Cuba: The Story of Two Blockades

By Pilar Montes  

HAVANA TIMES — Last Wednesday, in New York, the US, through its Ambassador speaking before the UN, Samantha Power, announced that it would abstain from voting in the 25th vote of the resolution that demands the end of the US blockade on Cuba.

For 24 years, Washington has voted against this resolution, even in 2015, when diplomatic relations between the two countries had been reestablished. Power recognized that the US has remained alone in its attempt to isolate Cuba, due to its failed policy to cut off the island.

Nevertheless, as this resolution doesn’t force the US to abide by it, the long-lived siege continues to remain in force, until the US Congress either gets rid of it once and for all or a Presidential Decrees render it useless.

In the US, President Barack Obama himself, some members of his administration and the Democrat Party’s presidential candidate, Hillary Clinton, have stated that the “embargo” in force since February 3rd 1962, has proved to be an unsuccessful policy and should disappear.

With five sets of presidential decision directives in the last two years, Obama has contributed to making the embargo less arduous, even though its main purpose remains in place. Legislative power is controlled by the Republican Party, the conservative and most powerful party economically-speaking.

This is the case when risk assessment companies of international prestige have increased their assessment of opportunities in the Cuban market for investors and business people and the government renegotiated most of its debt payment with its main partners.

The highest-ranking dignitaries in countries such as the US, Russia, Japan, France, Italy, China, the EU, leaders of the Russian Orthodox Church and the Vatican, as well as twenty odd leaders from Latin America, the Caribbean, Africa and Asia, have all visited Cuba in 2016.

The 34th edition of the FIHAV-2016 Havana International Fair, will also take place soon, where business interests from 75 countries have confirmed their presence.

The Foreign Investment Law, which was approved in 1995 and amended in 2015 and has created new investment opportunities this year and a more attractive landscape to do business in Cuba, if it weren’t for the embargo’s extraterritorial persecution and other domestic problems which derive from national inefficiency and structures that suffocate our productive forces…

The domestic obstacle 

In an article written by Cuban economist, Humberto Perez, in the Havana magazine Temas, published on October 6th, he said that “the Cuban economy today has three weaknesses which require urgent attention, unless it wants to lose everything it has achieved.”

The former president of Cuba’s Central Planning Board (1979-1986) highlighted that the economy’s first weakness is that “in spite of all the measures taken in recent years, our economy still has low productivity and efficiency on the whole, which is even more noticeable in the State sector,” due to the excessive centralization of State assets and management as well as a “vertical and bureaucratic” administration.

The second Gordian knot lies in the “division of society into many different and inequal sectors, economically and socially speaking, where the majority of the population (public sector employees and workers, between 60-70% of Cuba’s workforce) doesn’t receive a reasonable salary to lie off of, in spite of them having free healthcare and education services as well as some limited basic food products at a subsidized price.

The third pitfall, in this expert’s opinion, which is key for any chance of progress in the future, is to resolve the exchange duality or plurality, as there are rates for the public sector, other rates for cooperatives and yet another rate for the general population, 24 CUP (regular pesos) for 1 CUC (Convertible Peso), or 2×1, 7×1, 10×1, depending on your economic sector and activity.

This problem is the one that causes the “most negative, disfiguring and counterproductive effects,” explains Professor Perez. Similarly, “it contaminates, adulterates and makes the accounting of public institutions untrustworthy, undermining the norm that our country’s leadership has to make decisions.”

Remittances from abroad are estimated to bring in two to three billion USD, Perez points out, to which you have to add direct revenue in foreign currency or CUC – from rental houses and rooms – when there are around 18,000 of them, as well as independent businesses for around 200 activities that are recognized by the National Tax Administration Office of Cuba (ONAT).

Humberto Perez reminds us that the government has said that for “the increase in our Gross Domestic Product (GDP) to be mirrored in our domestic economy, this has to increase by between 5 and 6% on an annual average. However, this indicator has only stood at 2.8% in the past five years, while in 2016, it will only increase by 1% or there won’t be any growth at all.”

Based on indicators provided by the highest levels of Cuba’s economic management, “in order to achieve 1% of GDP growth, imports will have to grow by between 2 and 3% however, they’re planning to reduce them by 3.3%.”

Ileana Diaz, a researcher at the Association for the Study of the Cuban Economy, states in an article that “50 years of centralization and hyper-centralization haven’t shown increases in efficiency” and suggests that “the policy that limits autonomy be revised.”

The number of companies has been falling due to the successive restructuring of the public sector on various occasions. At the end of April 2014, there were 2,163.

Meanwhile, in a report published in the official Granma newspaper about one of the most recent parliamentary sessions, legislators brought to light the “social consequences” of these shortcomings and criticized the problems in the “management” of agricultural companies, the “shortcomings” in their administration and the “lack of development programs” based on scientific findings and investment.

As President Raul Castro pointed out in December 2010, “the time to continue on the edge of the precipice has come to an end, we will sink or we will sink the effort of all our generations.”