Cuba: farewell to the planned economy? | Economy | '
There were only a few sentences in a longer speech, but they made people sit up and take notice. Cuba's Cuban President Miguel Díaz-Canel confirmed what the Minister of Economic Affairs Alejandro Gil had previously announced at the congress of the Cuban Association of Economists and Accountants (ANEC) last weekend in Havana. As of next year, the production plans in the state-owned enterprises are no longer set "from above", but made by the workers themselves. The state-owned enterprises thus receive more autonomy.
Thus, the government ends decades of centralization the economy. "It is a bold and revolutionary measure that requires objectivity, realism and awareness," Díaz-Canel praised himself. It is designed to help revive the troubled economy of the Caribbean island. The government has repeatedly emphasized that due to the chronic shortage of foreign exchange, imports should be reduced and more produced in the country itself. But the state-owned enterprises have to become more effective. The measure should also be seen against this background.
Cuba's President Miguel Diaz-Canel
"Caution is advised"
"More autonomy for the state-owned enterprises is urgently needed, but if the announcement Díaz-Canels actually means an 'end of the planned economy', there seems to be great caution," says Bert Hoffmann, Cuba expert at GIGA (German Institute of Global and Area Studies ), opposite the ‘. "The persistence forces are strong and announcements are far from being a consistent implementation."
Cuba's president knows that, too. "In order to effectively implement this measure, which has been required for years, a change of mentality is necessary," Díaz-Canel said in his speech. Also interviewed Cubans are rather skeptical, as regards an end of the planned economy. The speech always comes back to a culture in the companies and also authorities, in which the "orders from above" are not questioned. Changing them is likely to be the biggest challenge. Also, more autonomy had been promised for some time.
In fact, the social and economic policy guidelines adopted at the Congress of the Communist Party of Cuba (PCC) in April 2011 had already announced greater autonomy for state-owned enterprises. The renewal of the state sector is considered the centerpiece of the reforms initiated by then President Raul Castro. About 70 percent of Cubans are still employed in government agencies and businesses.
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The Decree on State Enterprise Reform of December 2014 gave state-owned companies more latitude in financial planning and the development of their own pay and incentive systems, but overall legislative initiatives were more restrained in decentralizing decisions.
"Cuba is facing difficult times"
"Given the dramatic worsening of the external situation – Venezuela, Maize Medicos, Trump – Cuba has few other alternatives to mobilize than domestic resources," said Hoffmann. In fact, the geopolitical climate for Cuba has deteriorated significantly. The economic and political crisis of Cuba's closest ally Venezuela is increasingly making itself felt on the island. Caracas oil supplies have fallen by more than half. And with the demise of the medical program Mais Médicos (More Doctors) with Brazil, about $ 400 million in foreign exchange is lost annually. The US, in turn, tightened its stalemate policy under President Donald Trump. Foreign companies confiscated and nationalized after the revolution have been sued for damages in US courts since May. This is primarily aimed at creating uncertainty among potential investors. In addition, Washington issued new restrictions on visits and money transfers to Cuba.
"In these difficult times, look for ways to improve the investment climate and facilitate trade and investment," Alberto Navarro, EU Ambassador to Havana, shouted in late May at a working meeting of European entrepreneurs and foreign diplomats, to which the press was admitted to the present Cuban government representatives. He has not yet seen a country that would have made it with development aid alone, foreign investments are needed.
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For Hoffmann the problem goes beyond more autonomy for state enterprises and more foreign capital. "For the private sector and cooperatives, it would also need more freedom and more legal certainty." The government's program was actually a slow, gradual reform, he suspects. "Now it looks like they no longer have the time and need to reform faster than they wanted to, but even then rapid improvements in the supply situation can hardly be expected." Cuba faces tough times. "
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