If things go as planned, the state’s jackpot will come in the form of remittances. A study released in June concluded that cash sent home already tallied $2.6 billion in 2012 – in other words, one of Cuba’s biggest revenue streams (all currency in U.S. dollars unless otherwise noted). Havana also hopes that allowing citizens to obtain education and business experience abroad will put them in a better position to contribute to the island’s well-being upon their return. And, in one stroke, it removed an irritant in its international relations by placing the onus on other countries to issue visas and, therefore, allow Cubans to travel.
On top of migration reform, Cuba has taken steps to empower its citizens as consumers. It legalized the sale of homes and automobiles; lifted restrictions on ownership of computers and cellphones, and on domestic use of tourist hotels; and modestly expanded Internet service, opening more than 100 monitored access points this spring.
And in addition to overarching reforms that alter the economic landscape, Raúl Castro has made some business-specific changes. He legalized supplements paid by foreign companies to Cuban workers; extended the term for leases of land to foreign firms to 99 years from 50 (a significant sweetener for developers); and invigorated the small-business sector by issuing licences – quickly and prolifically – to entrepreneurs in scores of newly legalized trades.
Idle land was distributed to individual farmers and co-operatives, which can now sell directly to hotels and restaurants that previously could only buy from the state. Grassroots ownership was also encouraged by extending the co-op model beyond the fields – to produce markets and urban services. And, this summer, the government announced it would begin to deregulate its biggest enterprises.
That still leaves unresolved the crippling problem of two currencies. It’s much easier to navigate the changing economy if you’re fortunate enough to have CUCs, or Cuban convertibles, in your wallet. Pegged roughly to the American dollar, they’re worth about 25 times the value of the peso, the currency in which most people are paid. That discrepancy distorts prices, limits purchasing power and is a prime reason for disenchantment among Cuba’s professional class.
Doing away with the dual currency is high on the government’s wish list. But, like doing away with la libreta (the ration book that provides all Cubans with subsidized food staples each month), it’s not something that can be done overnight. Making such radical change is highly contentious in a country that’s often described as frozen in time. Even what to call such change is contentious.
“We are modernizing our economic model,” says Joaquín Infante of the National Association of Economists and Accountants, in an interview arranged by the foreign-press office to give me the government line. “Modernizing the model is not the same as reform, because we are not questioning the political system.”
But University of Havana economist Rafael Betancourt notes that the revolution has carried out multiple reforms – in agrarian policy and education, for instance. And he questions why the state refuses to use the word in this case. “What is reform? It’s modifying your model without losing its basic principles and characteristics,” he tells me over lunch. “But you are admitting that you have things that have to change in order to improve. You are admitting you made mistakes.”
Cuba has also second-guessed some reforms – a decade ago, for instance, when Fidel Castro clawed back the limited space he initially created for private enterprise. In an e-mail conversation, however, a seasoned observer tells me why that’s unlikely to happen this time. “There have been phases of experimentation and adaptation throughout the revolutionary period, but these current ones are broader and more permanent,” says Mark Entwistle, who served as Canada’s ambassador in Havana from 1993 to 1997 and now runs a Cuba consultancy at Acasta Capital in Toronto. “This is because the government has concluded that adjustments to their economic model are simply necessary. The performance of the Cuban economy is a No. 1 priority.”
Cuba prides itself on its medical system. But the entire country was nervous about a December surgery performed at a hospital in Havana. The operation was Hugo Chávez’s fourth since June, 2011, and was preceded by a grim announcement days earlier in Caracas that he was formally naming a successor.
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