|
Getting your Trinity Audio player ready...
|
Nearly 70 years after the rise of the Castro revolution in 1959 and the establishment of a socialist economy, Cuba on Thursday adopted a massive, unprecedented program of liberal reforms affecting many sectors.
Is this a turning point for the Cuban economic system?
The reform program is unprecedented on the island of 9.6 million people and challenges the foundations of its socialist economy, which has been in place for nearly seven decades.”These are drastic changes, we’re not talking about cosmetic touch-ups. The announcements point to radical changes: for example, there won’t just be small and medium-sized businesses, but it will be possible to create a large private company in Cuba,” explains Cuban economist Daniel Torralbas, based in London.
Since the 1960s, the Cuban economy has been governed by a planned and centralized system, with state-owned companies as its cornerstone. Until a few years ago, these state-funded companies still made up 80% of the economy.
Over time, openings to the private sector have been cautious and controlled, serving as a pressure valve for the government to cope with crises.Very limited, private property is going to be profoundly reformed. Until now, Cubans could only own their house, their business, or a small plot of land.
“People will be able to own several small and medium-sized businesses at the same time, which goes in the direction of a concentration of private property,” which “will have access to assets such as buildings, houses, housing, and land,” explains Daniel Torralbas.
Another “major turning point lies in the abandonment of centralized planning, now tacitly recognized as a failure,” he points out.Will this be enough to overcome the deep economic crisis the island is going through?
Economists consulted by AFP remain cautious, however, about the Cuban government’s ability to implement such reforms quickly, given a severely degraded economic and social context.
For Daniel Torralbas, ‘Cuba’s economic policy in recent years has faltered by announcing many measures, but implementing few of them.’
‘Some measures can be taken immediately, but others will take more time, like attracting foreign investors,’ the expert notes, as the island’s infrastructure has greatly deteriorated over the years due to chronic underinvestment.The lack of legal and regulatory guarantees also remains a barrier to foreign investment, particularly from the Cuban-American diaspora, who are being encouraged by the government to invest on the island.
“To what extent do Cubans living abroad or foreign investors actually want to put their money in Cuba, given the distrust of Cuban institutions when it comes to fulfilling their fiscal and financial obligations?” highlights Tamarys Bahamonde, a Cuban economist at American University in Washington, speaking to AFP.
Another point of concern, she notes, is the human resources available on the island, as “Cuba has suffered a real hemorrhage of human capital with the emigration” of more than two million people over the past five years.
According to these experts, results are only expected to appear “in the medium to long term.”Is this program achievable without normalizing relations with the United States?
The issue of American sanctions, which have drastically increased in recent months to the point of drying up almost all state resources, remains crucial for implementing the reform program, according to Daniel Torralbas.
The expert emphasizes the need for relations between Cuba and the United States, which has imposed an economic embargo on the island since 1962, to normalize.
“Reforms are necessary and need to be done, but for them to really have an effect, the issue of relations with the United States has to be resolved,” he insists, noting that they “have become today the main variable in the country’s economic recovery.”
Because of the sanctions, no American company is allowed to trade with Cuba or invest on the island, unless it’s for the direct benefit of the Cuban population.Now the question is whether the economic shift announced by Cuba, without any reform of the one-party political system, will be enough for the Donald Trump administration to ease or lift sanctions against the island.
