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Introduction: Salvaging a Revolution?

By Eric Hershberg

here is a troubling reality that those

Eric Hershberg is Professor of Government and Director of the Center for Latin American and Latino Studies at American University. A former President of the Latin American Studies Association, he has served for nearly 15 years on NACLAs Board of Directors.

of us who sympathize with the under lying objectives and achievements of the Cuban Revolution must confront: namely, that the Cuban economy as currently organized is incapable of producing the minimum supply of goods, services, and tax revenue needed to provide for the basic needs of the population. The overwhelming majority of food must be im ported, the sugar industry has been decimated, and manufacturing is at a standstill and almost universally uncompetitive with foreign goods. Only a handful of industriesprincipally nickel mining, tourism, health services, and conceiv ably biotechnologyshow any signs of poten tial. The state lacks the resources to pay work ers anything close to subsistence wages, leaving them to resolver, meeting their everyday needs through illegal activities in the underground economy or, for a fortunate minority, through remittances sent by family members residing abroad. Two decades after the demise of the Soviet Union and the onset of the socalled Special Period, when Cuba opened up to foreign direct investment in a desperate attempt to keep its economy afloat, the countrys leadership has yet to elaborate a development model that re flects the imperatives of the 21st century. One can debate how and why Cuba ended up in this predicamentthe collapse of the Soviet bloc was unforeseeable, the reprehensible U.S. embargo increases transaction costs, a succes sion of hurricanes has devastated agriculture and housing stock, nickel prices have fluctuated, policy mistakes were made. The list goes on. But the fact of the matter is that, as President Ral Castro has publicly and repeatedly acknowl edged, the economic system that has prevailed for decades is unviable and urgently must be

replaced. The governments alarming failure to act accordingly over the many years that have elapsed since the collapse of the Soviet Union has resulted in severe hardship. Conversations with Cuban youth today reveal that the costs of this paralysis go well beyond material deprivation: A generation has grown up deeply despairing of its future, profoundly skep tical toward revolutionary utopias, and all too frequently bereft of hope for any way out short of exit. It is in this context that the leadership has proposed and begun to implement a multi faceted package of economic reforms. These measures, first articulated in Lineamientos de la poltica econmica y social en Cuba (Guidelines on Economic and Social Policy in Cuba), an official document published in October 2010 that out lines 313 goals meant to update (actualizar) the Cuban economy. These guidelines were debated at thousands of meetings in neighborhoods and workplaces across the island in advance of Aprils Sixth Congress of the Communist Party of Cuba, the first to be held since 1997.1 The longawaited congress concluded its deliberations by approv ing changes more profound than any that have been attempted since the 1960s.2 Central to the economic reforms are provi sions that will shift a significant portion of the workforce away from the sclerotic publicsector and into newly legalized privatesector activities; the number of layoffs ranges from a high of 1.8 million by 2015, according to some government declarations, to a more likely and scaleddown figure of 500,000 for now. Nearly 200 occupa tions previously limited to the state sector have been made legal, and the response by the popu lation has been immediate: Three months after the Party Congress, more than 100,000 new licenses were granted for the establishment of

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Delegates attend Cuban president Ral Castros address inaugurating the Sixth Congress of the Cuban Communist Party on April 16 in Havana.

small businesses.3 In a dramatic departure from past prac tice, entrepreneurs will be permitted to hire nonfamily labor, a measure that is intended to absorb workers who will be shed from the bloated state payroll. Whether the reforms can revive the economy is highly uncertain, but the stakes could not be higher: If there are features of the Revolution that must be salvaged, surely they are the social gains that accumulated from 1959 until the beginning of the Special Period, gains that have been sustained to varying degrees since that pivotal moment in Cubas history. Yet they are expensive to maintain, all the more so in a society that, like the rest of Latin America but to an even greater degree, is grappling with the challenges of supporting a rapidly aging population (by 2025, more than a fifth of the population will be over the age of 60). Without an economic system that can generate jobs and wealth, whatever social advances have survived to this pointand nowadays these consist principally of access to health and education of fraying qualitywill continue to erode. More troubling still, failure would inevitably exacerbate the trend toward widening social inequalities,

which fuel the sense of alienation among segments of the population for whom the Revolutions promise of social justice appears increasingly remote.

