The line of march in the "economic battle"

Cubans are beginning to debate the policy guidelines (lineamientos) that will be discussed in the Communist Party Congress that has been called for next April to discuss economic policy only.

A new round of public discussions began December 1. This article in El Pais sets the context; this editorial in Granma called on Cubans to state their unvarnished opinions without hesitation; and these articles from BBC, AP, and Reuters give varied perspectives on some workplace and neighborhood meetings.

When Raul Castro announced the Party Congress last month and made public the lineamientos (pdf, 32 pages) he noted that he had given the first copy to Fidel a few days earlier. (Apparently, he heard no objection). He gave the second copy to Venezuelan President Hugo Chavez, who happened to be present, and made the document available to the public. But not for free, he noted, those days are over – it would be one peso per copy.

The lineamientos, all 291 numbered paragraphs, constitute a policy declaration, not a set of policy decisions with schedules for implementation. Some reflect general principles, some concrete goals, some policies that are already being put into practice.

The document clearly favors an economy with a larger private sector, fewer subsidies, and more decentralized decisionmaking. This is not to say Cuba’s communists will necessarily achieve all these goals, and the lineamientos themselves seem to indicate, between the lines, that there is not unanimity within the party itself. No surprise there.

But regardless, the game is on.

Here are some parts that stood out to me.

• “Reform” is not the operative word; this is “updating the socialist model,” and “planning will have primacy and not the market.”

• While state planning will cover the state sector, the state will “regulate the non-state forms” of business such as entrepreneurs and cooperatives. The form and degree of regulation, and the amount of space permitted for autonomous decisions and business arrangements, will obviously have huge impact on this sector’s ability to prosper. A good sign in this regard is a paragraph indicating that cooperatives will be permitted to enter contracts with other cooperatives, enterprises, and private entities. That sounds as if the government is deciding that is no longer needs to determine where each ministry goes for carpentry services, where tourist hotels and restaurants must obtain their fresh produce, and which state enterprise will be responsible for moving produce from farm to market. Let’s hope so.

• The document says that wholesale markets “will be developed” to sell supplies to entrepreneurs and cooperatives. If so, that will address the number one headache of many entrepreneurs, and it would be a very substantial blow to the black market.

• The creation of a single currency to replace the punishing dual-currency system will need to wait, as has been clearly explained, for a general increase in economic output. There is a commitment to “carry out studies for the elimination” of it.

• State enterprises that lose money will not be subsidized forever, and if their losses continue they “will be submitted to a process of liquidation.” State enterprise managers will also be be permitted to decide on their own – i.e. without the approval of the ministry under which the enterprise is organized – the size and composition of their payroll. These are key elements of the perfeccionamiento empresarial business improvement program that began in the military and was applied partially to state enterprises in the 1990’s. If these decisions are adopted as stated, it becomes all the more urgent to foster an economic environment where new jobs are being created, whether in the public or private sectors.

• Some eating of crow: in the section on foreign commerce, the document expresses the need to “increase the credibility of the country in its international economic relations through strict adherence to contract commitments” – in other words, to avoid large-scale suspension of payments to vendors.

• When it comes to employment, the policy is to “change structure of employment, reduce inflated payrolls and increase work in the non-state sector.” The state will pay less and workers will pay more to finance retirement benefits. The state will try to raise state sector pay and will start with workers whose jobs generate hard currency income or savings. Regarding entrepreneurs, the tax system will “guarantee that those involved in the activity contribute according to their income.”

• There’s no date provided, but the document flatly states that the government will “implement the orderly elimination of the libreta de abastecimiento,” the ration book that guarantees some highly subsidized food to every household each month, regardless of income.

• The tourism section endorses private restaurants and bed-and-breakfasts to serve the tourist market: “Non-state lodging, food service, and other activities will continue to develop as a supply of tourism services complementary to the state’s services.”

• The housing section makes it sound as if a residential real estate market is about to emerge: “Apply flexible formulas for the exchange, purchase, sale, and rental of housing, so as to facilitate solutions to the housing needs of the population.”