomplished the transfer of 690,000 hectares in 82,000 approved applications of the 110,000 total number. This is 39% of idle lands. When Raul spoke, one-third of transferred lands had been planted. So progress is underway.

Nevertheless, Reuters reported, August 4, 2010, that food production fell 7.5% in the first half of 2010 from 2009. And the fall especially affected rice and beans, which had been on the incline. Rice, however, is mostly imported from Vietnam (70% of consumption), often on credit terms. And overall food production is below 2005 levels while imports are decreasing in the past two years due to lack of cash and credits.

Part of this must be due to severe hurricane destruction in 2008 and earlier draughts.

Nevertheless, while there is constant complaining about the US blockade—with the decade-old exception of foods and medicines—and praise for ALBA integration, of the top ten food importers only one is a Latin American country and that is capitalist Brazil, not an ALBA government. (6)

Furthermore, much of the foodstuffs that Cuba imports from its enemy—everything from cereals, powdered milk, soybeans and oilseeds to poultry and beef—is infested with Genetic Modified Organisms. Cuba is now using GMO corn seeds in its own earth.

Of all the contradictions, internationalist-revolutionary socialist Cuba’s business relationship with the former Mossad chief of European operations and major Zionist Israeli capitalist Rafi Eitan is one of the most incomprehensible.

“In 1992, Eitan was approached by Irving Semmel, a successful Brazilian businessman, to bid on a contract for an agricultural deal in Cuba, which involved the cultivation of the largest citrus grove operation on the island. After winning the bid, Eitan built a partnership with four other international entrepreneurs to run the deal. The company GBM (Grupo BM) was incorporated in Cuba, but Eitan represents the company in Israel under the name ‘Reesimex’. Due to the success of the venture and the connections acquired, GBM also won the contract to build the Miramar Trade Center in Havana, and a Holocaust Memorial at the center of the Old City of Habana. Recently, GBM was awarded the “Medal for Agricultural Work” by the Cuban government,” writes Wikipedia. Eitan also owns, with the Cuban government, the largest citrus juice plant.

Eitan has never renounced his Zionism or his murderous operations since his retirement from those activities. (7)  He was “involved in the secret planning and implementation of the attack on the Iraqi Osirak nuclear reactor in June 1981,” wrote Israel’s Ministry of Foreign Relations. Eitan was also Jonathan Polland’s handler. Polland was convicted of spying on the US for Israel, the only country which consistently votes in favor of the US blockade on Cuba. “Between 2006 and 2009, Eitan was a member of parliament and sat on its all-powerful foreign relations and defense committee. As leader of the GIL pensioner party, he was minister for pensioner affairs.

Proposal 179 calls for “Recuperating national citrus activity and assuring efficient commercialization of its products in international markets,” and there is no turning back on this imperialist capitalist. What does Cuba tell its Palestinians friends about this, not to mention Iranians, Iraqis and Afghans?

8. Industrial and Energy Policies

Cuba industrializes very little, something Che Guevara had endeavored to change without fortune. But with what little industrial development there is, these proposals call for orienting it for exportation while reducing the import component. How can Cuba meet its people’s own industrial product needs by exporting more and importing less? Now it is nearly impossible to find new clothes for sale in national pesos, for instance.

Proposal 199 calls for greater emphasis on small-scale production in local industries, which sounds healthy. Leaders also aim to produce more construction materials, and oil and gas, which provide 90% of energy use. There will be more clean energy too: biogas, hydraulic and wind. Something new will be the production of tires and packaging.

9. Tourism Policy
There is no change in direction here; just more of the same. In 2009, 2.4 million tourists visited Cuba, about the same as 2008, but spent 12% less, $2 billion, due to the global economic crisis. Twenty thousand of these were visitors to health facilities for care.

The tourism apartheid has been lessened with new rules allowing all persons as hotel guests as long as they can pay in hard currency. Today, a few of the new national Cuban bourgeoisie party alongside foreigners, including Miami Cuban “escapees.”  While this eliminates the previous discrimination of nationality it heightens the inequality of Cubans, the vast majority of who could not pay for one day in a luxury hotel with an entire year’s wage.

But the worst is that with so much investment attention and personnel in tourism revolutionary ethos has been permanently distorted. And national agriculture products are diverted from the population to tourists. This is, perhaps, impossible to calculate financially, but much of the foreign currency earnings from tourism must go to import food for national consumption.

10. Transport Policy
Nothing new is proposed here. Cuba will continue importing buses and trains from China, apparently. Leaders do propose investments in docking infrastructure, loading-unloading operations. As a former voluntary merchant marine, I personally welcome this initiative. Cuban longshoremen are (were, anyway) among the world’s slowest—something that irritated seamen and captains and caused greater costs to shipping.

The inadequate transportation system, with so many breakdowns and lack of repairs, causes tardiness and absenteeism from work and school. There is an endless vicious circle of inadequate production and services coupled with inadequate transportation.

11. Construction Policies, Housing and Hydraulic Resources

Residential housing is to increase, in part, by establishing a system of payment based upon construction results and employing double shifts.

Cuba has never had sufficient housing for the entire population. Pre-revolutionary and revolutionary governments have accepted that too many people live under the same roof—three generations is not unusual. But young people, especially those wishing to marry and have children, are not motivated by this “custom”. Nor will they be enthralled by proposal 270, which calls for more tourism construction, including: golf courses, aquatic parks, spas, and other non-necessities, thus diverting labor and materials for necessary national housing.
The traditional lack of housing and dilapidated conditions has been aggravated by unusually strong and frequent hurricanes, in part due to climate change. Between 1998 and 2008, Cuba lost over $20 billion to 16 hurricanes and three of them, in 2008, caused half those economic damages.

