What should be the priority policies to get out of the crisis? Economists Juan Triana, Omar Everleny and Julio Carranza respond.
Any Cuban who has been awake since 1993-94 knows that socialism was no longer what it used to be.
After the implosion of socialism in Eastern Europe and the dismantling of the Soviet Union, things in Cuba changed suddenly. The admission of the market, of the private sector, the legalization of the dollar, the redistribution in usufruct of most of the state lands, the opening to foreign investment, created not only a new economy and a new relationship with the world, but other mentalities about socialism as a system, including its reversibility.
These policies were initially justified as confronting the crisis called the "Special Period in Peacetime", or at least that is how they were projected at the time. So, as the crisis eased or so it seemed (for a while), its continuity and deepening became slower; and although its consequences on the ideological level (what socialism is this going to be?), and especially its impact on social inequalities and poverty, were spreading.
The policies that equalized the different classes and social groups in previous Cuba, such as a very limited wage structure, a basic basket subsidized by a ration card (the "ration book"), price controls, gratuities and subsidies of all kinds, faded away, formally or de facto, as wages and income diverged. that access to foreign currency altered the relationship established between wages and training, that production levels were not recovering.
Despite the supposed temporality of the crisis, Cuba never returned to the level of well-being and vision of the future that had existed, especially in the decade prior to the Special Period.
More than a decade after those measures—approved and implemented under Fidel's direction—a document entitled Economic and Social Guidelines was publicly discussed in a massive consultation, and officially adopted at the Sixth Congress of the PCC (2011). Five years later, only 23% of its agreed policies had been implemented.
In 2018, the consultation on a very broad constitutional reform yielded unexpected results. Among them, that the most controversial issues of the new text were not precisely the radical changes in the diversification of ownership over the means of production, the extension of the market, the access of private capital to sectors such as agriculture and services (including the sectors nationalized in 1960).
In other words, these transformations did not arouse opposition, despite their fundamental scope. The new Constitution, approved by an overwhelming majority in 2019, put equity – rather than equality – first and worried about the concentration of income, but did not outlaw it.
From the beginning of the 90s until today, more and more experts, inside and outside our institutions, have been making proposals aimed at constituting a reform program that would go beyond the scope of a package of anti-crisis measures.
Although none had ever proposed policies like those that marked the dismantling of socialism in Eastern Europe and the Soviet Union, not a few of them were branded as emissaries of capitalism.
Despite the differences introduced in the documents issued in the last 30 years about the nature of Cuban socialism, this suspicion of any reform proposal has remained alive to this day.
As a result of the United States' intervention in Venezuela on January 3, it occurred to me to survey a group of economists and political analysts around the question: What should be the priority policies, coherent with a strategy to get out of the crisis and that take charge of the complexity of the moment?
According to some readers who told me this clearly, the answers of my respondents were "excessive" (neoliberal).
Now that the National Assembly (ANPP) has just approved a program of transformations that far exceeds, in its radicalism and breadth, what any of these experts never proposed, however, the vision that identifies the reforms with the virus of capitalism is still there.
If one reads, for example, the narratives of foreign media, supposedly well informed about what is happening here and now, one can see that they identify the recent transformations with concessions to capitalism, which reflect the definitive bankruptcy of socialism. Exactly like the vernacular fundamentalists. And as if between these transformations and the collapse of the Berlin Wall nothing had changed in Cuba.
In search of light on the complex web of questions that derive from the 176 measures debated in the ANPP, I decided to submit them to three pioneering economists, who anticipated them in writings and conferences, and whom I know well for their way of thinking, persistence and commitment: Juan Triana Cordoví (JTC), Omar Everleny Pérez-Villanueva (OEP) and Julio Carranza (JCV).
I thank them for answering my multi-headed questions, and also for answering me in record time.
According to some economists, the axis of the reforms is or should be the extension of the private sector, in all those activities where it could be developed more efficiently than the state or the public. Is it going to be or should it be like this in the economic policy that is coming? Wouldn't it imply, in the medium term, that the private sector swallows the public sector?
JTC: There is not a single axis in the reforms, but at least two or three major axes. One of them is the expansion of the private sector and its role in the economy. The other, the reform of the state enterprise, postponed so many times.
