Alma Gillermoprieto, a prominent journalist who has written extensively about Cuba and Latin America, in an article dated April 15, 2016, had interesting observations about Cuba, which subsequently have been confirmed by the Seventh Congress of the Communist Party of Cuba and other events. (Her photograph is to the right.)
She was in Cuba during President Obama’s visit and did not disagree with the U.S. media’s declaring “Obama the winner in the encounter” with Raúl Castro, an unsurprising conclusion since “Obama is as skilled at public relations as any U.S. politician, and the leader of a monolithic state hardly needs charm.” Obama and his speech to the Cuban people on live television, as discussed in an earlier post, made a significant impact on the Cuban people with the speech’s content as well as his persona—young, vigorous, handsome and African-American.
The Broken Cuban Economic System
Guillermoprieto noted that everyone in Cuba obviously was aware of the state of disrepair of nearly everything on the island. It prompted the “joke on everyone’s lips,” she reports, “that Obama should stay in Havana for a month, because in preparation for his three-day visit [in March] more had been done to fix up the place than in the previous half-century.” This was but one indication of the broken Cuban economic system.
For Raúl Castro and the other leaders of the Government and the Communist Party of Cuba, Guillermoprieto speculates, the question has been “How many mistakes can safely be corrected? When the house you live in is falling apart, how much can you tinker with the plumbing, the windows, the doorjambs, and the supporting walls before the whole edifice collapses around you?”
Raúl in his April 21 speech to the Party Congress admitted some of the major ways in which the Cuban economic house was falling apart. Economic growth [over the past five years], he said, was “not enough to ensure the creation of the productive and infrastructure conditions required to advance development and improve the population’s consumption.” Indeed, “wages and pensions are still unable to satisfy the basic needs of Cuban families.” (Emphasis added.)
A major problem, Castro admitted at the Congress, was insufficient agricultural production and hence rising prices for basic foodstuffs and the need to maintain consumer subsidies in the form of lower prices with ration books. Such price controls to lower prices on basic foods were instituted on April 22, and on May 3 additional price controls on foodstuffs were implemented.
Moreover, said Castro, “The state enterprise system, which constitutes the main management mode in the national economy, finds itself in at a disadvantage when compared to the growing non-state sector which benefits from working in monetary system with an exchange rate of one CUC to 25 CUP, while the state system operates on a basis of one CUC to one CUP. This serious distortion must be resolved as soon as possible and a single currency reestablished.” (Emphasis added.)
According to Castro, efforts to implement the economic reforms approved five years ago have been delayed due to “slow implementation of legal regulations and their assimilation.” The “main obstacle,” however, has been “out-dated mentalities, which give rise to an attitude of inertia or lack of confidence in the future. There also remain, as was to be expected, feelings of nostalgia for the less difficult times in the revolutionary process, when the Soviet Union and socialist camp existed.”(Emphasis added.)
Incorporating Private Enterprise in the Cuban System
Guillermoprieto further speculates that Raúl “may be trying to modernize Cuban socialism to the point where it is capitalist and open enough to accommodate the restless generations who are now under forty-five years of age . . . . Perhaps he has the sense that the revolution is finished, that there is no future in the old dogmas and failures, that sixty years of poverty and repression are enough, and that he has no real power to control the inevitable future. Perhaps he is simply trying to ensure, finger in the dike, that a newly capitalist Cuba does not slide into a morass of corruption and cynicism.”
At the subsequent Party Congress, Raúl clearly embraced private enterprise as necessary and welcome to Cuba. He said, “Cooperatives, self-employment and medium, small and micro private enterprise are not in their essence anti-socialist or counter-revolutionary.” With non-state employment increasing from 18.8% in 2010 to 29.2% of the economy in 2015, “just over half a million Cubans [now] are registered as self-employed; they provide services and generate much-needed production. An atmosphere that does not discriminate against or stigmatize duly authorized self-employment is being defined. . . . [We] favor the success of non-state forms of management.” (Emphasis added.)
Moreover, according to Raúl, “Recognizing the market in the functioning of the our socialist economy does not mean that the Party, government and mass organizations are no longer fulfilling their role in society. . . .The introduction of the rules of supply and demand is not at odds with the principle of planning. Both concepts can coexist and complement each other for the benefit of the country.” (Emphasis added.)
At the same time, Raúl made it clear that these welcome changes did not constitute an abandonment of the ideals of the Revolution, that state ownership of the means of production would still be the mainstay of the economy, that the changes did not constitute a restoration of capitalism, that the state would not permit concentrations of wealth and property and that Cuba needed to be wary of powerful external forces (i.e., the U.S.) seeking to take advantage of these changes.
Other signs of Cuba’s economic distress are the recent firing of an economist at the university of Havana and the upsurge of Cubans, especially younger people, leaving the island, as mentioned in a prior post.
