By John Paul Rathbone and Marc Frank
Published: April 24 2011 17:54
Rummaging round the Communist party's central committee headquarters
building in Havana, Raúl Castro finds an old lamp. Curious, he gives it
a rub. A genie emerges and offers two wishes. "Only two?" asks Cuba's
president. "Yes," replies the genie. "Times are tough. We've cut back."
Mr Castro, a straight-talking former general, might be inclined to agree
with the joke doing the rounds in one of the world's last bastions of
state communism more than 20 years since the end of Soviet subsidies
holed his country's economy below the waterline. Though today the lights
are back on, there is water in the taps and far more food on the table,
industrial and agricultural production have stagnated in recent years
and the nation's debt burden has grown.
Mr Castro, however, is promising change. Half a century after the
communist revolution, last week's party conference adopted a package of
economic reforms to move the country to a more market-oriented system
over the next five years. In addition, he promised political reforms
including an injection of fresh blood into a leadership dominated by the
ageing revolutionary generation and the imposition of presidential term
"We are convinced that the main enemy we face and will continue to face
is our own shortcomings," Mr Castro said at the closing of the watershed
Many, both inside and outside the country, wonder whether he will be
able to pull off such a profound shift in a country that has been a
long-standing symbol of third world revolution – and potentially
transform the tone of US relations with its southern neighbours, for
which Cuba has long been a kind of Palestine.
"This is the most exceptional … [indication] of future paths that the
revolution has shown since the 1960s," says Hal Klepak, a Canadian
military historian who has written extensively on Cuba. "We are truly at
a historic moment, full of promise if things can be kept on track – and
probably in many ways for Latin America, where the island's influence
Cuba's bitter history with the US, including the trade embargo that has
been in place since shortly after the 1959 revolution, and Washington's
fear of a mass exodus should the country implode, ensures the island
remains a keystone feature of US foreign policy, one of the last
unresolved problems of the cold war.
The country no longer poses the profound foreign policy threat it did
during the 1962 missile crisis. However, its alliance with Hugo Chávez,
the socialist president of Venezuela – Havana provides intelligence and
doctors in return for subsidised oil – means Cuba remains a thorn in
Furthermore, the recent release of many political prisoners is a
reminder of the state repression that has dimmed Cuba's regional appeal.
Most Latin Americans now aspire to the bourgeois social democratic
prosperity of Costa Rica, Chile or Brazil.
In addition, this year's overthrow of Middle Eastern gerontocracies has
highlighted the gulf between Havana's self-proclaimed progressiveness
and the age of its leaders. Despite the promise of new blood, 12 of the
15-member political bureau elected at the congress were also in the
previous one. Only three are younger than 60. The president himself is
almost 80; Fidel Castro, his brother, almost 85. Between them, the
Castros have overseen for more than 50 years an economy that even Fidel
– progenitor of the slogan "socialism or death" – admits does not work.
Since Fidel stepped down as president in 2006 for health reasons, Raúl,
who assumed all his posts, has made it his priority to modernise the
economy "to ensure the revolution's very survival". At last, after five
years in power, his liberalising economic programme has been ratified.
"There have been other congresses," says Rafael Hernández, editor of
Temas, a government-supported magazine at the forefront of internal
debates about reform. "But this one endorsed for the first time a
fundamental change in the political and economic model."
In keeping with the president's at times corrosive criticism of state
inefficiency, the mooted changes are by Cuban standards sweeping. The
centrepiece is a structural adjustment so harsh it would make even
advocates of the "shock therapy" meted out in the former Soviet bloc
wince. In the next few years, even as unemployment benefits are slashed
to just a few months' duration, more than 1m workers will be taken off
the state payroll and expected to find jobs as private farmers or in
newly created small businesses.
Increasing the numbers of those in private employment will reduce the
hold of a state long seen by many Cubans as almost divine in its
omnipresence. It employs about 85 per cent of the 5m-strong workforce.
The measures would end state administration of companies in favour of
regulation through taxation and other financial means. They would also
open the door to more foreign investment, for example by developing
special economic zones and allowing long-term leasing of property in the
The reforming president admits this congress is likely to be the last he
– or any other member of the "historic generation" – will oversee. Which
reinforces the urgency of a question that has troubled 11 US presidents
and more than 1m exiles: what will a post-Castro Cuba look like?