I don't think the private sector can swallow the public. This is still very big, and there is really a powerful business there; it would be very difficult for the private sector to be able to displace it, being still a nascent sector.
OEP: The private sector must play an essential role in the economic policy that is coming. Not because it is private, but because Cuba's problem, more than financial, is one of supply of goods and services. And the State at this time does not have the financial resources to produce what the private sector can develop.
I don't think it will swallow the public sector. Everyone has their space.
The first thing that must be defined as a strategy is what the size of that public sector will be. Energy, steel production, all those types of productions that need a large capital can only be guaranteed by the State.
But in retail, food, personal services, there's a very large area that can be covered by the private sector.
In the past, the public sector, for different reasons, has been inefficient. The State has taken away resources that the socialist state enterprise produces. And those rules have to change.
JCV: A fundamental issue of the current approach is to give the entire business system the recognition and powers it should have to operate, whether state, cooperative, private and mixed, national or foreign; all integrated into the markets regulated by the State, and in the case of state enterprises, under strategic and financial planning. not a bureaucratic and administrative one like the one that has existed until today.
Prejudices against the private sector must be overcome and given the place it deserves. The private sector and the cooperative sector must play an important and essential role; their interests must be recognized and represented, but in no way impose those individual or business interests, however legitimate they are and are, over the general and majority interests of the people and the nation.
Of course, the fundamental, strategic means of production must continue under social ownership with legal protection and all public enterprises that are efficient must also be maintained and developed.
The state sector that comes out of here must be efficient and competitive. This does not exclude the existence of certain activities that by definition are loss-making and, given their function, must be kept under the subsidy of the State budget, but they must be few and fully justified.
They must also be maintained under state regime and with the allocation of necessary resources to fundamental sectors such as education and health, even when some specific activities of these sectors pass into private forms, as in fact is already the case with some shops of medicines and optical and dental services, where participation must be mixed.
These measures will accentuate social differences, but they must be regulated and accompanied by a progressive and rigorous fiscal policy. That income differences are the result of efficiency and work and not of corruption and spurious activities, social policies must also be reinforced to support a fatigued and currently impoverished population. The principle that no one should be left behind must be maintained.
We must prevent perverse privatizations without tenders that respond to the interests of particular groups, many of them coming from the old bureaucracy. We have already seen what happened in Eastern Europe.
These dangers are activated, but the way to foresee and control them must also be activated. Its essence is the participation and political power of the population, through adequate action by the instances of popular power and the organs of control of the republic, the political and social institutions, in the first place, the Party. But in order to adequately fulfill this role, they must reform themselves, including the Party, and on the state side, in a primary place, the Comptroller General's Office, whose function must include all sectors of the economy, without unjustified exclusions.
The country's democratic institutions, first and foremost parliament, must have an active and diverse voice, an expression of what Cuban society already is and will be today.
An efficient public sector, with real autonomy to plan, decide what it produces, redistribute profits among its workers and make them participate in decisions, operate in the foreign exchange market, establish agreements with other companies, whether public or private, national or foreign, seems a very different animal from the current one. Is this metamorphosis possible? What would have to happen for that transformation to take place? In what timeframe?
JTC: The transformation of the state-owned company has to be deep and large. We cannot hope for it to happen in the short term. But this metamorphosis, as you call it, can happen because, although sometimes it is unknown, we have very capable entrepreneurs, who have not allowed themselves to develop as real entrepreneurs.
This transformation is going to take place not only through direct actions towards the way in which the state enterprise is managed, but also through indirect actions. Part of the policies that are being discussed and approved today require this metamorphosis: to participate in the foreign exchange market, to be able to have much more fluid relations with foreign companies, to export and import freely; all this forces the change of that sector.
What else should happen? Letting employers get their act together or not taking their batteries off when they already have them on, which is also what has happened.
It is very difficult to set a deadline. There is a learning process there, which requires undressing, unlearning, dressing again and learning again. I do not dare to set a deadline for this process, but it should not be short, that is, it will not happen in six months. Although there are Cuban companies that began to work with foreign companies and were quickly transformed, it is always a complicated process, because unlearning and learning again is relatively complex.
OEP: There are going to be different stages of the reform. A stage in the first two years, which some economists have proposed to identify as stabilization. Then, a stage of structural changes, between two and five years, which is where deeper changes are really made.