constitute a qualitative shift from previous efforts to revive the Cuban economy. They are remark able in scale and in scope. But the jury remains out as to their prospects, not only in terms of advancing the gov ernments twin objectives of reducing the hemorrhaging of state resources and increasing productivity, but also of the broader aim of enhancing social welfare. Three sets of questions stand out as highly contingent, yet crucial for responding to these uncertainties. First, how internally consistent are the reforms, and what risks do they entail? Second, and inextricably intertwined, what are the additional, still to be defined elements of a reform agenda that will be needed to enable the govern ments proposals to generate sustainable economic security and prosperity? Third, with regard to their potential to sal vage the Cuban Revolution, to what extent do the unfold 9

he reforms approved by the party congress

EnriquE dE la Osa / rEutErs

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ing reforms signal a transition toward a coherent strategy for development, one that envisions not only a return to fiscal solvency and economic growth but also an egalitarian approach to social welfare? With regard to the first two questions, the foremost concern has to be with the fate of displaced workers. However true it may be that the state lacks the resources to pay hundreds of thousands of employees who, particu larly in the manufacturing sector, often sit idle and pro duce nothing of value, those citizens and the households they support must have somewhere to turn for income. At least in the short term, unfortunately, it seems highly unlikely that selfemployment and the incipient private labor market will be sufficient to accommodate the inevi table flood of job seekers. This is primarily because there is no guarantee that those who are laid off will have the skills needed to thrive in the newly authorized occu pations, while lots of occupations that they may have suitable training for remain offlimits to private entrepre neurs. Cubans may now be free to start private businesses in an array of once prohibited fields, ranging from hair dressing to window repair to food preparation to retail ing, as well as cultivating land that previously lay fallow on unproductive state farms. But not everyone is trained to cut hair, to fix windows, or to farm. If the substantial portion of the workforce that the government now con siders redundant is not somehow absorbed into the new economy, Cuba could face a social catastrophe. Prospects for rapidly expanding the supply of jobs will be increased if the authorities can implement an array of microeconomic reforms that have been anticipated but not yet specified in sufficient detail. This is where the ques tion is one of internal consistency: Creating viable systems for allocating credit to new and existing companies, for example, would increase their likelihood of surviving and accelerate their potential for jobcreating expansion. Yet so far it is not clear how the government will ensure this essential underpinning of a market economy. Consoli dating tax systems whereby the state is able to capture a sufficient portion of companies profits so as to be able to sustain social investments, but without putting the companies out of business, is a no less daunting yet vital challenge. Equally important, the private sector will need reliable access to wholesale markets where companies can purchase much needed inputs, at accessible prices, and retail outlets where they can sell their goods and services. That these critical foundations for a vibrant market economy are needed is not in question. Whether the gov ernment has credible plans for making them available is far less certain, and there is limited time to work out via 10

