Cuban Reset: Havana announces large-scale market reforms
Big changes await Cuba. President Miguel Diaz-Canel announced large-scale economic reforms to overcome the severe crisis caused by pressure from the United States. Washington is not ending the energy blockade. Private businesses will be able to carry out export-import transactions without involving state-owned companies as intermediaries, and Cubans living abroad will be able to invest in the state on an equal basis with other foreign entrepreneurs. Details can be found in the Izvestia article.
More freedom for Freedom Island
"The country is not standing still. She's handling this whole situation intelligently. We can't talk so openly about everything we do, because the enemy is watching our every move. Our response should be unity and cohesion," said Miguel Diaz—Canel, announcing reforms in the public administration system, enterprise management, real estate, tourism and agriculture.
According to the head of state, "the country needs to meet the requirements of the times." He explained that the authorities are going to encourage foreign direct investment, including at the expense of Cubans living abroad. In addition, it is planned to open more sectors of the economy to non-governmental participation.
Local governments will be allowed to manage their budget independently and implement business projects.
Agricultural producers will be able to show more flexibility, the mandatory intermediary role of state-owned companies in foreign trade will be abolished, and restrictions on car imports will be lifted. Electric cars will be able to be imported to Cuba, and the authorities will seek to attract investments in the development of solar energy. Havana believes that this will help reduce dependence on traditional energy sources in the face of a severe blockade by Washington.
The government will also allow state-owned companies to independently plan production, approve salaries and manage their own profits.
In addition, a reform of the state apparatus is planned. The number of ministries will decrease from 27 to 20. The President believes that this way it will be possible to create a more flexible management system and reduce bureaucracy.
Advantages and disadvantages
Miguel Diaz-Canel said that the reforms are not being carried out under pressure from Washington, but with the aim of reviving the economy, reducing centralization and granting greater autonomy to various sectors.
In the coming weeks, a package consisting of 20 key points is to be submitted to the Politburo of the Communist Party of Cuba, one of the country's top governing bodies, for approval. After that, the document will be considered by the National Assembly of People's Power (unicameral parliament).
According to experts, the reforms could help Freedom Island restart production and trade, despite enormous external pressure. However, such measures are considered shock therapy, which can lead to the opposite effect: if the market is sharply liberalized and the usual subsidies are removed, prices will soar and inflation will go through the roof.
The pressure is only increasing
Recently, Cuba has been experiencing a severe economic crisis against the backdrop of the US blockade. The island is forced to go without electricity for 18-22 hours a day, which has led to a collapse in various fields, including healthcare. According to Volker Turk, the UN High Commissioner for Human Rights, children began to die en masse in the republic due to a shortage of electricity and medicines.
Logistics chains within the country are disrupted due to fuel shortages. At the same time, the White House is only increasing the pressure. The day before, the United States imposed sanctions against the current president of Cuba and his wife, as well as relatives of former leader Raul Castro. On June 11, the head of the State Department, Marco Rubio, also announced new restrictions against Cuba's state-owned oil and gas company, completely blocking its access to legal transactions with American businesses.
In addition, American President Donald Trump has repeatedly said that after the war with Iran, "he is going to change the regime in Cuba."
The USA is not in the resource
This is not the first attempt at large-scale economic reforms undertaken by the Cuban Government. The author of one of them was Miguel Diaz-Canel himself, and before him, Raul Castro. At the same time, analysts in different countries of the world evaluate the results of the reforms differently. Western sources, for example, say that they "only led to a deterioration in the economic situation of the country."
Cuba has been under sanctions for many years, in fact, in a state of blockade, because of this, the effectiveness of economic measures is decreasing, Ivan Glukhov, a researcher at the Center for the Study of the Global South at INION RAS, said in a conversation with Izvestia.
— Current measures are needed, regardless of how the situation in Cuba develops further. This is necessary for the continued existence of the island, for the well—being of the Cuban economy, for increasing its sustainability and, in general, for finding a worthy place in the modern world, the expert believes.
He also calls for paying special attention to the potential actions of the United States against Cuba. In his opinion, the main question is whether Washington will play the Cuban card.
— At the moment, the strategic resources of the United States are stretched. They are trying to resolve the situation in the Middle East, investing resources in maintaining the European defense industry and in many other regions in general. Their hands are tied, there is no room for maneuver that existed before," the political scientist explains.
According to the source, Donald Trump most likely will not understand direct military intervention, but will prefer to influence Cuba using the methods that are being used now. We are talking about economic sanctions and a partial blockade.
— It is dangerous for the United States to go for a direct confrontation, as this may lead to a final escalation of forces. In addition, the situation in Cuba is much more complicated, much more multifaceted than in Venezuela," the analyst explains.
At the same time, Glukhov does not rule out that the Americans may still go for a limited operation, delivering a small blow in order to achieve a media effect, although he considers this probability extremely low.
Doctor of Historical Sciences, journalist Sergey Brilev believes that the Cuban leader has announced truly serious changes in Cuba.
"In short, the Cuban economy may cease to be a centralized dinosaur, bound on all sides by the fetters of a grandiose bureaucracy. Firstly, it is explicitly stated that Cuba has something to learn from China and Vietnam, which, as you know, retained the power of one party, but followed the path of a consumer economy," the expert explained.
Secondly, according to him, the course of transition from subsidizing prices for all to targeted assistance to people in need has been announced.
"Naturally, we'll see what happens. Moreover, the American sanctions have not gone away. But the shift is enormous," the expert concluded.
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