In the first two years, you have to focus on three vital issues: energy, food and infrastructure. Because there are critical problems for the Cuban population, such as water, solid waste collection and other public services that must be recovered.
To then define which sectors, which areas are the ones that we are going to prioritize.
I still see tourism as important. And the possibility that there will begin to be tourist agents, private tour operators, gives a certain guarantee that this sector can recover. For example, if a not so large hotel, with 30 or 40 rooms, hostels, motels, can be given in management to a private company, why not give it to them, if foreigners already have it?
The government has a very concrete plan and has been very skilled, very pragmatic, in recent days, to propose things that at another time it would not have thought of.
You have to go to private CADECAs (exchange houses), because in any case you exchange on the street and that is money that does not access the State. Why not put private CADECAs and charge a tax for operations?
Another important step is to eliminate the monopoly of foreign trade, so that all forms of property can import and export directly. If someone wants to do it through an experienced state-owned company, let them do it. But it should not be mandatory. As well as eliminating employing agencies, which have been an obstacle for foreign investors. And above all, work on the problem of foreign debt. If you don't unblock the debt, there will continue to be a lack of financing.
An efficient public sector is one that is concentrated in certain entities, which in order to be efficient require a law of companies that equalizes them all under the same conditions. So that the state sector participates in the foreign exchange market, retains part of its profits to recover production and the decapitalization it suffers.
With the rules applied so far, it cannot guarantee certain goods and services. Of course not! Well, if a state-owned company has profits, but then the state collects them for a "common good"—such as producing certain things for the entire population—that can be justified in this way, but the capacity of the company as such is affected.
In the medium term, they should be given the same possibilities that the most dynamic sector of the economy has had so far, and which is the largest importer of food in Cuba right now (and the figures support it). The use of remittances, to decide where to buy and at what prices, is not available to the public or state sector.
Autonomy has to be real. The road ahead, I believe that it will include an improvement in the conditions of competition.
JCV: The current situation has urgencies that must be addressed as a priority and also the need for a comprehensive and profound transformation of the economic model. Interdependent planes, but they should not be confused.
The immediate response to emergencies is determined by the fundamental problems that affect the population today: energy, food, water, health, public hygiene, mobility, etc. This response also implies having more external resources, hence the problem of debt and access to credit, investment, etc., is also a priority. The proposed measures include ways to respond to these urgencies.
The other is the comprehensive transformation of the economic model. This is a process that is necessarily slower, although it must be accelerated as much as possible, which must begin with the restoration of macroeconomic balances: fiscal deficit, inflation, external deficits, etc. This process takes more time, as there is much that needs to be transformed.
It is necessary to define stages, areas of action, general and partial objectives, indicators, etc.; and above all to have a clear strategic horizon and the political capacity to correct the deviations that will inevitably appear. Otherwise, a sad unwanted fate could be reached and perhaps no recovery possible. We have written and proposed all this at length since our 1995 book and with many other subsequent texts with the corresponding updates.
Today politics is more important than ever, although there are those who think otherwise, not to hinder or stop the reform process, but to lead it along the path it should go, always responding to the interests of the nation and not to spurious sectoral and group interests, much less to imperialist pressures. There is a fundamental challenge in this. In a recent article I used an expression: let ideas and not uncontrolled facts be the driving forces of this process.
One of the features of the new socialism, as portrayed in the new Constitution, is decentralization, in particular, the handing over of powers to local levels. Although we still do not have a law that has granted them seven years after that constitutional definition, now the emphasis is on decentralization and the strategic role of the municipalities. Are local governments prepared for this autonomy? To be able to manage their resources, manage internal and external investments, design fiscal and employment policies, control basic services and adapt social policies to their needs...? What would need to happen for local governments to fully assume that role? What are the dangers of decentralization?
JTC: If local governments are prepared for the autonomy granted to them, I think they are not. My answer is that brief.
As for what should happen for them to become so, something that is happening is that they are already being granted those spaces, certain rights and obligations. The other thing that must happen is that they will have to train adequate personnel for that.
If one reviews local governments today, they are not only poor because they are in a poor territory, but because the personnel they have to work is probably not the most adequate, although, by the way, they may be the most dedicated.