The ministry of construction apparently does not foresee being able to meet the population’s needs so the government proposes to allow “new forms of construction organizing” (272), such as cooperatives and self-employed contractors, who will most assuredly demand convertible currency (CUC) payment, which only a minority of Cubans have enough of for residential construction.

Proposal 273 allows for increasing the “commercialization of construction materials”. Does this mean in CUCs as well?

Proposal 278 also needs explanation. It calls upon “flexible formulas” for exchange of housing (permute), buying, selling and renting”. Does this mean Cuba will change its long-held-standard of not permitting housing sales, in order to abolish speculation and inequalities in property relations?
New and better water works need to be built and repaired. One of the most frustrating aspects of living in Cuba for me was to see so much water go to waste, either through gushing leaks or permanent drippings due to faulty equipment and a lack of washers, or carelessness of many people, who let water flow out of faucets and tubes without regard to its loss. I was shocked to see the figure 58% “of water distributed is wasted,” and impressed that this was reported in “Granma”. (8)

So, party leaders propose (282) to promote “a culture conducive to the rational use of water” while reducing waste of all kinds. Just why is there a culture of waste? Is it not because of rampant apathy and alienation?
”The greatest obstacle has been our fear lest any appearance of formality might separate us [revolutionary leaders]  from the masses, from the individual, and might make us lose sight of the ultimate and most important revolutionary aspiration, which is to see man liberated from his alienation,” wrote Che Guevara. (9)

12. Commercial Policy

Party leaders propose a re-structuring in commercial production and presentation of services both wholesale and retail. Non-state food services are encouraged. Leaders aim to diversity the types and increase the amount of products and services. Once there is one integrated currency, the differences in products and services available should disappear.

But where will all the wealth come from for these operations? It sounds too inflated, and too consumerism oriented, to me. There is absolutely no need, for instance, to shop in stores that sell ten toilet paper packages with different names.

Conclusion: Workers Power is the Only Future for Socialism

I am not alone in maintaining that without workers power real socialism cannot be built, and even half-real socialism will fail—as we have witnessed in most countries that made attempts.

Workers power should include oversight committees staffed on a rotating basis by actual workers across the country. I firmly support what James Petras wrote: “A new income policy in itself can contribute to greater incentives for productivity if it is combined with greater direct participation of all workers in the organization and administration of the work place as well as the opening of multiple spaces to discuss the restructuring of the economy.”

”What especially requires reform is a new system of public accountability based on independent accounting authorities, consumers’ and workers’ oversight commissions with the power to ‘open the books’.  Workers and professional control will not eliminate corruption altogether but it will challenge the authorities through independent periodic reviews…Greater accountability within the leadership is necessary but not sufficient.  There must be control and vigilance by authorized commissions from below and by a parallel independent general accounting office…a new system of elected representatives to oversee the allocation of the budget to the various ministries and the power to summon responsible officials to televised hearings for a strict public accounting,” states Petras. (5)

When revolutionary, communist, anarchist organizers are engaged in workers struggles under capitalism, one of their best arguments when confronted by management that their demands are not economically possible is the demand: “Open the books.” So when they are told they now have their own economy, their own government, their own Cuban-Marxist state why can they not see the books?

When I first started citing Fidel’s perhaps most important speech ever, that of November 17, 2005—“This country can self-destruct…and it would be our fault”—many non-Cuban leftist solidarity activists considered me to be too critical, even bordering on treachery. Today, it must be quite obvious to nearly all that internal deterioration, physically/emotionally/ideologically, has grown such that it is beyond denial.

Nevertheless, back in 2005, Fidel apparently had not foreseen that it would degenerate more, because of the measures then being taken against that. Later on in this speech he stated: “I can assure you with absolute certainty that this battle against waste, theft, the illegal diverting of resources and other generalized vices has been won in advance…”

I will close with another, sober quotation from Fidel Castro:  “Capitalism tends to reproduce itself under any social system because it is based on egotism and on human instincts. Human society has no other alternative but to overcome this contradiction; otherwise, it would not be able to survive.” (10)

Notes:

1. See my book “Cuba at the Crossroads”, Infoservicios, Los Angeles, California, 1994.
2. http://www.afrocubaweb.com/estebanmorales.htm
3. http://www.export.by/en/?act=news&mode=view&id=21977
4. http://lanic.utexas.edu/project/asce/pdfs/volume19/pdfs/backermolina.pdf
5. “Cuba: Continuing Revolution and Contemporary Contradictions”, August 12, 2007.
6. http://www.fas.usda.gov/itp/cuba/CubaSituation0308.pdf
7. See Gideon Alon, “Just a Farmer in Cuba”, as cited in (5). See also my “Cuba: Beyond the Crossroads”, Socialist Resistance, 2007, page 7. http://en.wikipedia.org/wiki/Rafi Eitan http://www.mfa.gov.il/MFA/Government/Personalities/From+A-Z/Rafi+Eitan.htm
8. “En este proceso quien decide es el pueblo,” November 16, 2010, in a statement by René Mesa Villafaña, president of the National Institute of Hydraulic Resource.
9. “Socialism and Man” Marcha, Uruguay weekly, March 12, 1965.
10. “The law of the jungle”, October 13, 2008.