Wednesday, November 09, 2011

Cuba: New Study Finds Cuba's Economic Reforms Real, Irreversible, and Meriting U.S. Support

SOURCE The Center for Democracy in the Americas

The Center for Democracy in the Americas (CDA) releases today a comprehensive studyCuba's New Resolve: Economic Reform and its Implications for U.S. Policy— reporting on the extraordinary steps being taken by Cuba's government to address its economic crisis and offering a realistic assessment of its prospects for success.

"What Cuba is doing to update its model is real, irreversible, evolving, and providing new opportunities for Cubans to lead more prosperous and independent lives," said Sarah Stephens, executive director of CDA. "We think it's time for skeptics in the U.S. like President Obama to accept that these reforms – Cuba's biggest economic changes in decades – are significant, consistent with the goals of our policy, and merit U.S. support."

Written after a series of fact-finding trips to Cuba; consultations with Cuban officials, experts, and economists; interviews with Cuban citizens in Havana and outlying provinces; additional research and a survey of scholarship by others, CDA's report describes:

  • The origins of Cuba's economic crisis;
  • The actions taken by President Raul Castro to cut centralized bureaucracies and replace Fidel Castro's economic team; to end state subsidies and mandate painful cuts in state employment; and to rely on private sector solutions to create small businesses, jobs, and markets for property such as cars and housing;
  • The doubts, anxieties, and hopes Cubans are expressing about the changes;
  • The vital role of the Diaspora in providing capital, wholesale goods, support, and training for the Cuban people, with the explicit encouragement of Cuba's government; and,
  • The metrics for judging success, the actions Cuba can take to expand the reforms, and policy changes the U.S. should undertake to support them.

"What Cuba is doing is unprecedented," said Ms. Stephens. "The goal is to preserve the communitarian ethos of Cuba's society and maintain its guarantees of education and public health, while building a competitive economy that can create wealth and enable Cuba to pay for these commitments in a sustainable way over time."

The report acknowledges that creating a retail sector alone will not address Cuba's economic problems, and that not every Cuban can form a small business. Cuba continues to face challenges to encourage productivity, build more businesses that can export goods and services, and make progress in sectors like agriculture to reduce Cuba's import bill for basics like food. Emerging businesses will need more autonomy and access to credit, and Cubans will require job training and skill development to run businesses successfully. Larger structural changes need to be introduced to alter the way stated-owned enterprises operate and how investment and production decisions are made.

"Cuba is undertaking reforms not because of U.S. pressure, but because of forces and ideas that came from inside Cuba itself," said Collin Laverty, author of the report. "It still must address a variety of challenges to accomplish its goals, but the recent legalization of home sales shows the reform process continues to roll."

CDA, and a growing number of analysts and advocates, recommends a list of actions the U.S. could take, several with Cuba's concurrence, to encourage the reform process and increase the flow of capital and support to Cubans engaged in private sector activities.

Policymakers should:

  • Acknowledge the reform process is real; it is opening a greater role for the market, but also likely to exact hardships on the Cuban people. They should not allow skepticism to play into the hands of Cuban hardliners who oppose reform and rapprochement with the U.S.
  • Continue loosening restrictions on travel to Cuba to create additional demand for services and goods produced by the emerging private sector.
  • Provide greater clarity and detail for new rules allowing any U.S. citizen to provide remittances to qualified recipients to boost the flow of funds especially to vulnerable Cubans who lack family supporters abroad.
  • Allow independent farms to export agriculture products to the U.S. and allow U.S. entities to contract with Cuban musicians, scholars, and artists for their work.
  • Remove Cuba from the list of State Sponsors of Terrorism to eliminate baseless economic sanctions and expand Cuba's access to technology.
  • Permit the international financial institutions to advise Cuba on the reform process.

The report is available for download here.

The Center for Democracy in the Americas is devoted to changing U.S. policy toward the countries of the Americas by basing our relations on mutual respect, fostering dialogue with those governments and movements with which U.S. policy is at odds, and recognizing positive trends in democracy and governance.

The CDA report on economic reform is part of its 21st Century Cuba series supported by a grant from the Ford Foundation.