Wednesday, July 29, 2009

Cuba ponders reduced state role in economy

Cuba ponders reduced state role in economy
Tue Jul 28, 2009 4:48pm EDT
By Marc Frank

HAVANA (Reuters) - Cash-strapped Cuba should consider putting more of
its state-run economy in the hands of producers, as President Raul
Castro has done with agriculture, the country's top economic commentator
said on Tuesday.

Ariel Terrero, during his regular Tuesday appearance on state-run
television, did not call for private management, but suggested that
sectors such as food services and retail could perform better if they
were run in a new way.

"In the Cuban economy, there's a need to look for formulas more dynamic,
more intelligent, of understanding property, of running a business, of
running a cafeteria," he said.

About 90 percent of communist-led Cuba's economy is under state control.

Terrero pointed to Castro-led reforms in the island's agriculture that
include decentralization of decision-making, greater emphasis on private
cooperatives and farms, and the leasing of state lands to some 80,000

"The leasing of state lands, which in the end is the placing of state
property in the hands of producers, could be applied in other sectors,
for example food services, retail trade, and other areas where really it
is impossible, given the diversity and breadth, for the state to
administer directly," he said.

Terrero, who regularly comments on economic affairs in Cuba's tightly
controlled state media, said big, concentrated operations such as nickel
plants, sugar mills, hotels and the power grid were not the same as an
appliance repair shop or a cafeteria.

"I think this diversity requires new thinking about the concepts and
manner of understanding property in the Cuban economy," he said.

Raul Castro replaced ailing brother Fidel last year and since then has
pushed for a more efficient and streamlined government and economy.

He replaced his economic Cabinet in March amid the worst financial
crisis Cuba has gone through since the demise of former benefactor the
Soviet Union in 1991.

Terrero said the current difficulties could open the way to reform,
pointing out that in the 1990s crisis the economy was opened up to
foreign investment, tourism and some small family businesses.


His comments follow a recent government report seen by Reuters that
suggested similar changes.

The report by the Economy and Planning Ministry blamed hurricanes, the
U.S. embargo and world financial crisis for a cash shortage that has
forced cutbacks in imports, budgets and energy consumption.

But it also said long-standing structural problems were to blame.

"State-run socialist companies must be efficient and for that what they
need for their optimal performance must be guaranteed," the report said.

"The remainder of the economy must adapt to a form of property better
suited to the resources available," it said.

Many Cuban economists have long argued that the state should focus on
large companies and wholesale trade and get out of the retail business,
which it has monopolized since 1967 and which the government admits is
plagued by petty theft, inefficiency and abysmal service.

Cuba expert Daniel Erikson at the Inter-American Dialogue think tank in
Washington said it appears the Cuban government may be considering such
a move.

"What this tells me is that the Cuban government is once again wrestling
with the central dilemma of how to adapt the island's outdated economic
model to changing realities," he said.

"At bottom this is a debate about reducing the role of the state and
allowing controversial free market practices to take root," he said.

(Editing by Jeff Franks and Eric Beech)

Cuba ponders reduced state role in economy | Reuters (28 July 2009)

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