Can Cuba Turn to Capitalism?

Can Cuba turn to capitalism? It seems that the answer is yes. In any case, this is what can be concluded from the words uttered by head of state Raul Castro on August 1.

Speaking on Sunday, the brother of the leader of the Cuban Revolution said that the country will have an “updated economic model.” It will include restriction of government intervention in private business development, changes in the tax system, as well as layoff of every fifth employee working for state enterprises. As it turned out, they are simply redundant.

So far Cuba had been building socialism, the main economic component of which is known to be a complete predominance of the public sector in the economy. Strictly speaking, this is where 95 percent of Cubans are currently employed.

Moreover, socialism does not entail unemployment. People seem to be always attached to some company or organization. Now every fifth employee of state enterprises will lose her job. This is a huge number as it involves 19 percent of the adult population.

Russia Today: Cuba to take brakes off economy, but not turn off socialism road

Of course, such changes are fraught with social upheaval. The Cuban authorities addressed the issue to prevent it from happening. They promise that all laid off employees will be retrained or reassigned. However, a question arises: if every fifth job is redundant, then where can these people be employed? The answer is the private sector.

A small number of entrepreneurs appeared in Cuba in the early 1990s. Then the socialist camp collapsed, Cuba lost the old Soviet support, and the United States tightened the embargo of the island. Under these conditions, Cuba plunged into a severe economic crisis. In order to give people at least some means of livelihood, the government had to allow small and medium businesses.

Hairdressers, owners of small cafes and restaurants opened private institutions, and became very successful. Supporters of “traditional socialist values” sounded the alarm and forced the government to introduce restrictions for the “bourgeois." Taxes were raised for the private businesses and the rules for obtaining licenses were tightened. As a result, only five percent of Cubans were employed outside of the public sector.

Now the number of “workers of the capitalist labor” on the island has markedly increased. Despite this, Raul Castro completely denies that Cuba has fundamentally changed its entire economic system. According to him, 55-year-old revolutionary struggle has proven its effectiveness, and the country will continue to build socialism. He also denied rumors that a split in the leadership of the country was brewing.

“The unity of leadership in the revolution and majority of the people is our most important weapon. No matter how much it hurts our enemies, our unity today is more robust than it has ever been. This unity is supported by the greatest Socialist Democracy, and a broad discussion with people on all issues," said Raul Castro.

Yet, it is quite difficult to predict the results of the planned changes.

“I had a chance to visit Cuba both during the Soviet era, and today,” says Boris Martynov, Deputy Director of the Institute of Latin American, in an interview with “Last time I was there in February (10 years after the first trip).I felt a very significant change.

People I spoke with, including scientists, say that their country is living in anticipation of major changes. Actually, they are long overdue. Now the life in Cuba revolves around “convertible peso” designed for transactions with tourists. You can hardly buy anything with a “regular peso” that Cubans are get paid with.

“Will coming reforms be too radical? “

“I want to tell to the Cubans: “Guys, do not rush the reform, learn from other countries!” We need to find the gold Cuban middle to prevent the impoverishment of millions of people. It is terrible to imagine what happens if the situation deteriorates.

What will the Cuban capitalism look like? I do not think it is possible to return to the days of dictator Batista (up to 1959 - Ed.) with “Miami” plot when Cuban ex-immigrants from Florida will rush to Cuba with American money. Most likely, there will be a type of state capitalism (like the ones that already exist in several countries in Latin America).

Most likely, Cuba will not follow the path of the Soviet Union and even China. This is due to previous development of the country. The Cuban Revolution took place under the obvious influence of the nationalists who are still strong.

In 1961 Havana announced the transition to socialism largely under the pressure of external circumstances. Then the country was threatened with U.S. invasion, and Cuba has found protection in the name of the USSR. 30 years later the Soviet Union collapsed, and the socialist system in Eastern Europe crumbled. As a result, Havana has lost the old Soviet support.

However, Cuba has not abandoned the idea of socialism. There was a time when the Cubans were eating grass, but they have not abandoned their course and survived. And it was then when Cuba was a truly independent country, and no one imposed their course on it.

“Who do you think can implement such major changes?”

“This is one of the main issues of Cuban politics. Raul announced the changes, but he is a representative of the old elite. Can he be a reformer? On the other hand, the Castro brothers are Marxists. What's wrong with Marxism? Those that profess it, in my opinion, are in anticipation of a miracle. But miracles do not happen. An entirely different view on the situation in the economy and the country as a whole is required to implement real reforms without hurting the interests of ordinary people.

One more thing: in the next five to ten years, Cuba's current leadership should completely retire because of its venerable age. Therefore, the challenge to reform the country will probably be on the shoulders of a new leader. How will these changes will take place remains an important issue.

“The Americans are most likely to try to interfere.”

“As for the Americans, of course, they have not relinquished or abandoned their attempts to bring the situation in Cuba under their control. But they will not use force. They have not ventured into this even in 1990s, when the country lost its former Soviet intercession. And they will not dare do it now, when the American troops are tied down fighting in Iraq and Afghanistan.”

Sergei Balmasov
Vadim Trukhachev

Read the original in Russian

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Author`s name Dmitry Sudakov