ble answers: Markets without enabling institutions have little likelihood of functioning effectively. The longerterm question is whether Cubas leadership is proposing an integrated development strategy that draws on societys strengths to build a plausibly desirable future. There is substantial and heated debate about this, both on the island and outside. On the one hand, as anyone who navigates the increasingly busy streets of Havana can attest, there is a buzz of economic activity that would have been unimaginable even a year ago. Change is definitely in the air, and alongside widespread fear about the antici pated layoffs, or to a lesser degree about the announced gradual reduction in the libretathe monthly ration card that provides a small supply of food and basic consumer necessitiesmany Cubans voice a degree of cautious opti mism that was absent before the Party Congress. On the other hand, a recipe for stabilization does not a development model make. Indeed, as economist Pedro Monreal has pointed out in these pages and elsewhere for a number of years, what Cuba has required since at least the beginning of the Special Period is a comprehensive strategy for repositioning its economy in such a way as to take advantage of the strengths that emerged precisely as a result of the Revolutions core commitments to social equity.4 Cuban officials justifiably trumpet the fact that the Revolutions investment in primary through tertiary edu cation has fostered a highly skilled workforce that could create value across countless knowledgeintensive indus tries as scientists, engineers, designers, and researchers. Tragically, however, that workforce increasingly finds that its only opportunities lie abroad. A highly skilled population represents an invaluable asset that could be drawn upon if the government were to assign priority to strengthening industries that deploy a workforce with advanced training. It would be unfair to suggest that it has ignored the matter entirely (see Marguerite Rose Jimnezs article in this volume on Cubas biotechnology sector). Yet notably absent from the list of occupations permitted under the Lineamientos are any that rely on high levels of education! Indeed, the roster of 181 professions that have been opened to selfemployment read like a catalog of informalsector ser vice activity of the sort that governments throughout Latin America are trying to replace with formalsector jobs. It is difficult to escape the fear that the opportunities opened up by the reforms are precisely those that a highly educated society should aim to have substituted with betterquality work and more valuecreating industries. For Cuba to embark on a path toward sustainable eco nomic development, it must stimulate domestic demand for goods and services, yet this can be done only through a

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A woman holds a libreta, the monthly Cuban ration card, which is set to be gradually phased out under the new reforms.

reform of the countrys dysfunctional system of exchange rates. The issue is complex, but in a nutshell, the country now operates with a dual economy. In one, the U.S. dol lar has been replaced by the convertible peso (the CUC), which is pegged to a basket of foreign currencies; all but a limited set of essentials are available only in this currency. Cubans who have access to CUCsthrough their jobs in the tourism sector or foreignowned enterprises, family remittances, or transactions in the shadow economy can secure an array of luxury consumer goods, from clothes to TV sets, albeit for a steep price. But for the remaining half or so of the population, those who rely exclusively on state salaries or on pensions, the prevailing currency is the Cuban peso, convertible into CUCs at a rate of 24to1. Public employees wages are paid exclu sively in artificially depressed pesos that, when converted into CUCs, are essentially worthless. As a result, the large segment of the population that lacks access to CUCs also lacks any meaningful purchasing power. The result is a stubborn drag on an economy in which only a fraction of society has the capacity to consume. More troubling still, this is a core source of a dramatic and wors ening inequality, as the gap widens between those who can

access CUCs and those who cannot. Cuba researcher Mayra Espina Prieto, featured in this volume, is among the Cuban social scientists who in conference presentations has identi fied a roughly 50% increase in inequality, as measured by Gini coefficients, between the mid1980s and 2000. Despite the absence of definitive data, no close observer would ques tion the assertion that the index has deteriorated further dur ing the ensuing decade. According to Reuters, 85% of private savings in Cuba are held in only about 15% of the countrys bank accounts.5 To some degree this rising inequality may be mitigated by the shift of workers from undercompensated state employment into selfemployment or wage labor for the emerging smallscale private sector. But that will have mini mal impact and will not address the underlying problem: the urgent need to rid the system of the distortions generated by the current exchangerate regime. Nobody inside or outside the Cuban government denies that the situation is unsustainable, but it continues, for rea sons that are on the one hand understandable, and on the other deeply disconcerting. The continuing exchangerate regime is understandable because, as things now stand, the state collects inflated CUCs and converts them into arti ficially undervalued pesos in order to pay publicsector 11

