Friday, April 15, 2011

Al Congreso

What to make of the sixth Congress of Cuba’s glorioso partido?

It’s the first since 1997, when the country was getting back on its feet after the Soviet bloc’s disappearance. The rule about holding a national Congress every five years has gone by the wayside. This one is being held after a 14-year lapse because there is work to do.

Politics and strategy

When the Congress was announced last November, the agenda was to be all economics and a separate, smaller Party conference was to resolve some leadership issues. Now the Congress itself will treat those, presumably elevating Raul Castro to the top position that his brother says he vacated (see discussion here).

The big political question is whether any officials will be elevated to a position of prominence that could point to future leadership roles.

The decision on the #2 job, the Party’s second secretary, could be ho-hum if it follows the Fidel-Raul precedent and lands Vice President Machado Ventura in that slot. If someone from a younger generation is named, that would be a clear signal about the coming generational succession.

Also worth watching is whether the Congress sheds light on the role of former economy minister Marino Murillo. In the most interesting personnel move since the defenestration of Vice President Carlos Lage and Foreign Minister Perez Roque in 2009, Murillo was moved upstairs from the economy ministry and made into an ad hoc super-minister, responsible for driving the agreed-upon policy changes through the bureaucracy and into full implementation. (See AP, CNN, and the official announcement.) He had a prominent public role in last year’s National Assembly discussions of economic policy, explaining proposals one by one and handling questions, including skeptical ones. Others could also emerge.

The bulk of the Congress’ work involves economic policy. Fidel and Raul Castro have made fixing the economy a strategic priority, essential to the survival of the socialist system and to their generation’s successful transfer of leadership to the next generation. The task of figuring out how to do that – strategy, policy changes, and implementation – fell to Raul Castro and became the center of his presidency.

The policy document under discussion, the economic and social policy Lineamientos, is the heart of the matter (highlights here). Fidel Castro received the first copy, Raul said when he released it last fall, and Fidel later told an American reporter that the Cuban model does not work. These seem to be signs of Fidel’s support, and maybe he is indeed fully on board.

But it is impossible to imagine Fidel Castro writing such a document when he was still in the saddle.

The last time around, in 1997

The 1997 Party Congress was not focused solely on economics. It did produce a long economic resolution (pdf) that illustrates the difference between then and now. It noted that the economy was facing new challenges – the end of Soviet aid, the strengthening of U.S. economic sanctions in 1992 and 1996, and globalization – but some policy adjustments had already been made and beyond that there was no questioning of the economic model. As for the new challenges, the resolution referred to “the conviction of the Commander in Chief that the key factor for confronting them and moving ahead, is resistance.”

The resolution discussed the new policies – expanded tourism, and openings to foreign investment, incentive-based agriculture, and small enterprise or trabajo por cuenta propia. Apart from those, it included a long, sector-by-sector discussion that seemed like an obligatory checklist, noting the need for greater production and investment and innovation and efficiency in each. In most cases there was no discussion of new incentives or other policy changes that would bring those improvements about. It was a mostly status quo document, mostly devoid of the “changes of structure and of concepts” that Raul Castro would call for years later.

In the very brief small enterprise section, there was one small hint of possible liberalization that, in the event, did not materialize: expanding the number of lines of work where a cuentapropista could work with another “worker” – the word “employee” was not used.

There was much discussion of the perfeccionamiento empresarial business management program that began in the Armed Forces’ enterprises, a program that came to be only partially implemented.

The resolution spoke approvingly of the state’s expansion in the food service sector – a trend that in ensuing years would, combined with other factors, help drive many private restaurants and lunch stands out of business.

It stated a need to “re-design” the acopio, the chain of state enterprises that buy, store, transport, and distribute food, and to bring new technology to its tasks.

Today, by contrast, the state is closing food service establishments and workers are expecting many to be converted to private cooperatives. Perfeccionamiento empresarial is still in the air, but the Lineamientos express a commitment to the hard part of the process, which is “liquidation” of state enterprises that operate consistently at a loss. And acopio is slated to shrink dramatically as the ration book disappears, and with it the need for nationwide farm-to-bodega distribution of many staples.

What difference will the Congress make?

There is no reference book that answers that question, but it’s a safe bet that the communist confab will adjust and ratify the economic reform plan and produce, in appearance at least, a stronger political commitment to its implementation.

There is lots of expectation that the Congress will result in a new departure. Maybe it will. But recall that no national Party meeting was needed for decisions and actions taken so far: announcement of a million layoffs; announcement that 1.8 million workers would move to the private sector; reduction of the number of products provided in deeply subsidized household rations; distribution of land to 100,000 private producers; doubling the number of cuentapropistas and putting them under new rules and an overhauled tax system; closing workplace cafeterias; and more. (See Reuters chronology of reforms.)

Issues to watch

  • The Lineamientos themselves will be revised – President Carter was told that two thirds of the 291 paragraphs were modified – so we will be able to look at the old and new versions and see which way the wind has blown in the past few months. The document already reflected the obvious tension among Party members between the urges to change and to conserve.

  • The doubling of the number of cuentapropistas is a dramatic change, and the sector is likely to grow further. At the six-month mark, will there be policy adjustments? Faster provision of a wholesale supply system? Tax changes? Rules that allow professionals to work in their profession on their own?

  • What about cooperatives that would result from converting the state’s retail, restaurant, repair, and light manufacturing operations into private entities? When will this reform occur? And if ten workers skilled in building trades want to form a new construction cooperative, will that be permitted, or will cooperatives only be converted state enterprises?

  • The layoffs are clearly behind schedule, which is not surprising given the political sensitivity involved. But the layoffs drive important aspects of the reform process: government savings, higher pay in the government sector, expanded private sector, improved productivity, higher tax collections.

  • Results have been mixed in farm policy, so changes may be in store there. A faster turn to private distribution and marketing would help, leaving acopio to guarantee food supply when necessary for schools, hospitals, and other institutions. The government would save money, and farmers would have clearer price signals and greater incentives.

  • There are many more, but this one interests me most of all: the Lineamientos’ call for “flexible formulas for the exchange, purchase, sale, and rental of housing, so as to facilitate solutions to the housing needs of the population.” Getting rid of the convoluted permuta system and opening up a simple market for residential housing sales would be a very dramatic change. Even if there is five-year prohibition on resale or some similar measure to prevent speculation, many Cubans would instantly have equity (or collateral), in some cases lots of it. Relatives abroad, such as those in the United States who can send unlimited amounts of remittances, would contribute to the demand.

We’ll be watching.

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