Cuba: On the Way to Market Socialism?

Cuba’s government has initiated plans to lay off half a million state employees by March 2011; an additional 500,000 employees are to follow. An expansion of the private sector will supposedly absorb the newly unemployed personnel.

Analysis

The acute state finance crisis has forced the Cuban government to undertake the most dramatic reform measure since Raúl Castro took office in July 2006. Nevertheless, the leadership continues to argue internally about how much market economy Cuba’s socialism will permit.

• The laid-off state employees are to transition to occupations in the “non-state sector.” This will entail the greatest opening up to private-sector economic activities since the 1959 revolution. With this opening, the question of new social disparities will become an acute one.

• There is still no consensus among Cuba’s leadership regarding the future role of the private sector: For the reformers, the state should actively promote the new selfemployed as an important part of a market socialism modeled after the Vietnamese or Chinese example. However, still-powerful forces in the party and the bureaucracy see the private sector rather as a necessary evil which is politically dangerous and thus needs to be kept limited.

• In many ways the reform will initially mean the “whitening” of already existing black-market activities. Nevertheless, there are many indications that the opening up to the private sector will take place, also in the future, largely without strong legal foundations. While a lack of legal certainty provides the state with control and sanctioning power, it is also a hindrance to the economic dynamic which these reforms could generate for the economy as a whole.

• With its awarding of the Sakharov Prize to Cuban dissident Guillermo Fariñas, the EU Parliament has demonstrated its solidarity with Cuba’s opposition. Although the EU has decided to maintain its “Common Position” on Cuba, it will nevertheless strengthen its efforts to make bilateral relations more flexible—not least because if it does not, increased solo action at the national level is to be expected.

• Fidel Castro’s public appearances of recent weeks do not herald his political comeback. To the contrary: Raúl Castro has consolidated his power; Fidel’s presence has served primarily to legitimate his brother’s government.