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workers and have enough leftover to finance teetering social programs and the everyday costs of operating the system. Without the policyinduced gap between the two currencies, the state would crash, taking down with it the remnants of the (pesofunded) welfare programs that it continues to fund. This makes good sense. But there is a darker side to the story: Closing the gap between the CUC and the peso would mean devaluing the CUC, and that is not in the interest of certain Cuban elites who thrive off their access to the CUC. Reforming the exchange rate would have a particularly powerful impact on the small number of Cubans who, often drawn from the ranks of the Armed Forces, earn handsomely from their lead ership positions in major state enterprises and holding groups that on their own or together with foreign capital occupy the most lucrative niches in the economy. No scholarly study or journalistic account has mapped the actors in these seg ments of the economy or assessed their incomes, though Argentine analyst Carlos Prez Llana hinted at this problem in a commentary published in May in the Taipei Times.6 That many of these people are highranking party mem bers and that these firms are closely allied with the military is not trivial. It is difficult to escape the conclusion that in Cuba, as elsewhere in Latin America, inequality generates not only povertya topic that is strikingly absent from any of the documents put forth in connection with the reformsbut also wealth, and that those in whom wealth is concentrated stymie the introduction of policies that would redistribute resources more equitably.

rate suggests that, even if the most urgent ques tions on the table today appear economic, it is important nonetheless to recognize that Cuba is at a crossroads politically as well. In the United States and be yond, the mainstream media have spilled excessive ink dissecting the ramifications of Fidel Castros nearly com plete disappearance from the scenea product, perhaps, of a misguided assumption that the Revolution was all about a particularly charismatic and/or diabolical individ ual leader. Meanwhile, too little attention has been paid to who actually is wielding power in contemporary Cuba. As a result, observers have largely failed to illuminate the sources of regime stability amid a leadership transition in which Fidel successfully passed the baton, albeit to his slightly younger sibling rather than to a new generation. Those sources of stability may be the factors that con strain the reforms from moving in a more redistributive direction and that call into question the longerterm pros pects for political continuity. 12

he delay in correcting the distorted exchange

Considerations of politics in Cuba today have to acknowledge this dimension, that is, the interests that are served through the exercise of political power. This topic has been sorely neglected. At the same time, we must pay fresh attention to currents that emerge in contestation. Again, too little attention has been paid to the political messages to be derived from the debates that unfolded both before and after the Party Congress in April. The basic contours of reform have been reaffirmed, though there have also been important modifications to the initial Lineamientos, most notably a delay in the mass layoffs.7 More noteworthy still, commentators have entirely neglected the spaces of political innovation that have been percolating in Cuba, barely but not always beneath the surface, over at least the past decade. Noteworthy among these are the ubiquitous citizens and neighborhood associations, autonomous groupings which are growing and consist largely but not exclusively of youthand communitybased economic cooperatives that are springing up in towns and barrios across Cuba. A growing array of independent associations and advo cacy groups has championed the rights of Afrodescendant Cubans, documenting and protesting patterns of exclusion that never disappeared entirely with the Revolution and that have grown more acute during the Special Period. While these actors, again predominantly youth, advocate cultural recognition and project their presence through public per formances of various sorts, they also make claims on the state that are fundamentally material in nature, encompass ing access to suitable housing, for example, and to higher education opportunities. From the perspective of the state, these forces are a potential source of dynamism in a society that has suffered from inertia, yet at the same time some of their priorities clash with the logic of reforms that, in the short term at least, seem destined to exacerbate inequalities. These popular initiatives, some of which are analyzed in contributions elsewhere in this NACLA Report, often have only ambiguous ties to official channels for representation. There is little if any evidence, as well, that they are linked to the network of bloggers and dissidents who are championed in foreign media accounts of political dissent in Cuba. But in articulating unprecedented demands about social welfare and equality, about racial empowerment, individual autonomy and sexual identities, they will be important players in deter mining the future character of everyday life on the island. Considered in broader Latin American context, their insis tence on popular agency is reminiscent of what we encounter in highly unequal societies virtually everywhere else in the hemisphere. Salvaging the Cuban Revolution is in part a mat ter of economic transformation, but more fundamentally, it is a matter of subaltern politics and resistance.

