Posts in Sixth Party Congress
After a nearly three month-long leave, I've got lots of Cuba news catching up to do. Much has happened. And much has stayed the same.
In Cuba, following the Sixth Party Congress in April, we're beginning to see some changes, rolled out one-by-one, with little fanfare (as Phil Peters pointed out was how countless needed reforms would come about). For instance, the government is offering private entrepreneurs several tax breaks designed to help spur their growth - offering a payroll tax holiday for 2011 for businesses with fewer than five employees, and finally allowing private restaurants (known as paladars) to serve up to fifty customers at a time - up from 20, which was up from 12. It's easy to see these and other recent reforms as overdue, and as playing too much at the margins.
But, however slowly it moves ahead, this is a government that has committed itself to a long range reform process. It's all here - in the very public, fully discussed and debated, 313 lineamentos or guidelines for reforms. Oh, and let's not forget Raul Castro's embrace of term limits, which, if he honors it, will have tremendous implications for Cuban political leadership and reform in the next several years.
But it's this distinction, between the journey and the end, that President Obama failed to acknowledge in his recent interview with Univision's Jose Diaz-Balart (yes, brother to Lincoln and Mario, and nephew of Fidel Castro's first wife, Mirta).
There are Cuban individuals both on and off the island who are disgusted by the Castro regime and who do not want to see any reforms in Cuba, but rather hope that the deteriorating situation will galvanize discontent and provoke a rebellion. There are others in Cuba, enjoying the privileges of the Communist system, who do not want any reforms so that they can go on enjoying the status granted them due to family ties, loyalty or simply ideological opportunism. Still, there are many others who would like to see Cuba initiate orderly reforms that gradually lead to a political and economic system consistent with all human rights-- civil and political, economic, cultural and social-- enshrined in the Universal Declaration.
The principal report to the VI Congress of the Communist Party, presented by Raul Castro, points to a Cuba in which none of the three groups may be satisfied. The proposed reform program inserts economic change into single-party political continuity. This formulation implies that it is possible to advance in terms of legitimacy, freedom and welfare in some areas, while in other areas there is no progress, or even reinforcement of authoritarianism. It envisages a Cuba that might combine prosperity and joyful consumption of market-oriented economic growth with the permanence of reprehensible acts of repudiation against political dissidents.
The dilemmas of economic reform
The Central Report to the PCC Congress reflects a set of proposals generally associated with unorthodox propositions by government supporters. Positions in favor of term limits, decentralization, revaluation of the market as a development tool, separation of party and state functions, increasing the representation of women, blacks, mestizos and youth in government leadership and in favor of checks and balances between the branches of government and the Communist Party of Cuba (PCC) have been present in Cuba's internal debates since the 80's.
In practice, the transition to a mixed economy model with a decentralized state and a major non-state sector, considered in the past as antithetical to the official communist ideology, has already begun. President Raul Castro has taken (some would say stolen) agendas promoted in the past by reformist groups or even opponents and has set out to implement them under the leadership of the PCC. It will be a challenge for a bureaucracy, steeped in hostility toward these very concepts, to do so.
Market oriented reforms and a reduction of the State's distributive role had already been decided. The questions put to the PCC concerned the speed, methods, sequence, scope and progression of the reforms. The report lacks clear answers. It insinuates a gradual approach by ruling out IMF-style shock therapy and sudden removal of the ration card. But there is still no overall vision or alternative economic model put forward and no discussion of the political risks that the PCC will face in implementing changes.
If, as the report states, contracts will be the "regulatory tool of interrelationships between economic actors," the government is way behind on legislation to accommodate this. There are no viable bankruptcy laws, credible legal mechanisms for dispute resolution between creditors and borrowers, or adequate consumer protection or antitrust laws.
Has the PCC adopted an economic model in which State, cooperative or private enterprises can go bust? How will the government respond when a borrower does not repay a loan? What are the rules for restructuring debt in the shortest time possible or accessing seized assets? What assets will be used as collateral when seeking credit?
It’s finally here. Cuba’s historic Sixth Party Congress begins tomorrow, and with it, the official embrace of a radically new economic model that has gradually been unveiled by President Raul Castro since taking power from brother Fidel back in 2006.
To help shed some light in what is driving this VI Party Congress, its implications for Cuba’s future, and that of U.S.-Cuba relations, lecturer and PhD Candidate at the Josef Korbel School of International Studies at the University of Denver, and frequent Havana Note contributor, Arturo Lopez-Levy has authored an excellent new report that addresses these questions and much more. The report will be made public at the New America Foundation’s U.S-Cuba Policy Initiative website next week, but in the meantime we wanted to provide you with a few excerpts here.
On President Raul Castro’s economic reforms:
“Most of these ideas about economic reform are in their initial stages. It is not yet clear just how mixed the new economic model will be and whether Raul Castro’s government will be able to efficiently implement its adjustment plan. There are obviously many impediments and flaws to the process, the most important of which is the lack of funds to ameliorate transition costs and speed up the implementation of the new policies. Equally important is the Cuban leadership's preference for gradualism. Shaped largely by what is seen as Russia's horrific experience with a shock-therapy approach to economic reform, this predilection for slow change has seemingly rendered Cuban leaders oblivious to the problems associated with excessive gradualism.
A great challenge for the reform process will be addressing the fact that workers in Cuba’s social services, such as education and health, have already been disadvantaged by the development of Cuban tourism and other industries with access to hard currency, or CUC. The reforms are obviously generating winners and losers and it is difficult to determine what kinds of policies the government will use to compensate the latter. There is no evidence that in the coming years, even if the economy prospers, health and education professionals will share in rising wages or improvements to living standards. The same can be said about the reforms' impact on the most vulnerable and poor segments of the Cuban population.”