Internal Cuban Opposition to Economic Reforms
Guillermoprieto notes that Raúl has internal opposition to rapid and significant changes to the economy and government, including brother Fidel in his rambling article in Granma after Obama’s visit that was discussed in a prior post. That article has opened the gates for other opposition, cleverly directed at Obama instead of Raúl.
Indeed, at the subsequent Party Congress, Foreign Secretary Bruno Rodriguez and one of the Cuban Five delivered speeches with harsh criticism of President Obama as the “pied piper’ attempting to lure Cubans down the path of capitalism. This too was discussed in an earlier post.
Guillermoprieto also quotes respected Cuban historian Rafael Rojas, now based in Mexico, about other opposition to Raúl coming from government ministries who believe “change must come more quickly.” A key problem for such rapid change that was recognized in Raúl’s recent report to the Party Congress was the need to eliminate as soon as possible the dual currency system (the CUC and the CUP), but the state’s subsidization of many prices in CUC makes that exceedingly difficult financially.
Inequality in Cuba
Guillermoprieto notes that there already is income and wealth inequality in Cuba growing out of its allowance of self-employment, i.e., private enterprise, in certain occupations over the last five years and the allowance of higher salaries or wages for medical doctors (now $67 per month) versus those employed in state-enterprises ($25 per month). The prospect is that there will be more inequality contrary to the ideals of the Revolution.
The recent allowance of higher salaries for Cuban physicians apparently was justified on the theory of a pyramid of workers with those with higher skills like doctors at the top of the pyramid earning higher salaries. Indeed, in Raúl’s speech to the Party Congress he complained about the inversion of the pyramid where lower-skilled workers like hotel bus boys and gas pump operators earn more through tips In hard currencies and illegal sales of gasoline than highly-skilled workers like physicians. This lamentable situation, said Castro, “does not allow work to be compensated in a fair manner, in accordance with its quantity, quality and complexity, or living standards to reflect citizens’ legal income.” This situation also generates “an unmotivated workforce and cadres, which also discourages employees from seeking out positions of greater responsibility.”
Guillermoprieto also reports that physicians who go on Cuba’s famous foreign medical missions are paid $500 per month ($300 while in the foreign country plus $200 deposited in a Cuban bank to encourage their return to the island). Because this is less than the Cuban government is paid for their services, she apparently regards this as unfair. I, however, draw the opposite conclusion while assuming her numbers are correct. The $500 per month is over seven times higher than the physician’s salary in Cuba and clearly is economically attractive to the physician. It totally negates the U.S. State Department contention that the Cuban doctors on foreign missions are engaged in illegal forced labor as discussed in a prior post.
I am grateful for Guillermoprieto’s sharing her observations about Cuba. She provides additional evidence of the brokenness of the Cuban economic system and the difficulties of reforming or restructuring that system to include the advantages of free enterprise while simultaneously controlling its disadvantages.
 Alma Guillermoprieto, Wikipedia. In her memoir, Dancing with Cuba: A Memoir of the Revolution, she recounts moving in 1970 from New York City to Havana to teach at Cuba’s National School of Dance. For six months, she worked in mirrorless studios (it was considered more revolutionary); her poorly trained but ardent students worked without them but dreamt of greatness. Yet in the midst of chronic shortages and revolutionary upheaval, Guillermoprieto found in Cuba a people whose sense of purpose touched her forever.
 Guillermoprieto, Cuba: The Big Change, N.Y. Rev. Books (May 12, 2016).
 New measures announced to regulate prices of agricultural produce, Granma (May 3, 2016) Such price controls, however, are seen by most economists as misguided ways to cope with supply and demand issues.
 That earlier post pointed to a study by Indiana State University’s Emeritus Professor of International Politics and Latin America, Dr. H. Michael Erisman, who said, “most evidence indicates that the overwhelming majority [of Cuban doctors on foreign missions] are motivated by philosophical and/or pragmatic considerations. In the first instance, one needs to understand that the Cuban medical profession . . . is permeated by norms which stress self-sacrifice and service to the community, both at home and abroad. At the core of this ethos is the principle, which is firmly entrenched in the curriculum of the island’s medical schools and reinforced throughout one’s career, that health care should not be seen as a business driven by a profit motive, but rather as a human right that medical personnel have an unconditional duty to protect. Such convictions often underlie participation in the medical aid brigades. There are, however, also some pragmatic factors that can come into play. Overseas service could . . . help to further one’s professional aspirations and for some assignments the total remuneration involved is more generous than what is available back in Cuba. . . . [T]hese are the considerations which apply to the vast majority of people” in such programs, not involuntary servitude. Also relevant is the fact that Cuban medical education is free and in a quid-pro-quo the student agrees to serve in such missions upon becoming a doctor.