Cuba’s economic reforms debated at Miami conference

Posted on Thursday, 08.01.13
CUBAN ECONOMY

Cuba's economic reforms debated at Miami conference
BY MIMI WHITEFIELD
MWHITEFIELD@MIAMIHERALD.COM

As Cuba struggles to reform its faltering economy, it has engaged in a
delicate balancing act of trying to spur growth while maintaining
control and keeping market forces from getting out of hand.

That was the quandary under discussion Thursday as economists, political
scientists, business executives, lawyers and scholars from the United
States, Latin America, and Europe came together in Miami to discuss the
theme "Reforming Cuba?" at the 23rd annual meeting of the Association
for the Study of the Cuban Economy.

"The Cuban government functions like a broken enterprise,'' propped up
by support from Venezuela and remittances from Cubans living abroad,
said Emilio Morales, president of The Havana Consulting Group during the
opening session of the three-day meeting.

A recent study by the Havana Consulting Group estimates that 600,000
American citizens and Cuban-Americans are expected to travel to Cuba
this year — carrying with them an estimated $2.2 billion in cash.

That's in addition to the clothing, food, medicine and household items
that Cuban-Americans send or take to their families, said Morales, who
now lives in Miami but is the former marketing director of CIMEX, Cuba's
largest commercial corporation.

Meanwhile, he said emigration from Cuba reached a peak last year with
more than 56,000 Cubans leaving the country.

This year's conference at the Hilton Miami Downtown Hotel also includes
10 speakers from Cuba and five other participants from Cuba, said Ted
Henken, a professor at Baruch College and ASCE president.

In past years, Cuban scholars have sometimes been unable to obtain exit
visas from the Cuban government to participate in the event or haven't
been able to get visas from the U.S. government. Cuba did away with the
exit visa requirement in January.

"This year no one got turned down,'' said Henken, although he said that
some Cuban scholars who had expressed a desire to attend were unable to
get permission from their universities.

There was a consensus among many conference participants that the pace
of reforms in Cuba is too slow and they are not far-reaching enough, but
speakers said the jury is still out on the impact of the reforms.

Among the reforms announced so far are allowing self-employment as the
government seeks to remove workers from bloated government payrolls,
allowing Cubans to buy and sell homes and cars, increased private and
cooperative farming, and allowing workers at formerly state-run hair
salons, barber shops and restaurants to run them independently and rent
the facilities from the state.

Economist Carmelo Mesa-Lago, professor emeritus at the University of
Pittsburgh, said there are still some missing ingredients if the goal is
to transform the Cuban economy. Cuba, he said, needs banking reform, the
unification of its dual-currency system, a realistic exchange rate and
tax system and more far-reaching agricultural reform.

"The success of the reforms is made more difficult by excessive
regulation and control,'' he said. But Mesa-Lago added, "The biggest
obstacle for reform is the Cuban model itself.''

Among other reasons that creation of small businesses and
self-employment hasn't produced the desired advances, said Morales, is
the lack of financing and loans for private enterprises, no system for
home mortgages and the failure to include professionals in
self-employment initiatives.

Marino Murillo, Cuba's economic czar, said in July that the most complex
part of President Raúl Castro's reform program will come over the next
18 months. Among the changes that will be implemented will be the
decentralization of state-run businesses, allowing them to keep 50
percent of their revenue to reinvest instead of sending it all to the
government.

At this point 124 non-farm cooperatives — most former state-run produce
markets — are operating and 71 others in areas ranging from light
manufacturing to food services have been approved.

The non-agricultural cooperatives have potential and could lead to a
"hybrid mixed economy'' if they come to fruition, said Archibald Ritter,
an expert on the Cuban economy who teaches at Carleton University in Ottawa.

When the decree law that established the legal framework for the
cooperatives was announced last December, there were no restrictions
placed on the number of employees a cooperative could have or on what
activities it could engage in, Ritter said. In theory, he said, there
could be manufacturing cooperatives, a cooperative of building
tradesmen, or even a group of accountants.

It remains to be seen whether cooperatives of professionals will be
permitted, how the initiative will be implemented and whether the
Communist Party will try to control or influence the governance of the
cooperatives. But, he said, if the cooperative system is "implemented
fully,'' it could lead to a significant degree of "economy democracy for
Cuba."

Source: "Cuba's economic reforms debated at Miami conference - Americas
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