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notes

Buenaventura, Colombia 1. Buenaventura, un puerto de ilusiones? Pacfico Territorio de Etnias 1, no. 5 (undated): 2, http://issuu.com/territorio_pacifico/docs/territorioetnias5/1; Proceso de Comunidades NegrasPalenque Regional el Congal, Pastoral Afro-Colombiana, Fundemujer, Rostros y Huellas del Sentir Humano, with support from the Washington Office on Latin America (WOLA), Buenaventura: Caught Between War and Despair (August 26, 2010), 1; $1 million figure cited in Jasmin Hriztov, Blood and Capital: The Paramilitarization of Colombia (Toronto: Between the Lines, 2009), 22. 2. Buenaventura, un puerto de ilusiones?, 2. 3. Ibid. 4. WOLA, WOLA Condemns Murder of Afro-Colombian IDP Leader Jair Murillo, statement, July 19, 2010, available at wola.org. 5. Yesid Toro and Adonay Crdenas, Buenaventura vive la mas dura epidemia de las desapariciones, El Pas (Madrid), August 16, 2010. 6. Personera Distrital de Buenaventura, Informe ejecutivo sobre la situacin de derechos humanos y DIH en Buenaventura, June 2011. 7. Ibid., and Toro and Crdenas, Buenaventura vive la mas dura epidemia. 8. Comisin de Bsqueda de Personas Desaparecidas, Instrumentos de Lucha Contra la Desaparicin Forzada (February 2010), 92, n. 155. 9. El Pas, Fosas Comunes en Buenaventura son muestra de la impunidad, July 29, 2010. 10. Office of the US Trade Representative, Colombia FTA Briefing Materials, ustr .gov/sites/default/files/uploads/factsheets/2008/asset_uploadfile368_ 14604.pdf. 11. The Labor Action Plan is available at ustr.gov/about-us/press-office/blog/2011/ april/us-colombia-trade-agreement-and-action-plan. 12. The White House, President Obama Meets With Colombian President Santos (video), April 7, 2011, whitehouse.gov/photos-and-video/video/ 2011/04/07/president-obama-meets-colombian-president-santos?v =accessibility; Obama and Colombian President Juan Manuel Santos Deliver Remarks at the White House, transcript, The Washington Post, April 7, 2011, projects.washingtonpost.com/obama-speeches/speech/617. 13. U.S. Labor Education in the Americas Project, Obamas Labor Action Plan for Colombia Woefully Inadequate; Doesnt Require Reduction in Violence, April 13, 2011, available at usleap.org. 14. Quoted in U.S. Office on Colombia, Impact of the FTA With Colombia on AfroColombian and Indigenous Communities (spring 2011), video available at youtube .com/watch?v=9Q7NOY8Axf4. Introduction 1. Full text of the Lineamientos is available at cubalegalinfo.com/lineamientospolitica-economica-social-cuba/indice. For a thoughtful analysis of them, see Archibald Ritter, El VI Congreso del Partido y los Lineamientos: un punto de viraje para Cuba? Espacio Laical, suplemento digital, no. 132 (June 2011). 2. For an account of the debate and revisions effected at the Party Congress, see Informacin sobre el resultado del Debate de los Lineamientos de la Poltica Econmica y Social del Partido y la Revolucin (May 2011), available at scribd .com/doc/55084978/Tabloide-Debate-Lineamientos-VI-Congreso-PartidoComunista-de-Cuba. 3. Agencia Venezolana de Noticias, Trabajo por cuenta propia en Cuba genera nuevos empleos, July 20, 2011. 4. See the following works from Monreal: Sea Changes: The New Cuban Economy, NACLA Report on the Americas 32, no. 5 (March/April 1999): 2129; Development Prospects in Cuba: An Agenda in the Making (London: Institute of Latin American Studies, School of Advanced Study, Univsersity of London, 2002); Cuban Development in the Bolivarian Matrix, NACLA Report on the Americas 39, no. 4 (January/February 2006): 2226; El problema econmico de Cuba, Espacio Laical, no. 2 (2008): 3335. 5. Marc Frank, Cuba Grapples With Growing Inequality, April 10, 2010.

