14ymedio, Havana, 27 October 2016 – In recent weeks several alarming news reports about the Cuban economy have filled the front pages of newspapers. The attitude of the government in monopolizing the aid for the victims of Hurricane Matthew and its cutting off of new licenses for private restaurants have raised fears that the country is heading down the path of “counter-reform,” accompanied by an aggressive political rhetoric.
The first signs of this backtracking were felt in the “Guidelines for Economic and Social Policy of the Party and the Revolution,” updated during the 7th Communist Party Congress last April. These guidelines not only refuse to accept “the concentration of property” in non-state forms of productions, but added that the concentration of wealth would also not be tolerated.
For those who were waiting for the Party Congress to lead to greater flexibilities for national entrepreneurs, this strengthening of the most orthodox line increased their frustration.
“Raul Castro’s government seems more willing to lose the income from taxes on entrepreneurs than to allow entrepreneurs to exist with positive results,” laments an economist at the University of Havana who asked to remain anonymous. “Although the foreign media has exaggerated the similarities between the reforms undertaken on the island and the Chinese and Vietnamese style models, in practice, Cuban officialdom strives every day to do the exact opposite.”
The national press is full of calls to use the maximum “reserves of productive efficiency” that supposedly exist on the island, but this is just an empty phrase if they don’t start opening the Cuban economy instead of closing it.
After officially ascending to power in 2008, Raul Castro initiated a process of changes in the economy that he called “structural” and necessary for the country. Among those that had the greatest impact on daily life was the push for the private sector, which had been corralled with excessive controls, rules and high taxes during the presidency of Fidel Castro.
The leasing of state land under the terms of usufruct generated hope for advances toward greater flexibility in production and trade in agricultural products. The creation of urban cooperatives also helped to fuel the illusions of an economic recovery and an improvement that would be felt on Cuba’s dinner tables and in Cuban pockets.
There were also the relaxations to allow Cubans to buy and sell homes and cars, to travel outside the country and to be able to have cellphones, which achieved greater political impacts, lauded in the headlines of the international press as it highlighted “the Raul reforms.”
Eight years after the beginning of that impulse for renewal, officialdom is determined to divert attention from the main problems facing the country. In the streets there is a palpable sense that the country is returning to the early years of this century, with an imposed economic arbitrariness.
The former Minister of the Armed Forces, now president, has not met his commitment to push transformations “without haste, but without pause,” a much-repeated phrase that has become a touchstone of his supposed intentions. In recent years, instead of advancing, the flexibility measures have stalled and only 21% of the Guidelines have been met, according to the authorities themselves.
Recently, the private sector in the dining industry has begun to suffer new pressures. The announcement of a freeze in the issuance of new licenses to open private restaurants has been read as an unmistakable sign of a slowing, and even a backtracking, in the reforms.
Instead of concentrating its facilities to create a wholesale market, the state has chosen to dedicate all its efforts so that entrepreneurs cannot acquire the products and raw materials needed for their businesses in the informal market. Monitoring and control absorbs more resources and energy, in this case, than enabling and empowering.
Something similar has happened with private transportation, which, since the beginning of the year, has been under intense scrutiny by the authorities, with the government canceling of licenses in an attempt to regulate rates already established by supply and demand. Price caps have affected the population and doubled the time passengers spend in travel.
When logic suggested that the authorities should turn their efforts to providing carriers gasoline and oil at wholesale prices, they inverted the logic with inspectors demanding receipts from the drivers of shared-taxi services to prove they bought their fuel at state outlets. This, at a time when it is an open secret that private transport is only profitable if fuel is supplied through the informal market.
The ever louder beating of the drums by the most recalcitrant targets the accumulation of wealth, but without announcing the definition of what is acceptable and what is not. A practice of confusion and permanent anxiety that was very effective for Fidel Castro in keeping the country on tenterhooks for five decades.
The question many are asking is why doesn’t the government turn its energy to working with private businesses to make the state sector more efficient. Why not decentralize this mammoth network that produces more costs than benefits?
The little progress that has been made in this direction is felt in the country’s development. According to official estimates, in 2016 economic growth will be less than 1%, a figure dominated by the state sector that employs three-quarters of the labor force.
The state model driven by Raul Castro has chosen, in recent months, to spend huge resources on political mobilizations, but is incapable of sowing the crops needed to feed the population.
What country does he intend to bequeath to his successor?
Those who applauded his reforms look out over a Cuba today that is turning to the past, and a government that redoubles its rhetoric against independent journalists, bloggers and academic critics. A nation that continues to put the brake on its productive forces and looks grudgingly on entrepreneurship and prosperity.