Economic change is already under way, and there is no looking back.
“It was a wonderful day full of joy, very emotional, with the news of a great victory”, reads a message arriving privately from Cuba. “Happiness and surprise. Nobody expected those news, and all together. People on the streets hugged one another and cheered,” wrote a correspondent with the Mexican daily La Jornada. “‘It’s a San Lázaro miracle’, said Maria Candelaria, a housewife devoted to the patron saint of the most popular neighborhood of Havana. Marvel and victory for the resumption of diplomatic relations? Not according to the Cuban press, the Granma. The day after the announcement by presidents Castro and Obama its front page featured the three “They are back!” in gigantic size. The joy and victory were for the five Cuban prisoners in the US coming back home. That makes sense, because the deeply felt campaign to free the five antiterroristas indicted with spying in the US went or for many years.
The Cuban society, and its 11 million citizens, is not anymore as homogeneous as it was over the decades — one party, one leader, one employer—the State. The deeply emotional moment that followed Raúl Castro’s short speech touched people on different sides. For the many, the hope is that the higher cap on remittances (which amount to $ 2 billion a year), easier visas and the new allowances for the products travelers can take with them will put some pesos in peoples’ pockets making ordinary life easier. A minority that staged Raúl Castro’s small-steps modernization of the economy in the last eight years hopes on more support to private businesses or even more foreign capital. They will benefit outright. In his message to the nation, Fidel’s younger brother recalled the economy as being Cuba’s “main outstanding issue.” He will have to maneuver though to keep the rest of the Communist Party happy. Four days before the announcement, Aleida Guevara, the daughter of Che Guevara, said in an interview with the website Theprisma that the people in Cuba will never, ever, want radical economic change. “Put an end to the embargo. That’s what we need.”
Granma, the only printed outlet, seemingly did not make clear to everyone that the historic shift does not include lifting the embargo. A message from Cuba says that Fidel, “our historic leader of the Cuban revolution has seen the fruit borne by his long struggle; he is alive and strong applauding the return of the Five and the end of the embargo.”
Nobody really knows how much Fidel rejoiced, because he did not speak yet, nor did the Granma feature a photo or even a line, as one would expect. The spotlights are all on Raúl, who came to power after Fidel’s 46 years rule. With Raúl at the steering wheel, beginning with the 6th Party Congress in 2011, the economy began to change, slowly, and to make life easier for some, and more expensive for others. Small ownership, agricultural cooperative ownership and joint enterprises with foreign capital are allowed, as is micro and small self-employment.
The cuentapropistas, as the self-employed are called on the Island, are a good example of how change is trickling into the economy. They span over 400 allowed métiers, among which artisans, hairdressers, gyms, tailor shops, taxis, photographers, the legendary cigar rollers and the very active lighter refillers. The State as an employer relinquished to 9% of the active workforce that is 450,000 Cubans. Record 8,000 new monthly entries were recorded lately. Women make up 29% of the self-employed, according to the Cuban Ministry of Labor.
Milagros Díaz has been rolling cigars for 48 years, and is immensely happy that the US market will finally open up to her habanos, she tells Reuters. She used to roll up to 200 cigars per eight-hour shift when she worked at the state cigar factory Romeo y Julieta. Now self-employed in a stand at the Hotel Nacional in Havana, she rolls them with a more relaxed pace but still with the same 200-year-old techniques. “I thought that being 67, I would never see that diplomatic relationship,” said Díaz. “Selling more cigars will help fund the farmers… But this is just the beginning.”
Change will show perhaps the fastest in the blocks behind the Malecón, the waterfront where people stroll after work. Or around Avenida 5th, in bars often located on a first or second floor that stay open until the morning. Or in the big hotels area, where the taxi drivers collect their clients on their Almendrones, their Fords, Chevrolets and Mercuries of the ‘50s. The world’s oldest car fleet, a true museum on wheels, attracts tourists, but for taxi drivers life is not easy. Even if they can pocket up to € 20 per day with 20-60 cents rides, most of their earnings go in repairs. Tires must be constantly replaced due to the holes in the streets, and all spare parts must be custom made. They also pay taxes several times a year. Taxes on entrepreneurs now account for 2% of the state budget.
Many small and medium businesses fail due to the low purchasing power of Cubans. The average wage is about € 25 per month, or 500 national pesos, and the great majority has no access to divisas or pesos convertibles, a parallel currency whose value equals that of the US dollar.
Only a nascent middle class who wears designer clothing, and talks over imported smartphones can get hold of divisas — often thanks to remittances. They buy houses and cars, and some even set up companies that require thousands of euros as upfront investment, but they do not get involved in politics. They leave that to militants and leaders. Especially as the Communist Party intends to keep the reins of power after Raúl. Or as Aleida Guevara put it, “the Communist Party in Cuba isn’t in power, it is the only party in Cuba, and power is in the hands of the people. The people trust the party.”
The strategy of the CCP is explicit: “We will not follow [Eastern] Europe’s path, which led to a dismissal of socialism,” said José Luis Rodríguez, a former economy minister until 2009, to El Economista de Cuba. “Cuba will not embrace market socialism, as cubanologists would want it to. We are not ‘reforming the economy’, but ‘updating’ it. [But] some non-state forms of ownership could contribute to the development of the country as well”. This means that more sectors besides tourism, oil and sugar will need to open up to large foreign companies.
The saying “No sugar no country” is today perhaps more true than ever — against a new context. The US is to become soon sugar self-sufficient, and the same goes for Mexico that would then become preferred supplier to the US and Canada thanks to NAFTA. In addition, the sugar market is one of the most protected and distorted ones in the world, and the real price of sugar fell.
The Brazilian giant Odebrecht is undertaking a sugar production ramp-up in a historic sugar mill in Cienfuegos. Mills infrastructure is however also decades old, and with no funds to modernize it, production fell to scarce 1.2 million tons in 2012 from 8 million tons in 1970. The outlook now includes also a large-scale ethanol production, so far turned down by Fidel Castro, who opposes food commodities being manufactured into biofuels. Some experts estimate that a revamp sugar industry could make Cuba the third largest producer of biofuels behind the US and Brazil. Likely, everybody agrees on Aleida Guevara’s comment that “lifting the embargo would make Cuba thrive”. However, with or without the embargo, Cuba is already on the path of change.
Economic change is already under way, and there is no looking back.
