By Marc Frank HAVANA (Reuters Oct 24 2014) –
Some of Cuba’s best-known economists are openly questioning the very core of the Soviet-style command economy and saying market reforms under way are too modest to boost weak growth.Emboldened by freer debate in the country, they are increasingly vocal in criticizing rigid instructions coming down from the top and the uneven management of policies across the economy, from banking to agriculture. Their influence on government policy-makers is difficult to gauge due to the secretive nature of the ruling Communist Party, but they clearly have been given leeway to call for changes.
Seeking to build a “prosperous and sustainable” socialism, President Raul Castro pushed through a 311-point reform agenda that was adopted by the Communist Party in 2011. It has led Cuba to liberalize farming and retail services by turning much of them over to cooperatives and allowing small private businesses. The Caribbean island is also actively seeking foreign investment. Castro, who took over from his older brother Fidel in 2008, has repeatedly said he despises false consensus and has encouraged debate as long as it takes place within the system.
The economists now talking out are generally members of the Communist Party and some have contact with high-ranking officials, suggesting they may be able to influence the debate inside government on the speed and scope of reforms.They have called for economic reforms for years, but never targeted so sharply the very pillars of the system.
Juan Triana, one of the best-known and most influential economists, says the government’s reforms have signaled a reliance on market mechanisms but officials have still not embraced competition for core parts of the economy and more than 2,000 state companies. “The cost of not recognizing the importance of competition for development are paid in lower rates of growth than the potential, the incorrect assigning of resources, lower than possible rates of productivity and efficiency, and most of all a lack of incentives for innovation, one of the principal motors of development,” he said in a recent presentation to mid-level government officials and peers at a seminar in Havana. The seminar was hosted by the Havana University Center for the Study of the Cuban Economy (CEEC), known for its bold stand for reform over the last 15 years and its criticism of the status quo.
Speaker after speaker joined Triana in urging deeper reform, according to copies of presentations seen by Reuters. Central planning, the government’s sway over strategic company decisions and the state’s monopoly in foreign trade were all criticized.
Centro de Estudios sobre la Economia Cubana (CEEC), Universidad de la Habana
“Probably, the so-called state monopoly on foreign trade is a big obstacle to the diversification and growth of exports,” said Miguel Alejandro Figueras, winner of Cuba’s top economics prize in 2007.
While Castro’s reforms have raised the expectations of many Cubans, they have largely disappointed. Public frustration over a lack of well-paid jobs has contributed to a sharp increase in the number of Cubans risking dangerous and illegal journeys on home-made boats in search of better opportunities in the United States. “Most Cubans support the reforms but are coming to realize that much more needs to happen. I think everyone from top to bottom is concerned with the numbers and reality on the ground,” said one Cuban economist, who asked to remain anonymous due to a prohibition on talking with foreign journalists without permission.
The economists generally believe Cuba’s leaders are listening, in part because the reforms so far have failed to lead to growth. They say they hope to reinforce the more reform-minded leaders in closed-door debates at the highest levels. Many liken Cuba’s process to the first years of reform in China and Vietnam, when partial measures proved ineffective and eventually gave way to deeper reforms. But Castro has moved at a deliberate pace, and despite official calls for a more critical press unorthodox views rarely get aired in the state-controlled media. The government revised down its economic growth forecast for this year to 1.4 percent, a second straight year of slowing growth, and food prices are rising on average 10 percent a year. Meanwhile, more than 70 percent of the economy remains in state hands, usually in the form of monopolies.
At the recent seminar, economist Jorge Mario Sanchez criticized state monopolies as out of step with a growing mixed economy and international competition. “The state-centrist culture of production and trade by the state and for the state should begin to transition to another broader mode from and for society,” he said.
Others say harsh U.S. economic sanctions against Cuba are only partially to blame for a lack of state financing and delays in the arrival of supplies and parts, which lead to disruptions in production and shortages. “Our top leaders are very aware of these problems, but unsure how to proceed without creating greater inequality,” said the economist who asked to remain anonymous.
Hal Klepak, a Canadian military historian and author of two books on the Cuban military and Raul Castro, said he thought Castro and other leaders “find criticism welcome not because it is comfortable but because it allows them to push for more and faster movement of a deeply cutting kind.” “There will be more and deeper reform since there is really little hope for any other option,” Klepak said.
Another outside expert differed, doubting that major changes were coming any time soon. “There is still no blueprint as to where the major state-controlled sectors will be in 5 or 10 years time,” said Paul Hare, a former British ambassador to Cuba who now teaches at Boston University.
Juan Triana, CEEC
Jorge Mario Sanchez, CEEC