6. Carlos Prez Llana, Cuban Revolution Has Lost Its Last Chance to Reform the Economy, Taipei Times, May 11, 2011. 7. Marc Frank, Cuban State Layoffs Move Slowly, Workers Uneasy, Reuters, March 8, 2011. Changes in the Economic Model and Social Policies in Cuba 1. For data sources and a fuller discussion of the new inequalities and social policy, see Mayra Espina Prieto, Viejas y nuevas desigualdades en Cuba. Ambivalencias y perspectivas de la reestratificacin social, Nueva Sociedad, no. 216 (JulyAugust 2008): 13349. 2. On the rise in the Gini coefficient, see Angela Ferriol, Poltica social y desarrollo. Una aproximacin global, in Poltica social y reformas estructurales: Cuba a principios del siglo XXI, Elena lvarez and Jorge Mttar, eds. (Mexico: ECLACNIER-UNDP, 2004). 3. Figures from State Committee on Statistics Committee, Censo nacional de poblacin y viviendas (Havana, 1981) and National Statistics Office, Anuario estadstico de Cuba (Havana, 2006). Changes From Below 1. James C. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (Yale University Press, 1987). 2. See, for example, Andres Martinez, We Support Democratic Uprisings in the Middle East. Why Not in Cuba? (editorial), The Washington Post, April 7, 2011. The Promise Besieged 1. See, for example, Haroldo Dilla, Gerardo Gonzlez, and Ana T. Vicentelli, Participacin popular y desarrollo en los municipios cubanos (Havana: Centro de Estudios de Amrica [CEA], 1993); Haroldo Dilla, ed., La participacin en Cuba y los retos del futuro (Havana: CEA, 1996); Juan Valds Paz, El espacio y el lmite. Estudios sobre el sistema poltico cubano (Havana: ICIC Juan MarinelloCasa Editorial Ruth, 2009). 2. See Marlene Azor Hernndez, La izquierda y su relacin con la Revolucin Cubana, Nexos (Mexico City), March 1, 2011, available atnexos.com.mx/?P=leer articulov2print&Article=1943208. 3. There are, however, some works worth mentioning on this topic. See Armando Chaguaceda, Ser, expresar, transformar. Los proyectos socioculturales como espacios de innovacin participativa en Cuba actual: la experiencia de la Ctedra de Pensamiento Crtico y Culturas Emergentes Hayde Santamara (KHS), ms. (2009), available at http://lasa.international.pitt.edu/members/congresspapers/lasa2009/files/ChaguacedaNoriegaArmando.pdf; Velia Cecilia Bobes, Los laberintos de la imaginacin: repertorio simblico, identidades y actores del cambio social en Cuba (Mexico City: El Colegio de Mxico, 2000); Armando Chaguaceda and Johanna Cilano, Entre la innovacin y el inmovilismo. Espacio asociativo, estado y participacin en Cuba, Pensamiento Propio (Buenos Aires) 14, no. 29 (JanuaryJuly 2009); Haroldo Dilla, Armando Fernndez, and Margarita Castro, Movimientos barriales en Cuba: un anlisis comparativo, in Participacin social. Desarrollo urbano y comunitario, Aurora Vzquez and Roberto Dvalos, eds. (Universidad de la Habana, 1998). 4. See VOCES: Comunicacin Alternativa, Educacin popular: participacin ciudadana (2010), available at http://www.cubaalamano.net/voces/index .php?option=com_debate&task=debate&id=17. 5. Chaguaceda and Cilano, Entre la innovacin y el inmovilismo. 6. Dilla, Fernndez, and Castro, Movimientos barriales en Cuba. 7. Chaguaceda and Cilano, Entre la innovacin y el inmovilismo. 8. Cited in and developed by Andrew Arato and Jean Cohen, Sociedad civil y teora poltica (Mexico City: Fondo de Cultura Econmica, 2002).

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