Cubazuela

A column of mine on the Administration's approach to Venezuela and Cuba, and Cuba's options.

The proposed new constitution

Cuba’s National Assembly hashed through and approved the draft of a new constitution last weekend, its discussion guided by Homero Acosta, a sort of Publius-without-the-pseudonym who chaired the group that researched and studied constitutional issues and produced the draft. His day job is executive secretary to the Council of State.

Acosta’s title-by-title discussion of the draft is summarized briefly in Granma and can be seen in two long videos here and here.

The draft has not yet been published, and there are, according to Acosta, more than 50 new “norms” that will have to be legislated to accompany it once it is approved.

Starting with the presidency, what’s clear is that with the Castro era ended, the Cuban leadership has decided that it wants no one older than 60 assuming that office, it wants no one in it for more than two five-year terms, and it wants executive functions distributed between a president and newly created prime minister.

These conditions would have ended Fidel Castro’s presidency in 1986 and prevented Raul’s altogether.

Beyond that, not much is clear. Why was it decided in the first place that a prime minister is needed? Will the president’s power be limited, or will the prime minister be sort of a minister of the presidency who handles day-to-day functions such as overseeing executive agencies? Will the prime minister be subordinate to the president? Perhaps the full text will answer these questions when it is published. Perhaps they will be answered once a prime minister is in office. Or perhaps we will be guessing for years, because this is a political system where very little is known about high-level decisionmaking, and there’s no evidence that this is likely to change.

In the meantime, note that the incumbent president is second-in-command of the Communist Party and the prime minister is not; the president nominates the prime minister; the president can propose legislation and the prime minister cannot; the president has the power to promote and remove high-ranking military officers and the prime minister does not; the president has exclusive pardon power; and changes in the composition of the cabinet are initiated when the prime minister proposes changes to the president. In addition, there are unspecified powers that rested with the Council of State that now go to the president. None of this fits the thesis that the new structure is intended to clip the president’s wings.

Odds and ends

·      What were the main changes during Raul Castro’s presidency? Granma and 14yMedio sum it up and are not very far apart.

·      Profiles of President Diaz Canel, by the New York Times and AP.

·      Faced with the same issues our embassy in Havana faced, Canada’s foreign ministry decides to keep its diplomatic staff in place and withdraw spouses and children. Also in Canada’s statement: “There is no evidence to suggest that Canadian travelers to Cuba are at risk.”

·      In Politico, a nonfiction bodice-ripper from Peter Kornbluh of all people, set in the Kennedy/Johnson years.

·      Granma reports on the Hotel Paseo del Prado, being built at Prado and Malecon, due to open next year. It is being built on a lot that was cleared years ago, at one time awaiting a China-financed hotel that never panned out. Across Prado and a block uphill, there’s the soon-to-open Hotel Packard, a large project that incorporates an old façade that was propped up by scaffolding for about 20 years. Spain’s Iberostar will manage it. From Skift in 2016, here’s a survey of hotel development in Cuba. Hotel construction is proceeding in Trinidad too; on a recent visit I saw two long-stalled projects under way, one a few blocks from the Plaza Mayor, and another way up the hill behind the church on the Plaza Mayor; this one is incorporating the ruins of a very old church that has just a few walls remaining.

·      There's a drop in U.S. travelers that is making many place in Cuba feel like 15 years ago (all Europeans and Asians, no Americans), and overall visits are down seven percent so far over 2017 (ACN). (Preceding sentence is corrected; some media reports noted growth rather than the seven percent decline.) And while some U.S. airlines have dropped out, those who continue to operate Cuba routes continue going to the Department of Transportation to bid for available routes (Forbes).

·      These scientists demonstrated that two ultrasound emissions on conflicting frequencies can cause a screeching sound – but this doesn’t explain any possible injury. Apparently, ultrasound can be used both in listening devices and in devices to interfere with them. Radio interview here.

·      This Kenyan medical school professor wants Cuba’s help not just with doctors, but in organizing the country’s public health system.

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Succession time

The departure of Raul Castro and the selection of a new head of state that didn’t fight in the revolution but rather grew up in it, is a momentous event for Cuba.

