By Marc Frank, Reuters, April 13, 2011
HAVANA (Reuters) – Cuba’s pace of economic reform is expected to pick up after a congress of its ruling Communist Party that begins this weekend and whose main agenda item is “modernizing” the socialist economy.
Reforms up for discussion include: decentralization of government decision-making and revenue flows; giving more autonomy to state-run companies; slashing state payrolls and subsidies and reducing the state’s role in agriculture and retail in favor of a growing “non-state sector”.
The congress crowns President Raul Castro’s efforts to build a consensus for major changes in how the Caribbean country runs its economy and how its people live.
Since he took over day-to-day rule from his ailing older brother Fidel Castro in 2006, Raul Castro signaled that one of the world’s last Soviet-style economies was due for overhaul. But he has ruled out any switch to Western-style capitalism.
What follows is a chronology of Castro’s most important reform measures and statements:
July – In his first major speech, Raul Castro calls the state milk collection and distribution system “absurd” and says farmers will deliver directly to local consumers where possible.
“To have more, we have to begin by producing more, with a sense of rationality and efficiency,” he said.
August – Castro signs a law ordering all state companies to adopt a system of “perfecting” management. This was developed by the military when Castro was defense minister to improve performance using capitalist-style management techniques.
February – In his formal inaugural address as the new Cuban president, Castro says: “We must make efforts to find the ways and means to remove any deterrent to productive forces. In many respects, local initiative can be effective and viable”.
March – Computers, cell phones, DVD players and electric appliances go on sale for the public and bans on Cubans renting cars and staying in tourism hotels are lifted.
A sweeping reform of agriculture begins. This includes decentralization of decision-making, increases in state prices paid to farmers, leasing of fallow state land and loosening of regulations on farmers selling directly to consumers.
August – A significant labor reform ties wages to individual productivity, and caps on earnings are eliminated.
Government announces domestic freight transport and housing construction will be decentralized to the municipal level.
March – Castro purges his brother’s economic cabinet and places trusted military men and reform-minded technocrats in key economy and planning posts. The central bank head Francisco Soberon quits two months later and is replaced.
April – The new cabinet slashes the budget and imports. Plans are unveiled to develop suburban farming around most cities and towns, using mainly private plots.
July – Castro is quoted as stating “ideas chart the course, the reality of figures is decisive,” an unusual statement in a nation where ideology and politics trump economics.
August – National Assembly establishes office of the Comptroller General of the Republic. Castro says it will aim to improve “economic discipline” and crack down on corruption.
He calls for “elimination of free services and improper subsidies — with the exception of those called for in the constitution (healthcare, education and social security).”
Santiago mountain dwellers are allowed to sell fruits and produce at roadside kiosks. Spreads to adjoining provinces.
September – Licenses are issued to food vendors in various cities, making them legal.
October – Granma announces state work place lunchrooms will close in exchange for a daily stipend.
December – Economy Minister Marino Murillo tells parliament: “We have begun experiments … to ease the burden on the state of some services it provides.”
January – Municipal governments are ordered to draw up economic development plans that may include cooperatives and small business. A pilot project where taxi drivers lease cabs instead of receiving a state wage begins in Havana.
April – Barbershops and beauty salons with up to three chairs go over to a leasing system. Rules for home construction and improvements are liberalized.
June – Sale of construction materials to the population is liberalized. The government authorizes farm cooperatives to establish mini-industries to process produce.
August – New rules authorize Cubans with small garden plots and small farmers to sell produce directly to consumers.
The state increases from 50 to 99 years the time foreign companies can lease land as part of tourism and leisure development projects, such as golf courses and marinas.
Stores open where farmers can purchase supplies in local currency without regulation.
September – The government announces the lay-off of more than 500,000 state workers and 250,000 new licenses for family businesses over six months. Some 200,000 of the state jobs will go over to leasing, cooperatives and other arrangements. Unemployment benefits are cut.
Self-employment regulations are loosened and taxes tightened. Family businesses are authorized for the first time to hire labor, do business with the state and rent space.
December – Castro gives most explicit reform speech yet urging change of “erroneous and unsustainable concepts about socialism that have been deeply rooted in broad sectors of the population over the years, as a result of the excessively paternalistic, idealistic and egalitarian approach instituted by the Revolution in the interest of social justice.”
January – State banks begin issuing microcredits to would-be farmers who have leased land.
March – Castro announces the original timetable to lay-off 500,000 state workers by April has been scrapped and there is no fixed date to complete the process as workers resist losing their jobs and balk at the high cost of proposed leasing arrangements. Castro creates new post to oversee economic reform and promotes Economy Minister Murillo to the job.
April – Authorities announce 120,000 people have leased land since 2008 and 180,000 people have taken out licenses to work for themselves and rent space to new entrepreneurs since October. State banks are authorized to issue microcredits to new entrepreneurs and state bodies to do business with them.