More Reforms From Raul Castro?

Monday, July 21, 2008
More Reforms From Raul Castro?

Is Raul Castro preparing the ground for more substantive, pro-market
economic reforms in Cuba?

BY LATIN AMERICA ADVISOR
Inter-American Dialogue

Cuban President Raul Castro said [recently] that "socialism means social
justice and equality, but equality of rights, of opportunities, not of
income" and that "equality is not egalitarianism." What is the
significance of Castro's comments? Is he preparing the ground for more
substantive, pro-market economic reforms? What possible reforms do you
see in the offing?

Dennis Hays, Vice President of Thorium Power and a former Coordinator
for Cuban Affairs at the US Department of State: Raul will never be the
public speaker his brother was, but that doesn't mean he has nothing to
say. In an address full of anecdotes and faint attempts at humor, he
managed to get across a number of interesting points, including an
ad-libbed admission that 'sometimes in socialism two plus two equals
three.' But after noting a number of ways in which the Cuban economy
continues to be the most dysfunctional one this side of Zimbabwe, he
finally got to the point—Cubans can expect to be taxed in the future for
many of the things they take for granted now, and major discrepancies in
income will become commonplace (starting, of course, to the advantage of
the senior military). Two full years after assuming effective control of
the nation, Raul still is constrained by the continuing presence of
Fidel. Despite the tepid nature of his proposals, Raul felt compelled at
the end his speech to note that his brother had determined that his
proposals were 'perfect.' Raul is enough of a pragmatist to know that he
must interject market-based reforms to appease an anxious and unhappy
population, but until Fidel is dead and the last set of eulogies
delivered, no significant changes will take place. Further, even after
Fidel is safely gone the sort of systemic root and branch reform
required is unlikely. Instead, we will see actions that put the generals
into BMWs but do little for the average citizen. And nothing, of course,
is even contemplated in the area of political reform or human rights.
Raul has a plan, but it is too timid to work.

Dan Erikson, Senior Associate for US Policy at the Inter-American
Dialogue: Raul Castro has embarked on a concerted effort to re-brand
what 'equality' means in the Cuban context by speaking frequently about
providing equality of opportunity, not of outcomes. Since becoming
president, Raul's early reforms focused on expanding access to consumer
goods like cellphones and DVD players, or allowing Cubans to stay in
expensive hotels that cater to foreigners. Critics abroad and at home
emphasized that most Cubans lacked the financial resources to take
advantage of these new freedoms. But that is precisely the point: Raul
recognizes that Cuba has already become a society of 'haves' and
'have-nots' and is thus willing to jettison the notion of state-enforced
egalitarianism in favor of allowing the 'haves' to have more. In April,
Raul released a plan that would allow thousands of Cubans to receive
titles to their homes, which had previously belonged to the state. The
government then eliminated salary caps and increased pensions for the
island's more than two million retirees to nearly $20 a month.
Government employees, such as court officers, saw their median monthly
salaries jump by more than 50 percent to $27. While Cuban pensions and
wages remained extremely low by international standards, they still put
more money in the pockets of one-fifth of the population. Last month,
Cuba introduced a system of incentive-based pay for state workers based
on their productivity. Meanwhile, a quiet revolution is unfolding in
Cuban agriculture, as the state moves to decentralize decision-making to
the farmers on issues like land use and crop selection. These changes
have already riled Fidel, who has warned 'do not make concessions to the
enemy ideology,' but the possibility of Raul Castro leading Cuba toward
an Asian-style market reform process is becoming increasingly conceivable.

William LeoGrande, Dean of the School of Public Affairs at American
University: In his speech to the National Assembly, Raul Castro repeated
themes he has talked about ever since assuming Cuba's presidency in
2006: the need for greater economic efficiency and discipline; the need
for Cuba to live within its means; and the need for pragmatic reforms to
enhance productivity. Raul Castro has long been known for his
willingness to experiment with market mechanisms in order to boost
production. Over the past two years, experiments in agriculture have
become increasingly bold, culminating in the recent decision to allocate
state-owned land to private producers to increase food production. More
reforms are likely down the road, as promised in Raul's July 26 speech
last year. On one level, Raul's reminder that socialism means equality
of opportunity, not equality of incomes, is simply a reaffirmation of
Lenin's dictum: 'to each according to his work.' Symbolically, though,
it expresses the need to tie incomes to productivity and the value of
individual incentives. Over the years, Cuba has swung back and forth on
the use of moral versus material labor incentives. Fidel Castro always
had an instinctive distrust of material incentives, fearing they would
corrupt socialist values. At times, Fidel sacrificed economic gains on
the altar of ideology, as when he ordered the closure of farmers markets
in 1986. Raul, although a dedicated communist, puts results ahead of
ideology. From the market experiments in agriculture to the recision of
burdensome regulations and the criticism of vulgar egalitarianism,
Raul's approach signals a willingness to free individual initiative and
entrepreneurship in pursuit of economic growth.

Luis Martínez-Fernández, Professor of History at the University of
Central Florida: In his July 11 address to the Cuban National Assembly,
Cuba's new president, Raul Castro, announced the latest and most
profound ideological shift in the history of the Cuban Revolution. This
declaration of ideological change went much further than the usual
pendular shifts between two alternating socialist formulas: on the one
hand, Che Guevara's model of socialism, based on the application of
radical egalitarian measures and the principle 'moral incentives'
whereby individual workers are motivated by the spiritual rewards of
sacrificing for the benefit of their communities; and, on the other
hand, the Soviet model, which allows the retention of capitalist
vestiges, such as market activities and material incentives: overtime
pay, salary bonuses for high productivity workers, private business
activities, and the like. Raul Castro has in fact declared the end of
socialism on the island by creating a new definition of socialism that
bears no resemblance to the common usage of the term ... He went on to
say that egalitarianism is in itself a form of exploitation;
exploitation of the good workers by those who are less productive and
lazy. This is a far cry from Karl Marx's formulation 'from each
according to his ability, to each according to his needs.' Moreover,
Castro's statements that his government will eliminate some free
services and excessive subsidies to consumer goods gives credence to the
arrival of a post-socialist era in which the Cuban state retains control
of the economy but pulls back from the social responsibilities of a
socialist government.

Republished with permission from the Inter-American Dialogue's daily
Latin America Advisor newsletter.

http://www.latinbusinesschronicle.com/app/article.aspx?id=2597