There are many dangers that are run when decentralizing, from a misinterpretation of national policies to those that are associated with acts of corruption, without a doubt.
I don't dare to list them all because a new one comes out all the time. But having that capacity to interpret national policies and adapt them to their needs, and to generate their own policies, has as a component the taking of risk and the possibility, without a doubt, of making mistakes.
I prefer to run that danger rather than stand idly by.
OEP: One of the deficiencies that affect the local levels, and also the central ones, is the lack of preparation of the cadres. Sometimes a person who is not prepared or who is not the professional that is needed is put in a position. And for what is coming, local governments should have greater preparation, and that they should be given the prerogatives that they lack, and are announced, but in practice are not granted to them. Hand in hand with local autonomy must go the necessary preparation and incentives for leaders to be able to manage resources at that level.
If a low, non-stimulating salary is paid, there will be no people willing to lead in the municipalities. Before taking on positions, let's say, in municipal education, they will be more interested in doing so in a private business, where they can earn ten times more. All these imbalances must be corrected. But I do believe in local powers, in which we have to work intensely for what is coming.
Yes, there are dangers in decentralizing, indeed, but they must be assumed. Because before, the central measures took place in a context where the State could manage resources. Today it does not have them, nor will it have them in the coming years, because today we are alone. Alone means that we will not have the necessary credit to distribute, nor the friends we need, because we have lost them due to mismanagement in administering them.
If a friend gives you, say, a series of vehicles, buses for your public transport, and you don't pay for them, he won't give you the spare parts for those buses. This is how we have treated the friends who have helped us by selling to us, with short payment periods, but with very low interest rates, and have allowed us to pay them with products, let's say, nickel, such as China, to whom we stopped sending nickel because we do not produce it.
All of this must be corrected, because that is going to be the next path, because there is no other way left. You have to overcome all adversity, but that comes at a cost. Not so much a greater social cost, because the social reform has already been done – and I will tell you about that later.
JCV: I believe that the decentralization of these processes to the municipalities must be done with great care. It is positive and necessary and could make management more democratic and effective, but not in any way. Municipal decentralization should not mean that the central government disregards responsibilities that are its own and cannot be delegated.
A country is not the simple sum of its municipalities, not even in countries with a strong federal character. The municipalities are very different from each other and their articulation, their complementarity as parts of a whole, is an undeniable responsibility of the central government.
Economic policy and the conduct of the national development strategy are a task of central responsibility. In other words, the correct municipal decentralization should not mean the annulment of the essential role of the central government, since we are a single nation.
On the other hand, for decentralization to operate properly, municipalities must have the necessary resources. Firstly, with capable cadres and officials. It must be meritocracy (ability, training, ethics, probity, empathy and commitment) that determines appointments and election at that level, as it should be at all levels.
In general, the current level of cadres and officials at the municipal level is below that required for this complex function and, of course, that this work must have the remuneration it deserves.
In a context of decapitalization, lack of sources of financing, high external debt, deteriorated infrastructure, energy and food crisis, where could the necessary investment come from to recover the economy and restructure the model? Do Cuban émigrés have the capital and the will to become that main source? To what extent do the political circumstances in the Cuban diaspora facilitate or put it at risk? Would it be possible without the United States and Cuba returning to the path of normalization?
JTC: The investment needed to recover the economy and restructure the model can come from different sources.
One is foreign investment, which may be stimulated by the decisions taken to facilitate and expand its spaces in the country.
Another source may be the facilities offered by the BRICS. To do this, it is necessary to understand how to negotiate and participate in that framework.
A third source can be national capital. Not only private capital, but also from state-owned companies that are successful and want to invest to grow, to diversify, and that should be abandoned.
There are also the credits that can be provided by multinational organizations, and individual countries, which today are much more difficult to access. But I do not totally dismiss them.
Finally, the capital of Cubans living abroad. Here comes the question: To what extent do the political circumstances in the Cuban diaspora facilitate or put it at risk? So far, the history of that relationship has been very complex — and you know it much better than I do. It means that a part of that diaspora has a lot of distrust in investing in Cuba.
On the other hand, the legal framework in Cuba is still not well understood. It must be perfected a lot, improved so that it can provide the security required by the investor in general, and in particular, this Cuban investor who comes from the experience of having lived in Cuba. That uncertainty must be erased, creating a group of very clear rules that also encourage and guarantee that participation.
