March 30, 2015
Cuba’s New Economy
Posted on Apr 14, 2011
By Reese Erlich
Economist Munster says a lot of government workers don’t put in a full day’s work and wouldn’t be missed if laid off. “One-third of the workforce has nothing to do,” she tells me. But the process of deciding who stays and who goes will be difficult and could end up taking years.
Meanwhile, the government also confronts fears about the elimination of the libreta (ration card). In the early years of the revolution, the government opened up special stores to sell basic food such as rice, cooking oil and milk at very cheap prices.
More recently, particularly after the end of subsidies from the Soviet Union in 1990, the libreta provided many fewer items. Yet the food subsidies still cost the government $900 million per year.
The government plans to gradually remove items from the libreta, hoping the free market will provide more food at reasonable prices. For those who can’t afford free-market prices, the government will hand out cash subsidies. Thus the government hopes to save $600 million per year.
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“Instead of subsidizing the goods,” says Yepe, “we should subsidize the people who are not able to get the goods properly.”
But these internal changes won’t be enough, according to Yepe. Cuba needs more foreign investment. Spain, Norway and China are already developing offshore oil fields. Spain invests heavily in Cuban tourism.
But the nearly 50-year-old U.S. embargo against Cuba still hurts. Cuba can’t lease oil drilling platforms that have any U.S. parts. Ships that come to Cuba can’t dock in the U.S. for the following six months.
The embargo, which is not supported by any other country in the world, mainly hurts ordinary Cubans. For example, Marta’s mentally ill sister can’t get the latest generation of U.S.-manufactured antidepressants.
The embargo hasn’t strangled the Cuban economy, but it does drive up costs. The domestic reforms are aimed at reducing government costs, while still providing a strong safety net. Yepe notes that the government will continue to control the major industries such as tourism, nickel mining, sugar and petroleum. Education and health care will remain free.
“It doesn’t mean we’re going to copy China or Vietnam,” he says. “We’re going to continue with our creation of socialism. We have done it in a very creative manner.”
Cubans are anxiously waiting to see if that creativity actually puts more food on the table.
Freelance foreign correspondent Reese Erlich is author of “Dateline Havana: The Real Story of U.S. Policy and the Future of Cuba.” His most recent book is “Conversations With Terrorists: Middle East Leaders on Politics, Violence and Empire.”
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