But it is not likely to bring a dramatic change in Cuba’s governance, as many outside Cuba seem to expect just because the Castro presidencies have come to the end of their run. Raul Castro remains until 2021 as head of the Communist Party, where policy is made. The next president, all but certain to be Vice President Miguel Diaz-Canel who has now been formally nominated, emerges from the party and political system that has set current policies. A clean break is unlikely – the most likely question is how the next president will manage the process of change that the Raul Castro presidency initiated.

And for embarking on that change, Raul Castro’s presidency has been very consequential. He diagnosed Cuba’s economic woes as a threat to the system’s survival, and the party embraced that diagnosis. He led the party to develop and endorse a reform program that is changing Cuban socialism in ways his brother would never have contemplated: a smaller state, more foreign investment, and a substantial private sector.

The state has indeed shrunk by more than half a million personnel; the number of private entrepreneurs has more than tripled and the private sector accounts now for one in four workers; private farming is vastly expanded; and foreign investment flows are starting to expand.

Policies that were in place when he took office in 2006 – banning Cubans from having cell phone accounts in their own name or staying in tourist hotels, requiring advance government permission to travel abroad, banning the sales of cars and residential real estate, denying nearly all applications for new entrepreneurs to get business licenses – are all gone. Even as the one-party state remains in place, these have to count as human rights improvements.

These changes, along with more open U.S. policies and changed attitudes among Cuban emigres, have enabled a transformation in relations with the diaspora. Generations ago, those who left were disdained by the Cuban government and declared themselves exiles. Plenty still choose to stay away, but those who don’t are visiting, buying and improving properties, investing in businesses, and creating millions of avenues of communication and support. This is a quiet, gradual development with strategic significance for Cuba’s economy, politics, and security.

The reforms are incomplete and seem stalled. Agricultural reform is half-done, yielding commensurate results. The government itself admits the need to recharge the foreign investment approval process. The dual currency system persists, with ill effects that ripple throughout the economy. The private sector lacks an adequate supply system. New and potentially impactful laws that were put on the agenda a few years ago have not yet seen the light of day: an enterprise law, a law of associations (to establish how religious denominations and private organizations gain legal status), a media law, an electoral law, and constitutional reforms to limit top officials to two five-year terms in office and to downsize the national legislature.

Why have the reforms not been fully implemented? Part of the answer surely has to do with their complexity, and to political caution on the part of a government that sees potential dislocation in eliminating family food ration books or changing the monetary system overnight. There is also political resistance based on ideological orthodoxy, reluctance to change that exists in any bureaucracy (especially when the changes reduce the size and authority of government agencies), and discomfort with new inequalities in earnings resulting from a vastly expanded private sector.

Cuba’s next president will have to deal with all these tensions, without the benefit of the Castro surname. But absent an unlikely shift in policies that have been approved in two party congresses, the question will remain one of implementation.

And the stark fact remains that there is no viable Plan B. There is no turning back, if for no other reason than that Cuba’s private sector is now essential to employment, family income for millions, and even to the functioning of the tourism industry – and the   government cannot possibly replace the jobs it has created. Cuban governments are virtuousos when it comes to muddling through, but that option does not deliver the growth Cuba needs to keep young Cubans in Cuba, and to sustain popular social services guarantees.

It will be a new political environment, with a premium on consensus-building and coalition management. Cuban politics is about to get more interesting, and if it would get more transparent too, more than a few observers – not to mention Cuban citizens themselves – would appreciate it.

A new step on state enterprises (updated)

Cuban officials regularly say they are in the hard part of the reform process, and today they took a step forward by publishing new regulations on state enterprises. 

Today’s action was previewed last July by reform czar Marino Murillo, who expressed weariness at subsidizing businesses that can’t make it on their own. 

This is not an easy challenge.  Anyone can run a profitable hotel in Varadero, but thousands of Cuban enterprises have their origins in past decades where Cuba’s planned economy was connected to those of the Soviet bloc, and many – including in agriculture – are not profitable.  State enterprises belonged to ministries, and the ministries had to approve decisions big and small, including purchases of supplies and payroll changes such as dropping one engineer and adding two janitors.

