Informacion economica sobre Cuba

?Cuba's economic reforms: Socialism with neoliberal characteristics?

Nile Bowie is a political analyst and photographer currently residing in

Kuala Lumpur, Malaysia. He can be reached on Twitter or at

April 16, 2014 11:26

Reuters/Enrique de la Osa

Havana has prioritized foreign investment and private enterprise,

slashed state-sector jobs, while seeking closer cooperation with the

European Union. Will Cuba's latest market-based reforms undermine the

social gains of the 1959 Revolution?

Times are complicated in revolutionary Cuba. President Raúl Castro is

well into his second term and plans to officially step down in 2018; he

is now laying the groundwork for a new generation of leaders to take the

reins of the island nation.

In an effort to address the stagnating economic conditions that have

burdened the country since the collapse of the Soviet Union, President

Raúl unveiled reforms in 2010 aimed at moving the island's outdated

command economy toward a mixed economy with greater emphasis on market

mechanisms and self-employment.

Cuban authorities have acknowledged the difficulties posed by

maintaining massive subsidies across various sectors, and plan to

transfer up to 40 percent of the workforce into the private sector by

2015, where workers will be expected to pay taxes on their income for

the first time.

The state has laid off some 500,000 workers, in addition to eliminating

more than 100,000 non-essential jobs in the nation's national health

service to cut costs. Havana has simultaneously relaxed prohibitions on

small business activity and the individual hiring of labor. Former

state-employees are now encouraged to start small businesses by driving

taxis, opening barbershops, clothing shops and restaurants.

The state employs around 79 percent of the 5 million-strong labor force,

while around 436,000 Cubans currently work in the private sector,

according to government figures. Reforms are becoming bolder and Cuban

politicians have recently approved a new law to draw in greater amounts

of foreign investment, while tax-free special development zones have

also been introduced. In these zones, foreign companies will be able to

transfer their tariff-free profits abroad, receive contract extensions

for up to 50 years, and retain full ownership entitlements, a drastic

departure from decades of Soviet-style central planning.

Public health indicators suggest that Cuba has some of the highest

quality health services in the developing world, which is provided to

citizens free of charge. Despite a severe lack of resources due in part

to decades of being under an economic embargo imposed by the United

States, the country has one of the highest literacy rates in the world

and free universal education for its citizens; it has also become one of

the world's leading exporters of teachers and doctors.

Cuban leaders have acknowledged how the country's traditional state-run

economic model can no longer support the across-the-board subsidies that

fuel socialist programs and welfare services, giving rise to new

legislation that would make the country much more reliant on market

mechanisms and foreign capital.

Reagan's ghost in Havana?

It may be seen as ironic that Cuba, with its history of sweeping

nationalizations of corporations that dominated the economy before the

revolution, is now sacking masses of state-sector workers and adopting a

capital-friendly growth model intent on cutting down the public sector

in favor of private enterprise and profit.

Cuba's decision to break from its traditionally closed economy and

toward a free market system with neoliberal characteristics is not a

signal that the country plans to yield toward unhinged capitalism. In

the view of pragmatic thinkers in the Communist Party, these reforms

represent an attempt to update the economic model, allowing Cuba to

define its own distinct system appropriate to modern developments and

external circumstances.

In essence, the Cuban leadership is attempting to develop a different

model of market-socialism better suited to advancing the ideals of the

revolution: egalitarianism, social justice, and resistance to

imperialism and US dominance. Cuban leaders have acknowledged the

negative features of market reforms, which can often exacerbate income

disparities and entrench cronyism, and have pledged to maintain its

public health services, universal education systems, and other features

that do not adhere to the ideology of free market capitalism.

Cuban workers will have three main avenues of employment to choose from.

While the largest portion of workers will run small businesses and

shops, the government has prioritized the agricultural sector to promote

food self-sufficiency. The state subsidizes land, seeds, and

chemical-free fertilizer for farmers and vegetable growers, and

agricultural collectives are also seen as a viable career path.

Other workers will find employment in sectors that rely on foreign

investment. Cuba's newly-passed foreign investment law, which comes into

effect in June, offers attractive incentives to foreign companies. Taxes

on profits have been reduced from 30 to 15 percent, and companies will

be exempt from paying taxes for the first eight years of operation;

foreigners doing business on the island would be exempt from paying any

personal income tax.

