Responsibility for Cuba’s Economic Crisis

Los Quimbos is made up of 100 marginal homes in which more than 500 Cubans live, without water or sewage, and many without electricity. (14ymedio)

14ymedio bigger14ymedio, Elias Amor Bravo, Economist, August 7, 2021 — Once again the Castro regime is tripping over itself to pass a series of laws aimed at, according to the official press, “strengthening the Cuban socio-economic model.” These actions, adopted with urgency but little forethought, have received the approval of the Council of State.

Government, Council of State, Communist Party: the triad of those responsible for the failure of the economy. They have not covered their tracks so there is no way that history will absolve them. Nothing more and nothing less than eight separate laws, issued as decrees, which presumably will be published in the Official Gazette in the coming days. They deal with the so-called “socio-economic strategy of the country.”

Regulations about which very little is known. Given the way parliamentary and the governmental regulatory processes work in Cuba, we will not find out what is in them until they take effect, without their ever having been subject to public scrutiny.

Among the regulations that got the green light from the Council of State — the regime’s supreme decision-making body and therefore the party responsible for whatever ends up happening — is a law on micro, small and medium-sized companies. It allows for the creation of these types of businesses in a way “coherent with the legal framework,” recognizing their role as an “actor which has an impact on the productive transformation of the country.”

This law seems to mark a return to a situation that existed until 1968, when Fidel Castro’s fateful “Revolutionary Offensive” abolished all legal private enterprise throughout the country. Now, fifty-three years later, this appears to be an attempt to roll back that decision. We’ll see if the regulations governing these businesses encourage them or not. One has to be vigilant.

The council gave its approval to a law on non-agricultural cooperatives, which will regulate their formation, operation and dissolution. Expanding the cooperative sector throughout all areas of an economy seems reasonable, even in a free-market economy, where cooperatives work well. They should work even better in Cuba, especially in sectors where they are currently not allowed, like banking, education and even health care. This is another piece of legislation to which we will have to pay attention since we do not yet know enough about its contents.

The council adopted on a law on self-employment that updates some general provisions and regulates other particulars. Undoubtedly this is another important piece of legislation since it is not yet known in which direction the regime intends to go in controlling the growth of one of the few areas in the communist economy in which private enterprise is possible. It would be a mistake if its operation were restricted given that inappropriate limits have  already been set for newly formed medium-sized businesses. In any case, self-employed workers should have the same legal protections and abilities as any company to operate with autonomy and independence, free of excessive government control.

Also approved is a law on private sector employment and a special social security provision for self-employed workers. It will cover partners in non-agricultural cooperatives and in micro, small and medium-sized businesses. The goal of this law is to offer these workers the protection of  social security benefits. Its guidelines establish a means of control and suppression of private sector conomic activity, which to a large extent is dictated by the very nature of the country’s economic and social model.

On the other hand, it establishes a method for financing social security, which is beginning to have problems paying for pensions due the aging of the population and low tax collection rates.

Likewise, an amendment to Decree-Law 113, adopted in July 2012, was approved. It modifies the tax code and is aimed at increasing tax revenues, affected by the country’s serious economic crisis. Although its contents are unknown, it will try to relieve the financial pressure caused by a recession that has been dragging down the Cuban economy since the second half of 2019.

Another law — one dealing with the conservation, improvement and sustainable management of soils and the use of fertilizers — was incorporated into the set of guidelines that received the Council of State’s approval.

Agricultural supplies are in short supply because they cannot be bought abroad due to the lack of foreign exchange earnings. And in sixty-three years no communist leader has bothered to produce them. It remains to be seen how this legislation will deal the situation, which is limiting agricultural production.

Also mentioned in the Granma article is the law on real estate records. It establishes public registries of property ownership, applying information and communication technologies, as provided in the Decree-Law 335 of the public records system.

Having failed to address the dark issue of expropriations that took place between 1959 and 1968, it is patently absurd that the regime devotes so much attention to pubic real estate records when, in many cases, these registries attributed property titles to owners other than the actual ones. This is another assault on legality that will have to be corrected by a government at the service of all its citizens,

The provisions approved by the Council of State, with their complementary regulations, were announced in Granma  and will be published in the Official Gazette of the Republic but, as always, with barely any public or parliamentary debate and without input from the Cuban people.

These provisions are being approved solely on the basis of communist political imperative even though their feasibility depends on acceptance by the population. The experiments in this case are being driven by the current economic and social situation, which is pressuring officials to act, though they are not going in the right direction.

Cuba’s communists have already shown this year that they intend to govern without listening to the people. Currency unification was a politically a high priority but caused the worst economic crisis in the country since the Special Period.

The July 11 demonstrations were a clear sign that the people cannot take it anymore. It is not a question of the Council of State approving more and more regulations in hopes that the social situation will calm down. It is about committing to measures that really transform the legal and economic framework so that the nation can prosper in freedom.

This, on the other hand, is just entertaining an impossible idea. We are far beyond that point. To “strengthen the process of updating the Cuban economic model” is to turn our backs on reality, to go down a path different from the one Cubans want while trying to save what little remains of an experiment that has been a historical failure. Meanwhile, we will continue to wait for the guidelines to be published in the gazette to find out what they say and question them if appropriate.

The Council of State has lost an historic opportunity to provide the changes the country needs for the good of all Cubans. It is actively complicit in incompetent and unsuccessful actions by a government that places legislation on the table for its approval based on ideological communist obligations.

The Council of State could have returned these decrees to the government, or to the National Assembly, without approving them, as is its legal right, thereby taking a clear stand on the uselessness of these measures when it comes to restoring nation’s economy.

They are complicit in the disaster and are as responsible as the Communist Party, to which they are beholden, for the national disaster. Every day that goes by makes it more likely history will judge them harshly.


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