Cuba and its Pending Matters

by Fernando Ravsberg

HAVANA TIMES — The year 2017 is drawing to an end with its almost paralyzed “reform process” and the economy hasn’t changed in the way the Communist Party Guidelines proposed, which the government itself had put forward and had been ratified by millions of Cubans at assemblies.

It will be left up to the next government to resolve key issues that stand in the way of progress such as unifying currencies, opening up to small and medium private enterprises (SMEs), lifting restrictions on cooperatives, authorizing wholesale markets and speeding up foreign investment processes.

In spite of everything, Cuba continues to have two currencies and, which is even worse still, different exchange rates between them, which makes it impossible to objectively analyze accounts and it creates troubled waters in which the corrupt can move about easily.

As a result of these exchange rates, some more profitable companies appear to have negative balances and vice-versa. The false parity at a business level between Cuba’s two currencies distorts everything and it is a burden that makes it impossible for the economy to really take off.

The Party, government, congresses, parliament and people assemblies all approved the existence of SMEs and yet not the slightest practical move has been made for their promotion, there isn’t even a State institution where you can go to make a company legal.

The delays within this field are surprising given the importance this project has in the reforms’ master plan. The State needs to free itself of shortfall companies, which would create great unemployment which can be only be absorbed by the private sector.

Not everyone has the skills, the capital or the knowledge to transform them into self-employed workers. “Self-employment” has its limits and the current standstill within this sector proves that there needs to be new forms of organization for the private economy.

This year has been particularly negative in opening the economy to private production and services. Small and medium businesses aren’t being set up, already established cooperatives are being shut down and licenses for popular self-employed jobs that were really booming have been suspended until further notice.

Criticism of the private sector is vicious and it tries to justify these steps backwards in the reforms process. The reality is that a double standard is being used to measure the success of State and private companies, where the corruption of some companies in both are intimately linked.

The sale of stolen products at “paladares” and cafes wouldn’t exist if there first weren’t resources being diverted away from State companies. Corrupt people in both sectors feed each other but only the self-employed are paying for the broken plates.

Within the state and private business tangle, both here in Cuba and abroad, there aren’t any saints but the lack of wholesale markets or authorization to import goods of their own accord push them towards crime. If they weren’t going to be given access to supplies, it would have been better not to have given out any licenses.

Foreign investment is moving forward at a turtle’s pace and apparently not even the foreign investment minister, Rodrigo Malmierca, can speed up this process. He has even publicly criticized the slowness of procedures and redtape that those interested in investing in Cuba suffer.

Cuban economists claim that the country needs 2.5 billion USD in investment per year to be able to grow. The national economy doesn’t have this kind of capital, nor the technology or the knowledge needed to be able to do this itself.

Within this context, halting foreign investment because of corruption or incompetence means sabotaging the national economy greatly. The new government will need to establish clear protocols that will regulate procedures and the time of these to demand results from its own negotiators.

The government’s great achievement was to renegotiate the national debt with the Paris Club receiving sizeable benefits for Cuba but repayments are leaving national coffers dry. Using the resources being reinvested as a result of these agreements smartly could be the only way out of this crisis.

The historic leaders are leaving behind great tasks to the next government. However, they are also leaving behind a masterplan that has already been written, debated and approved by the majority of the Cuban people, who hope that it will be put into practice soon and without further delays.