Transcript NS4540 Winter Term 2017 Cuba Up-Date 2016 Cuba Up

NS4540
Winter Term 2017
Cuba Up-Date 2016
Cuba Up-date 2016 II
• Seventh Congress of Communist Party, April 2016
• Economy was main focus
• Just as in 2011 when Castro launched the updating of Cuba’s
Soviet Era economic model
• Sought to replace it with a Cuban version of market socialism
• Three economic documents produced
• Review of economic performance since 2011
• A plan for 2016-2021, and
• A broad national development plan looking out to 2030
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Cuba Up-date 2016 I
• Performance review was disheartening
• Only 21 of the 313 economic guidelines adopted in 2011
have been fully implemented
• Castro attributed this to “the burden of an outdated mentality”
and “an attitude of inertia.”
• Annual GDP growth rate from 2001-2015 just 2.8% not enough
Castro conceded to improve standard of living for most people
• Tourism and export of medical services were bright spots with
tourism growing 17% in 2015
• However agricultural production lagged despite the
expansion of market incentives for farmers
• Cuba still imports 60% of its food at a cost of $2 billion annually
when it should be exporting food
• Private sector lacking seeds, fertilizer, pesticides and equipment
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Cuba Up-date 2016 III
• Process of rationalizing state enterprises which still
produce about ¾ of Cuba’s GDP slow
• Hampered by managers not encouraging initiative and
entrepreneurship
• Castro vowed to push ahead announcing Cuba would legalize
small and medium-sized private businesses and
• Continue devolving small state enterprises and cooperatives
• Only strategic sectors of the economy “decisive for
national development” would remain in the state sector
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Cuba Up-date 2016 IV
• On the questions of how to stimulate growth and manage
relations with the U.S. – Dilemmas
• Cuba’s leadership; faces tensions between economic
imperatives and political necessity
• Cuba wants normal relations with the U.S. to increase
trade, tourism and investment – all key to improving
growth
• With engagement comes political risk that Cubans may
become less tolerant of
• poor economic performance – blamed for many years on the
U.S. Embargo
• State’s restrictions on civil liberties – blamed on need for unity in
face of U.S. aggression
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Cuba Up-date 2016 V
• Contradiction between economic dynamics and political
needs evident in current problem of rising food prices
• With private farmers able to sell produce to hotels full of tourists,
supply of food in free farmer’s markets shrank earlier in 2016
driving prices up
• Economic logic would dictate higher prices would stimulate
greater production in long term but that was a political risk
government unwilling to take
• Forced farmers to sell more of their produce through state
distribution systems at controlled price
• Pleased consumers, but undercut incentives for farmers
to raise production
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Cuba Up-date 2016 VI
• In addition with economic transformation underway
income distribution is worsening
• Major challenge to the Communist Party
• Sustainable and prosperous socialism requires economic
change but
• Near-term dislocations that change produces are undermining
political supports for reform process both in elite circles and on
streets.
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