An exception remains for companies that exploit the country's natural

resources, such as nickel or fossil fuels, which will pay taxation rates

as high as 50 percent. Foreign investment will reportedly be allowed in

all sectors, however investment and marketization will be barred in all

fields related to medical services, education and national defense to

safeguard the country's socialist system.

Ending the embargo

The US unilaterally imposed a near-total embargo on Cuba in 1962

following the nationalization of properties belonging to US citizens and

corporations, which remains in place to this day. Washington has kept

Cuba on a list of 'state sponsors of terrorism' since 1982, while the

embargo has been consistently strengthened under several US

administrations despite the United Nations calling for its end for 22

consecutive years.

Cuban authorities claim that the economic damages accumulated after half

a century as a result of the implementation of the blockade amount to

$1.126 trillion, and President Raúl knows he needs erode the foundations

of the embargo before significant economic growth can take place. Havana

believes that getting the European Union into its corner is the best way

to move forward, and negotiations with representatives from Brussels are

set to begin in late April. Havana will try to overturn the EU's 'common

position' on Cuba enacted in December 1996, which calls for greater

human rights and democratic conditions in exchange for improved economic


The recent visit by French FM Laurent Fabius, the highest-ranking French

official to visit the island in 31 years, should be seen in this

context. According to diplomatic sources, Fabius was testing the waters

prior to the negotiations with EU members.

France has interests in winning contracts in markets where French firms

are traditionally weak, and understands the regional importance of Cuba

as investment pours in from both Brazil and Mexico, who are increasing

their presence in the country.

Normalizing trade relations with the EU would qualify as a major step

forward toward bolstering foreign investment, but the alignment of

business interests is not expected to have major reverberations on

Havana's positions on global political issues, where it is aligned

closely to Russia and China.

On the eve of Fabius' visit, state-owned media in Cuba published

critical commentary of the French municipal elections, criticizing

President François Hollande for doing "exactly the opposite" of what was

promised during his election campaign, and for conciliating "the

neoliberal demands of Berlin and Brussels." The editorial could be seen

as subtle way of the Communist Party reinforcing its political

nonalignment, or as a way of deflecting criticism from hardliners who

would prefer that Cuba maintains its distance from Western powers.

As more emphasis is placed on making Cuba an attractive destination for

foreign investment, Europe is expected to become more vocal in

supporting a change in US policy toward the island nation.

Cuba's diversification of trade relations also comes at a time when the

leftist government of Venezuela faces protests and serious economic

difficulties. The leadership in Caracas supplies cheap oil to Cuba and

also pays for Cuban doctors and other medical specialists sent to

Venezuela, while some economists claim that Cuba receives over $6

billion per year from this arrangement, representing a more significant

subsidy than that which the island received from the Soviet Union, which

paid above-market prices for sugar and other goods.

If attempts to enact regime change in Venezuela are realized, it will

have detrimental short-term effects on Cuba, which the leadership in

Havana seems to be well aware of. Much like other socialist governments

that survived the fall of the Soviet Union, Cuba is now reforming its

economy to conform to global capitalism, but unlike other countries that

have empowered their oligarchical elite through marketization, leaders

in Havana claim that the primary objective of attracting foreign capital

is to support social programs, the socio-economic development of the

country, and the distribution of wealth among all Cuban citizens.

Marketization may likely exacerbate income inequality and spur elite

corruption in the early stages, and these negatives features of

capitalism should be kept in check. If state-linked cronies are

perceived as being the most advantaged by foreign investment without

earnings being adequately channeled to social welfare programs and

development, it will have negative political ramifications.

If the new economic system can be leveraged to maintain socialist

benefits and bolster Cuba's biotechnology, pharmaceutical and renewable

energy sectors, the country may be in a position to assert its

independence more effectively through a mixed-development model that can

be replicated elsewhere.

The statements, views and opinions expressed in this column are solely

those of the author and do not necessarily represent those of RT.

Source: ?Cuba's economic reforms: Socialism with neoliberal

characteristics? — RT Op-Edge –

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