There are two possible scenarios:
a) Economic crisis= opening to reforms and changes, including political; the later might be slow, but the pace would be determined by the circumstances and happenings.
b) Economic crisis= closing to reforms, popular unrest, great repression.
United States presence in Cuba is very important in this moment of defining crossroads. It is not for supporting the government but to know, influence, preparing for the nearest future, and maybe assist. For 56 years the Cuban leaders were lecturing about and roaring against American Imperialism, but the measures taken by the current US Administration has eclipsed all, and the Cuban people see hope coming from the US. Dialogue can help opening (a). Isolation and confrontation could reinforce the hardliners versus the reformers (b).
I believe that the near future will be difficult. We Cubans have a lot at stake. Cuba’s fate depends on us. But USA, the European Union and many other international actors can contribute very much. Cuban population and its independent civil society must not be left aside; we cannot be the collateral damage. The Cuban government needs the international community, which has the ability to be wise and fruitful.
1) The government informed 4% growth of the GDP in 2015. Statistics have never been reliable. Many domestic productions were impossible during several months because raw material were bought late, the same happened with imports of products. For months there was lack of many items: medicine for heart, diabetes, pressure and others (Cubans must buy aspirin under strict control, it is not sold over the counter); yogurt (children over 7 years old lose the right to buy milk through the ration card), soap, deodorant, creams, colognes. State owned stores selling in hard currency were poorly supplied (almost everything has to be bought there). Production and productivity are low. Agriculture does not increase; there are insufficient offers of vegetables, fruits, beans, pork beef, so prices are high. Salaries are very low and workers are not motivated (wages have risen mainly for doctors, and are still ridiculous), average monthly salary is 659= 25 dollars. Thus there is great corruption at all levels. And many other problems.
The plan for 2015 was 4% increase of the GDP, announced in December 2014. Vice-president Marino Murillo confirmed the 4% GDP growth during a meeting of the Council of Ministers held in December 2015. The results were possible, he stated, because there was earlier liquidity, advanced contracts of credits and their execution, and lower prices of imports. All the productive sectors grew, he said, but agriculture, sugar industry, construction, transportation, storage and communications did not fulfill the plan. Agriculture grew 3, 1% but was 2% under the plan, mainly due to vegetables, tobacco, milk and rice. Sugar Industry grew 16.9%, but was 5, 3% below plan. Construction grew 11, 9%, but was 8% below plan.
It had been a great shame, having to recognize that the Plan had not been accomplished. The government announced in 2014 that the GDP grew 1, 3%, but the plan was 2, 2%, and in 2013 it increased in 2, 7%, the plan was 3, 6%.
The so called “updating of the economic model”, stated in 2011, has proven failure. The model (the system) that has never worked cannot be updated, it must be changed, as Oscar Espinosa Chepe summerized.
For 2016 the plan is 2 % growth of the GDP.
2) Cuban economy depends on the inflow of capital from Venezuela, through oil under special payment conditions and selling an estimate of 50% of it in world market (Cuba produces 50% of its consumption); the salaries of around 40 000 doctors, nurses and other personnel (of which the government keeps the lion share*); and investments (although they have dropped) direct or in the framework of the ALBA-TCP and Petrocaribe agreements. The fall of oil price, the economic crisis in Venezuela, the opposition taking hold of the Congress and probably examining all accords with Cuba will have paramount impact on Cuba’s economy, and the Cuban population fears that the worst times of the so called Special Period -1990’- will be back. The Cuban government has not found similar benefactor.
3) Brasil, although not as important as Venezuela to Cuban economy, and with its own problems, would end the contracts for Cuban doctors, and put on hold or end other economic agreements.
4) Foreign Investment. The government desperately seeks 2.5 billon dollars a year to recapitalize, modernize and develop industry and infrastructure. Although a new Foreign Investment law was enacted, it changed very little, and entrepreneurs do not find guaranties in such a risky country. (In 2008 there was no liquidity, the Cuban banks did not let the foreign enterprises withdraw or send their money abroad; payments by the Cuban government were cancelled for a long time). Employees must be hired through State enterprises, there are two currencies, investments are 51% Cuban state, and rarely 100% foreign. They fear sanctions by US Embargo.
5) The Paris Club reached an agreement with the Cuban government to cancel most of the debt and restructuring payments (Cuba had not paid since 1986). Now it could be easier to get short and medium term loans, but the Cuban government must honor its commitments.
6) Raul Castro began with promises, and in July 2007 he recognized that structural and conceptual changes had to be brought about. That encouraged Cubans, but later he came up with the updating of the model and saying they would go “sin prisa, pero sin pausa”, “without hurry, but without pause”. He has lost credibility and nowadays support is very low. Cubans do not believe reports on economic growth and propaganda. They feel that they are only in title to pretend not to partake with their opinions in decision making. Millions depend on the remittances sent by their relatives, mainly living in the US, including longtime believers and supporters of the “revolution”, who have ridiculous pensions (monthly average 272 pesos = 10 dollars).
7) In April 2016, the VII Congress of the Communist Party will take place. That is in three month. Members of the Central Committee, the Secretariat and the Politburo will be confirmed or replaced. The Conceptualization of the Cuban Socialism (what are they going to make up?) is going to be announced. And in February 2018, the National Assembly of the Popular Power should confirm the Counsels of State and Government. Raul Castro has promised to step down, although perhaps he and the historic leaders will supervise from some Special Council. There are at least two groups: Fidel’s and Raul’s that have been positioning their heirs. It is impossible to predict heirs’ views, because in Cuba, who has talked, has lost everything. The military could have the last word, and they always served under Raul. Most of the Cuban political and economic top officials and entrepreneurs come from the Armed Forces. They know they will inherit a chaos, and soon there will be no historic leaders.
*) Cuba’s main foreign currency income comes from services (Cubans) to about 60 countries.
Cuban Independent Journalist
Havana, January 6th 2016