Will there be a McDonalds in Cuba, a BBVA or a Cuban who owns hotels in Varadero? Will transnationals revive tourism? Will foreign capital boost old sugar mills, tobacco plantations or a steel mill?
These and other possible consequences are in the reform that the legislative body approved on Thursday, June 18. It is a large-scale privatization project, unimaginable even in the most open moments of recent times.
A day earlier, President Claudia Sheinbaum revealed, in a morning conference, that when speaking about Cuba with Donald Trump, she told the head of the White House to see how the island opened its economy.
Sheinbaum implied that Havana’s measures until then were an argument to urge Trump to at least alleviate the aggression that is suffocating the Cuban population in the first place.
After the fall of the Berlin Wall in 1989, the socialist community took different paths in a few months. Cuba waited four years to decide. Since then, it has had two economic opening plans executed in a fragmentary manner, with limits for the type and size of the particular business and with a vigorous catalog of prohibitions.
Those barriers were hardened with policies that sterilized foreign investment, reduced the private sector or planted obstacles.
Fidel Castro accepted the first plan and stopped it when he could. His brother Raúl promoted the second and recognized that he had to stop it, due to the resistance of the ruling apparatus. Miguel Díaz-Canel did not attempt weight movements. His plans for monetary unification and banking failed.
The new project, third in almost four decades, repeats decisions, but incorporates others that far surpass previous initiatives.
With the explicit support of Raúl Castro and a surprising public statement by his grandson Raúl Guillermo, there are now major goals, such as converting state companies into joint-stock companies, open to Cuban and foreign corporations and individuals; open private banks with national and foreign capital; allow individuals free foreign trade; remove limits on the usufruct of land and eliminate the obligation for a usufructuary to physically work his plot.
The reform eliminates the policy of capping personal enrichment and recognizes “the legitimate growth of the financial and material assets of legal and natural persons.”
Other objectives respond to old internal demands, such as the free hiring of personnel in foreign firms, without a state intermediary; authorize a person to have more than one business and to have more than 100 workers in a company; Open bank accounts with liquidity in foreign currency and private exchange houses.
The new scenario involves traumatic episodes, also announced, such as a progressive devaluation of the Cuban peso, the bankruptcy of inefficient companies and massive layoffs.
There are still doubts about the scope of central planning that will include private companies; the fate of the centralized agricultural purchasing system; the payment of pensions through private means or whether the barriers that defeated the two previous reforms will reappear. Will the restoration of capital impact the political system? Will the new magnates come from the single party and the military and security elites, as in Russia?
The big problem, for now, is that it is unimaginable who would want to invest in Cuba, with an economy in decline due to the US offensive and its own structural and current problems. But a rapid accumulation of properties cannot be ruled out looking to the future.
One aspect of Sheinbaum’s comment is that the argument for Trump has become muddled, with an avenue for American capital, from Cuban emigrants and from Cuban residents on the island.
The reform comes long overdue, it responds to decades of internal demands from society, entrepreneurs and academics. The paradox is that the center of gravity of the decisions is now in Washington. Question of timing.
*This article was originally published in Reform.
