By Eloy Viera Cañive (El Toque)
HAVANA TIMES – Cuba’s minister of Economy and Planning, Alejandro Gil Fernandez, presented what he called “new measures to revive the Cuban economy,” to the National Assembly on July 21, 2022.
After 60 years, it’s hard to believe that the national economy can be revived without first making radical changes to the foundation of this economic/political system. However, Cuba’s ruling class believes the opposite to be true, while selling lukewarm water as something new.
Alejandro Gil has been the salesman in charge for some time now. But before him, it was Marino Murillo; and further back, Jose Luis Rodriguez. The ways they sell experiments hasn’t changed, and neither have the results: an economy that can’t seem to get its head off the ground despite them filling it with statistical helium.
The Cuban economy can never prosper because it isn’t governed or contemplated in economic terms, but rather in political terms. Alejandro Gil’s latest speech proves this.
GREATER IMPORTING ABILITY
One of the measures Gil announced was Cubans’ greater opportunities to import more miscellaneous and “non-commercial” goods. The deputy prime minster insisted on this last detail. The summary of the measure stipulates that the quantity of underpants – as well as other products that you should be able to buy on any street corner – Cubans can import will not be dependent on the number of units, but the weight and value authorities decide in the following legal rules that dictate the implementation of these measures.
Measures also include a 70% cut in customs duties (that Cubans pay to import goods). Meanwhile, Gil announced that the maximum weight of packages that people can send from outside the country will go up from 10 kg to 20 kg. He also said that the tax per kilogram of imported goods would fall from 20 USD to 10 USD, and that the maximum weight of packages exempt from payment and made up of articles that fall under the weight/value system will go up from 1.5 kg to 3 kg.
According to the minister of Economy and Planning, increasing individual’s’ ability to import without commercial intentions is a “palliative” to a supply deficit and shortages of all kinds of products in the country. He added that it’s a measure that is a variant of requests and the general opinion of many Cubans, who asked for individuals to be able to import goods for commercial purposes.
Gil said that they were “convinced [that] imports of a commercial nature would slow down economic recovery because it would generate a demand for foreign currency within the country and then leave to foreign lands without having an impact on national industry, and that it’s a measure that isn’t suitable for the current economic situation.”
However, the cognitive discordance in Gil’s explanation, and by extension of the government he works for, is clear. Cuban leaders have decided to increase individuals’ ability to import goods to offset the supply deficit and shortages, but they haven’t legalized the commercialization of goods imported by these people.
How do they intend for supply to increase if imported goods can only be consumed or donated by the people importing them? Does the Cuban Government hope the economy revives itself with a collective act of charity?
The answer isn’t straight-forward and is macabre. The Cuban Government seems to be putting all of its eggs into what it considers illegal: an illicit market of miscellaneous goods that Gil has referred to as “indiscipline and distortion.” The fight against this market doesn’t meet economic criteria, but political criteria. Just like the criteria that led lawmakers responsible for writing up the 2019 Constitution to stipulate in the document that the Cuban State had to avoid “wealth accumulation” in private hands. Something they have tried to control and restrict for a long time by betting on the state-led retail market monopoly that has never been able to meet demand.
In October 2019, Salvador Valdes Mesa, a vice-president of Cuba, announced other “new economic measures” that would allow industry and national production to develop, on the Mesa Redonda (TV show). These new measures were essentially designed to tackle the growing trend of goods being imported into the country by individuals for non-commercial purposes. Goods that, according to Valdes Mesa, “enter the country legally and are received and then sold illegally.”
At that time – almost three years ago – a government committee was created to analyze the “complex problem” and to propose measures to tackle it. This committee was made up of a good 14 bodies of the State’s Central Administration. On the show, Valdes Mesa defended the idea that the amount of foreign currency leaving the country in imports by individuals was such a significant amount that the State needed “to capture this foreign currency” to restock its chain of retail stores and to reinvest in national industry.
Boosting “national industry using installed capacities” was also one of the Cuban Government’s objectives in 2019, as outlined in that series of measures. More than two years later, they’ve still failed to meet this objective; but now, far from competing and indirectly restricting imports of goods by individuals, they are now proposing this be opened up further and become more flexible.
The Cuban Government has not openly decided to support the development of a private sector with the ability to import and commercialize these goods. This would lead to the collapse of one of the pillars of Cuba’s centrally-planned economy: the State’s monopoly on imports. A monopoly that remains in place because leaders believe it’s a problem for the economy if Cubans import and commercialize what the State isn’t selling, much less producing.
In this game of cat and mouse, they have ended up encouraging the expansion of the illicit market they know exists, and have also tried to annihilate. You don’t have to have graduated from university or be the minister of Economy to know that if there’s an illicit market of products feeding imports by individuals, this market is expected to grow and develop at the same pace its supply source grows. It’s naive to think the officials announcing the new series of measures aren’t aware of this or expect this to happen.
TEMPORARY SOLUTIONS AND UNCERTAINTY FOR THE ENTHUSIASTIC
Secretly pushing and defending the idea to encourage supplies to the illegal market makes the Cuban Government an instigator. The same law that is used to criminalize Cubans taking to the street to protest can be applied to Gil and Diaz-Canel’s cabinet. When Gil’s announcement comes to life, he will be instigating Cubans to commit a crime that the Government is regulating and persecuting, which they call “indiscipline and distortion” as a euphemism.
Today’s Penal Code in force and the newly approved one by the National Assembly in May 2022, stipulate that speculation and hoarding are a crime, as is purchasing goods to resell them or hold onto them or transport “goods or products in significant amounts and above those required to meet normal needs.”
Increasing people’s ability to import without giving them a way to sell imported products legally leaves only three options for enthusiastic importers: get more than what they need (which could be considered hoarding); reselling imported merchandise illegally (which could be considered speculation) or, giving imported merchandise away (which would be a rare altruistic act that is economically unsustainable).
Gil’s announcement could be a sign that the Cuban Government will temporarily tolerate more imports and the illegal commercialization of products. However, in keeping the ban on commercialization and, further yet, considering it a crime, the Government will be able to persecute individuals at their own discretion and depending on who they consider a threat.
At the end of the day, Gil himself has admitted that this entails a risk. A risk that they should be handling and always leaving a back door open to do what they need to. Especially because the greatest risk right now “is not doing anything”, as he has said.
Relaxing imports by individuals without a commercial purpose isn’t a measure designed to revive the Cuban economy; because it is taking place in an uncertain context, and it won’t be able to revive an economy that has already petrified. It’s a measure that looks like a temporary lifeline to give the Government some space to breathe, as it tries to keep afloat without compromising their privileges, giving up control or changing their inefficient administration of the economy and politics.
The measures Gil announced are a bag of dreams, of hopes that need to come to light. However, it isn’t a system or catalog of profound reform that will help get the Cuban economy up off the ground – not even “slowly”.
In any case, Gil’s risk analysis is at the citizenry’s’ expense. His time isn’t the same as citizen time. Therefore, the people who are applauding these new and contradictory measures and believe they will magically resuscitate the economy are the ones in greatest danger, or those who see it as a foolproof way to make some money.