Most of the Cuban diaspora lives within constant risk and under the threat of the very restrictions that the U.S. government imposes on Cuba. They have to be measuring whether they are violating any U.S. law and can therefore be the object of retaliation. That is present, without a doubt, and can complicate the massive investment of capital by Cubans living abroad.
As for whether it would be possible without the United States and Cuba returning to the path of normalization: it is difficult, but not impossible. I would have to go on at length to explain it, but today there is already investment of capital by Cubans living abroad in the national economy. So, taking the facts as part of that answer and criterion of truth, I would say that it is possible, despite the fact that there is no normalization of relations between Cuba and the United States.
OEP: We have to situate ourselves in the fact that the natural economic environment of Cuba is the United States, given the distance and the very fact of having received a majority of Cuban emigration. But the government of that country has been very aggressive against Cuba, and especially in recent months the sanctions have been very strong.
However, Cuba has to move towards what could be done for that normalization. I have been able to learn that Cuban emigrants have capital and can become an important source. But for that to happen, legislative changes must be made, we must sit down to analyze at the negotiating table the problem of nationalizations and other pending issues, which must be resolved.
If at some point it was possible to exchange investment for swap asset, it would have to be done. If we have a hotel with barely 10% occupancy of its capacity, it could be arranged for an emigrant to manage that hotel and part of the profits be given to him, as part of the capital that Cuba disposed. There are many formulas.
If relations are not fixed and normalization is not achieved, it is very difficult for Cuba to access the capital it needs. Because capital today is transnational; and although many companies would be willing to invest in Cuba, if they are going to be sanctioned by the United States, they are not going to do so, which is already happening right now.
But we cannot give up, we have to look for any positive alternative, without ceding sovereignty, but without being very strict, because there is no way to solve those problems that you have raised. And the issue of external financing is a priority.
The State has to carry out a two-year stabilization process, to solve two priority short-term problems: energy and food. It will no longer guarantee the ration card as in the past; he does not have the means to do it. This will lead people to understand that the socialist Cuba prior to 2026 will not be possible, and that to maintain it in new conditions it is necessary to restructure the model.
For me, we have to build a social market model. One of the mistakes of recent years is not having advanced the reforms that many suggested to be made, especially Russia and China, where all forms of production, especially private ones, would have a greater weight. And Cuba took a long time to make them. Today we are doing it in the conditions in which we have no other options. And when you negotiate in these current conditions it is very difficult, because you have to accept many things that would not have been accepted at another historical moment. To save the country, above all else.
JCV: As I pointed out before, the availability of resources is a fundamental problem, a strong knot that affects the national economy; that is why the issue of seeking access to new resources is part of the urgency. And unlocking the debt is essential. I have been raising the idea of exchanging debt for assets and investment, this is very possible and probably the most viable option. There are many resources and capacities that are underutilized today and many are deteriorating. Of course, it must always be done in a way that is as rigorous as it is agile, and care must be taken that the pressures of the moment do not lead to inconvenient decisions that affect the sovereignty and control of the nation's strategic resources.
Cuban migration is part of the nation. One sector of it has capital and entrepreneurial capacity, although it is not all or the majority, made up of salaried workers. But everyone could participate in some way. The former, with investments, technologies, trade, markets, etc. This has to be part of a shared will and here all the guarantees should be given in a transparent and unhesitating manner, establishing with laws and regulations what can be done and what cannot be done; that is, spaces and broad guarantees, clearly established, based on a national project that should be shared by all. including, hopefully, those who have engaged in hostile behavior. It is a political and very current issue.
The short answer is clear: they should play an important role, without giving up their individual interests. There will always be risks, but they must be assumed with intelligence and resolution. The most important thing is the interest of the people and their well-being, is it difficult to make all that compatible? Yes. Is it impossible? Perhaps this is the most important political challenge today.
A scenario of negotiation with the United States is the most desirable, since it could significantly change the situation, overcome the economic crisis, etc. I believe that the government has worked and is working intensely on it, today with the experience of the years, history, the mistakes of the past, etc. But the question must always be: negotiate what and for what.