Changes are already under way. East of Havana, the central highway
passes through red-earthed provinces traditionally given over to sugar
and cattle farming. In recent years, passers-by would have seen fields
of spiny marabu, an invasive weed. Now, however, private farmers toil on
once fallow state lands and sell their produce from roughly built
roadside kiosks. This would have been forbidden a year ago but, ahead of
the congress, the government leased vacant land to more than 140,000
Separately, the state has issued about 200,000 self-employment licences
since October. Makeshift businesses have sprouted on city blocks.
Thoroughfares nationwide are now crowded with private vendors selling
snacks, trinkets, manicures, handicrafts, mobile phone repair and,
especially, pirated CDs and DVDs.
Given that Fidel Castro introduced self-employment in 1994 as a
"temporary concession to capitalism", this represents a major change.
. . .
For the pragmatic Raúl, former head of the armed forces, the shift is
born of necessity but also of a desire to assert his differences from
Fidel. Indeed, one common view holds that while the president
acknowledges there would have been no revolution without Fidel, he also
believes the former leader led his country down an economic dead end.
"Raúl believes he can sort out the disaster," says Carlos Alberto
Montaner, an exiled Cuban writer. "It will be his great personal victory
in the secret competition he has long had with his elder brother."
However, the only way to do this is through self-help, given that
international credit is scarce; much of Cuba's estimated $20bn foreign
debt burden is in arrears; and China, a recent creditor, is pressing for
"Without an increase in efficiency and productivity, it is impossible to
raise salaries, increase exports … and sustain the enormous social
expenditures of our socialist system," Mr Castro has said. This
conclusion might be obvious elsewhere but has become widely accepted in
Cuba only after a painful five-year process.
Behind closed doors, the president has replaced Fidel's men in
government with his own friends from the military. Marino Murillo, the
former economy minister, is now in charge of reforms. Luis Alberto
Fernández, Raúl's son-in-law and a colonel who manages the military's
expanding business interests, serves as the president's leading economic
Raúl appears to see as his model countries such as China that have
transformed themselves into fast-growing economies. But "Raúlonomics",
as his policy approach is nicknamed, is stronger on diagnosis than
The reforms are "too little, too limited and too late", says Oscar
Chepe, a dissident economist. More than 170 self-employed categories are
allowed, including palm-tree trimmer and toy repairer. But the rubric
remains that anything not allowed is forbidden. Nor are there any
wholesale markets to buy the goods needed to run small businesses. Bank
credit is available, in theory, but the financial system lacks liquidity.
Finally, there are taxes. Given that they are levied on gross revenues
rather than profits, and only a portion of production costs are
deductible, in some cases taxes will exceed earnings, points out
Archibald Ritter, economics professor at Carleton University in Canada.
All this will stifle the private sector, and its ability to absorb
workers taken off the state payroll, which is why the president recently
slowed the pace of the 500,000 job cuts meant to have been completed by
. . .
Now the congress is over, the speed of reform may pick up. But with
ration books being phased out and food prices rising, tensions will
inevitably rise among Cubans already struggling to get by.
So far, there are no signs of unrest. On a Saturday night in Santiago, a
humid port known as the "cradle of the revolution", thousands gather on
the main avenue to dance and drink as they do every weekend. Even as
jobless youths overthrow ageing autocrats in the Middle East, these
Cubans appear to have little thought of protest. In Cuba, where 14 per
cent of the population uses the internet (compared, for example, with
about 21 per cent in Egypt), there is no Facebook generation.
"No one is desperate," says one reveller, when asked if the
government-sponsored fiesta might become a protesta. "Those who govern
are not greedy fools and know how to pacify the masses," adds his companion.
Older generations are less sure. "It isn't easy," says 40-year-old Maria
Eugenia, who lost her bookkeeping job in January. "The future is dark,
That is as true for Havana's new technocratic military elite as it is
for the genie in the joke who granted the president only two wishes.
"I'd like you to turn the Hotel Nacional into gold so I can sell it and
pay off Cuba's debts," Raúl tells the genie. "Impossible – I am a genie,
not a magician. You have one wish left."
"In that case," says Raúl, "I'd like the Cuban system to become
efficient and productive so we can emerge from the crisis." The genie's
response is heavy with resignation: "Where was that hotel again?"
In real life, Mr Castro has released a political genie by raising
long-frustrated expectations of economic and political change. Now he
must deliver – or struggle to return the spirit to its bottle.