Cuba's economic reforms are based on socialist principles
News from Cuba | Wednesday, 20 October 2010
An interview with Oscar Martinez, the deputy head of the International Relations Department of the Cuban Communist Party on the economic changes taking place in Cuba.
What is the nature of the economic problems Cuba is currently experiencing?
In the context of our other problems, the US economic and financial blockade is hurting our economy more now. The blockade has been the main obstacle to our social and economic development over 48 years. With the collapse of the Soviet Union and the socialist bloc, we lost our main trading partners. It was a severe blow from which we have not yet recovered.
The 2008 global economic crisis also hit us hard. The price of nickel, a major export earner, has gone down. And we have had huge losses with the hurricanes. But also our productivity is too low.
We need greater efficiency and more saving to ensure economic growth. We are a small country with limited resources. We need better organize our production, improve discipline, and update our economic model.
We are importing far too much, especially food, and need to be more self-sufficient. We need to focus far more on agriculture. Food production has now become an issue of national security.
Isn’t the US blockade easing?
In practical terms, no. The main aspects remain and overall the blockade has even got worse.
Since 2009 there have been more prohibitions on companies doing business with Cuba. Yet 187 countries voted against the blockade in the UN General Assembly.
Direct economic damages to Cuba since the blockade began in 1962 until December 2009, according to conservative estimates, surpass 15,4 billion US dollars. If this was calculated according to the present value of the US dollar, it would be about 23,9 billion dollars.
But if you have economic problems how does it follow that you have to retrench half a million state workers? Especially since you’re a socialist state?
We are not retrenching. That’s a capitalist term. We are not putting people out in the street. We are not going to leave them without social assistance. We are re-organising the workforce, not firing workers. We are directing them to other areas of work vital for the economy, mainly food production. We are making these changes as part of updating our economic model in order to ensure that our socialist system is sustainable on the basis of the rational and effective use of the workforce. The first phase will be concluded by the first quarter of 2011.
As part of the process, we are giving people land, and helping them to make productive use of it. A significant section of this land is near the urban areas, where 80% of the working population lives. If this land is used to produce food, it will also reduce the fuel and transport costs because it’s near the urban areas.
We have too many bureaucrats and professionals, not enough artisans. We want to move people from just producing paper to areas of the economy in which they can be productive and contribute to the economy. We are trying to find new areas of work for them.
As President Raul Castro says, ‘we have to remove once and for all the notion that Cuba is the only country in the world where you can live without working’. If they do not accept work that the government directs them to, they can be self-employed. We have opened up 178 areas in which they can work. Over 2 years, the state will have to give up about a million workers.
Are you going to re-skill the workers? And what areas are you opening up?
Yes, we are going to fully support the workers to get new skills and other means to get started. Our higher educational institutions are also going to assist. Banks will help with loans.
Our main priority, of course, is food production, with the emphasis on substitution of imports, but we also want to increase imports in certain areas. The new areas being opened are in tourism, trade and services, mainly. We are to allow more people to be self-employed as transport providers, bricklayers, stonemasons, plumbers, electricians, panel-beaters, shoe-repairers, hairdressers, shoe-makers, accountants and so on.
We are also to allow people to have restaurants with up to 20 seats. Labour must be got from the owners’ families, but they can also employ a limited number of people.
Will there be a minimum wage for those employed and any restriction on the profits of the restaurant owners and others?
Yes, there will be a minimum wage. These will be limited enterprises and they won’t be able to make huge profits. We are introducing new redistributive taxes. In fact, new regulations related to this, including the modification of the tax system, have already been published in a special edition of the government gazette.
But ultimately you will be introducing a further measure of private enterprise?
But we’re not opening the door to capitalism. No way! Our economic reforms are based on socialist principles. In any case, we have always had self-employed workers. We are just increasing their numbers. Self-employed workers may be able to accumulate more in certain cases, but that’ll be based on their hard work, not through exploiting others.
But in the context of the joint ventures with the private sector and other economic reforms since the early 1990s aren’t you gradually drifting away from socialism?
No, no! We are consolidating socialism in new difficult global conditions. We are not expanding the private sector significantly, and the fundamental means of production remain in state hands. Even where people work on the land, the product will be theirs, but the state will retain ownership of the land.
We are not privatizing the land. And if people do not make productive use of the land, we will take it back from them as part of our leasing agreement and allocate it to others. It’s impossible to seriously build socialism with our low productivity. We must have a strong economy, especially to ensure our free health and education systems.
You must understand we are shaping our own Cuban model of socialism. Ours is an authentic Cuban revolution. It’s not been imported from anywhere. It’s based on our history, our culture, the nature of the Cuban personality, the psyche of the Cuban people, our natural resources, our climate, our position as a small island, our location in the Caribbean, and our specific problems now.
We are not perfect but we are working very hard to make socialism work. We have to make these changes to preserve socialism in the context of the economic and financial crisis and the anachronistic US blockade.
The changes we are making are under the control of the Cuban Communist Party, with the support of the people. After 51 years of our revolution, we cannot afford now to make major strategic mistakes.
Have there not been increasing inequalities within Cuban society since the economic reforms of the early 1990s? And with the reforms, a change of values? And what about corruption?
Yes, there are inequalities, and we are addressing this to prevent the gap growing. But the major distortions come from the money sent to Cubans by their relatives from the US and elsewhere. For example, one US dollar is equivalent to the entire ration card we give to our people. So those who get money from outside are better off.
Over time, we want to do away with the two currency system we introduced after collapse of the Soviet Union. (Cubans use the Cuban peso which is weak compared to the US dollar, but US dollars are exchanged into the convertible peso which is closer in value to the US dollar). But to do this, we have to increase the productivity of our workforce, to have a strong economy. We can then raise the salaries of workers.
And, yes, we are also aware that the values of people can change. We are addressing this in various ways, including through new and more intensive ideological programmes in our schools, the Young Communist League, the mass organizations, workplaces and elsewhere. We have open debates about this issue. That’s the best way to deal with it. We are also getting stronger against corruption through prevention measures and prosecutions of offenders.
Any process of change will have challenges. Our economic reforms will be managed gradually and progressively to try to prevent distortions. Of course, this is not the first time we’ve introduced reforms, but we are aware of the far-reaching consequences, and we are working towards avoiding possible negative effects.
So what is the response of workers to your new economic reforms?
We have spent long hours with the trade unions and workers. We discuss our problems. We make them public. That’s how we can solve them. If we are open with people they will support us, as they did during the ‘Special Period’ after the collapse of the Soviet Union and the socialist bloc. We have also been given lots of ideas by the public and are including these in our plans.
But the workers are worried. You see, until now the state has been doing everything for them. They have become too dependent on the state, on the excesses of government paternalism. Now they have to adjust. It won’t be easy, but we will do it. In a situation like this, the government has to be part of the solution.
We are not going to leave the workers alone. We are going to assist them in their new work. We have to make these changes. If we don’t make them we will burden future generations. We are doing this for us but mainly for our children.