That is where the clarity of the answer must be crystal clear. A broad position that includes many sensitive decisions, but very clear points about it being non-negotiable under any circumstances. It has been said that sovereignty and internal order, and I agree. Cuba's internal issues are a problem for Cubans, for all Cubans, but without additions.
The U.S. government must be aware and sure that Cuba is willing to move forward and put much on the table, except for what cannot be renounced. Such awareness could lead to a relationship of respect and mutual convenience. Now, will the U.S. government and this administration in particular be willing to establish an adequate framework for negotiation?
Cuba must work for that, but also be prepared for the worst of situations, including unwanted military aggression. Sovereignty, properly understood, is inalienable, which does not require an academic foundation. It is the historical will of a people demonstrated for almost two centuries. Now it will not be different. Negotiation yes, as much as possible, realistic and broad; but imposition and concessions of sovereignty, under no conditions.
Since 2011, successive reform programs have been adopted, reaching agreements at PCC congresses, approving a new Constitution and new laws. However, the reform process has stalled and to some extent seems to have gone off course. What reasons are there to think that from today it will be different?
JTC: I would say that there are many reasons and none.
The first reason to think differently is the international context in which Cuba is developing today, which has changed tremendously and generates a lot of stress when it comes to managing the country. This situation can push this reform process and prevent what has happened on other occasions from happening.
Second, we have the permanent threat of the United States and its intentions to change the country, depending on what they understand must change. Obviously, that is an element that pushes to carry out this process of reforms and not to turn backwards.
The third thing is the economic and social situation, that polycrisis in which we are all involved and suffer constantly. If there is no reform, it is very clear that it will be very difficult to get out of this polycrisis.
We must also understand that this government has had a learning process. Today it is in a situation with very few alternatives, other than to follow a path of reforms, which was already traced in general terms and was never followed, but was stopped and reversed. Now we have to follow them, and that is another reason, without a doubt. There is a learning process there, which counts for a lot.
OEP: The model that is coming is different. Although it is true that we have approved dozens of programs, we have reached thousands of agreements and we have taken stock of the Party congresses, the Constitution, the laws, etc., nevertheless, the country has not advanced. And among the obstacles through which the country has not moved forward is having been afraid of the private sector, which is an ideological problem.
Today it must be different, because I reiterate that Cuba is alone in the world. We have never been in a moment of polycrisis like this. It means that we have financial crises, food crises, long blackouts, problems with medicines and problems with transportation, all together.
In a Cuban family today they sleep badly, eat badly, walk to the workplace, earn little and there is high inflation. There has not been another moment in Cuba's recent history – speaking of the 90s – that presents this situation so convulsive and so complicated.
If we want to save, not the model, but the country, we have to do things differently. If we continue doing the same, we will continue to distribute misery. If there are new policies that entail constitutional changes, they must be made. If it is necessary to eliminate in the Constitution what says that the concentration of income or property will not be allowed, it must be changed. As long as it is legitimate, as long as it is legal, as long as the private sector provides certain goods and services, why be afraid of it? The strength of the State lies in being able to tax these activities and then redistribute them at the level of society.
For me, the only thing different is that you have to make a country with a market.
JCV: We have reached an extreme situation: external aggression on the one hand (which is not only the blockade) and internal insufficiencies on the other, including the tremendous delay in a comprehensive and profound economic reform. That has been one of those main mistakes; We have said and argued this at least for more than three decades, when the exhaustion of the economic model of bureaucratic planning was already evident.
If one reads the documents approved at the party congresses since 2011, and then the 2019 Constitution, one appreciates that this reality has been understood since then; and that documents were approved that gave the necessary political and legal space for reform. However, inertia, misunderstandings, dogmatisms and vested interests were a permanent force against it.
What is new now is to have assumed it; and the political will to move beyond that resistance. It's going to be difficult, but the road has already begun. We must be careful with that maxim that has existed in Cuba since colonial times: "It is complied with, but it is not fulfilled." But it is necessary to put an end to these sedimented obstacles, as strong as they are diffuse, which is why they are so difficult to eliminate. They will never be lacking, but with consensus, essential popular participation, accountability and accurate leadership, it can be achieved.
It is difficult to declare oneself pessimistic or optimistic in the face of such a complex process. We must be realistic and, as Gramsci said, continue, perhaps, with the pessimism of the mind, but always with the optimism of the heart.
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