As defense minister, Raul Castro began to tackle this problem in the 1980’s through a process called perfeccionamiento empresarial.  It is still being implemented today, although it never reached all state enterprises.  Its main features were cleaning up a company’s books, doing a tough diagnosis and planning exercise, giving managers greater authority and autonomy, and instituting incentive pay and profit sharing.  Today’s new regulations include many of these features, and they also give businesses flexibility to enter new and more profitable lines of work.  Today’s regulations are also incredibly detailed, presenting long, detailed lists of the functions of enterprises and managers – old habits die hard. 

Another difference in today’s context is that ministries are spinning off the businesses under their control to organizaciones superiores de dirección empresarial, where the businesses are supposed to function with greater autonomy.

These are rational economic measures – separating businesses from the ministries, giving managers more autonomy, institutionalizing incentive pay and profit sharing for workers. 

The hard part is politically hard – allowing managers to lay off excess workers and living up to the commitment to close state enterprises that can’t survive without subsidies. 

Those tasks are essential to a major goal of the reform program, which is to improve government finances.  They will be easier to carry out to the extent that other parts of the refoms proceed – more private sector job creation and the creation of new jobs and businesses through new foreign investment.

Here’s coverage from Granma and AP.

Update: further explanations of the policy in today’s Granma, and coverage from Reuters.

Odds and ends

• Granma published the text of the foreign investment law today.

• In the Mariel economic zone, as in foreign investment projects in general, workers are hired and paid through an employment agency.  Payment is made in hard currency, the agency keeps most of the money and pays the workers a normal Cuban wage.  Foreign businesses then make side payments to the workers to raise their wages and productivity, which is why jobs with foreign businesses are sought-after.  Trabajadores reports that in the Mariel economic zone, the agency will no longer have a “revenue-collecting” function and will pay workers 80 percent of the wage negotiated between the foreign business and the agency.

• Reuters on Cuba’s new private non-farm cooperatives; more than 450 are now operating in the program’s “experimental” phase.

• Granma: the new labor code makes Good Friday a holiday in Cuba, this week and permanently.

• A granddaughter recounts an interview that her grandfather Clark Hewitt Galloway conducted with Fidel Castro in 1959.

• Dodger phenom Yasiel Puig’s flight from Cuba was harrowing, and still is so, recounted in detail by Los Angeles Magazine in English and Spanish.

Quotable

“What Cuba needs is to free up the raising of cattle and the sale of milk and beef by prívate farmers, and to permit them to buy the necessary supplies directly from foreign suppliers who operate in Cuba, without government intervention.  You will see that within five years the problem of milk will be solved.”

– from a comment signed “Elsa Beltran,” one of many on Granma’s story on the hike in the price of powdered milk

Malmierca on the new investment law

The text of Cuba’s newly approved foreign investment law will come out in due course, and according to this presentation by trade and investment minister Rodrigo Malmierca, the new policy will also be defined by regulations and norms to be issued by at least four parts of the Cuban government.

The first principle he stated regarding the new policy is that foreign investment is viewed now “as a source of development for the country in the short, medium, and long term.”  That may seem obvious, but it’s a change from the old, more narrow formulation of foreign investment as a “complement” to Cuban production.  Everything else flows from that, beginning with the broader list of specific goals that foreign capital is to serve – instead of “capital, markets, and technology,” it now includes job generation, acquisition of new management methods, and more.  In two years, if a substantial number of new investment projects are operating in Cuba, that change of thinking will be responsible.

Other points of note:

If you’re curious as to whether the priority on renewable energy means that the taboo on cane-based ethanol has been cast aside, there’s not a clear answer.  He refers to the use of “biomass, which includes that of sugar cane” but it’s not clear whether he means cane itself or bagasse, the waste product of sugar milling.

He notes that cooperatives will be able to participate in foreign investment projects but with the participation of a state enterprise; details here.

Contracting of employees will continue to occur through state employment agencies, with salaries negotiated between the foreign partner and the agency.

He, like others, refers to “errors” of past policies on investment but doesn’t say what they were. 

Sugar and agriculture, two high-potential sectors where Cuba has shown low interest in foreign participation in the past, are on the list of priorities where sector-specific policies have been defined.