Madrid/Cuba Transformación believes that the duration of a first phase of “stabilization and emergency” will take approximately three years to “stop the macroeconomic deterioration”, address the energy crisis and reactivate agriculture and tourism. The working group, announced last June and formed by five independent Cuban experts to make a proposal for economic transformation, considers it “indispensable” before starting any plan that aims to be viable that there be a negotiation through which the United States makes the sanctions more flexible, since their permanence, they state, “constitutes one of the main obstacles to recovery.”
The document It has 120 pagesalthough the specialists – Mauricio De Miranda, Omar Everleny Pérez, Ricardo Torres and Pavel Vidal, all of them critical of the current regime, although the latter is also among the experts called by Díaz-Canel – have prepared a 19 executive summaryto present the basic axes. In the introduction, the text makes it clear that it is not a response or a complement to the 176 measures presented by the Cuban Government, but rather its own methodology and sequencing. The premise is clear: Cuba must be a social market economy supported by a democratic rule of law, and that includes multi-party elections, freedom of association, press and expression, transparency and submission of the powers of the State to the law.
Furthermore, the transformation has to be “conceived, conducted and executed by the Cubans themselves, based on the national interest” and to avoid the loss of sovereignty, although exile will be essential, they maintain, not only because of their nationality, but because of their experience, networks and capital. Another essential piece will be the international community, which is asked to create an aid fund that would be key so that the enormous initial costs of building a system that is currently undercapitalized do not end up having an impact on the population, especially the most vulnerable.
Another essential piece will be the international community, which is asked to create an aid fund that would be key so that the enormous initial costs of building a system that is currently undercapitalized do not end up having an impact on the population.
The document insists that, today, the suspension of fuel shipments from Venezuela and the threat of sanctions both to countries that can sell hydrocarbons to Cuba and to companies that work with the regime, prevent recovery. This does not mean that responsibility is attributed exclusively to the United States. Economists point out that the current crisis “does not constitute a temporary phenomenon nor can it be explained exclusively by recent external shocks,” but rather that these have had a profound impact upon encountering “an economy that already accumulated structural weaknesses, a limited adjustment capacity and long-delayed reforms.”
Furthermore, experts warn that the situation is getting complicated in every way, including the de facto dependence on the United States, not at the country level, but because the majority of remittances come from there. Money and remittances from relatives are, in the eyes of experts, the current equivalent of first Soviet support and then Venezuelan support.
The document also says that reality has partly prevailed and an important economic adjustment has already been made. “The State has reduced, in real terms, its capacity to finance public goods, investment, social services and subsidies, while inflation and exchange depreciation have severely eroded purchasing power,” they highlight. Furthermore, there has been “a growing de facto commodification of essential services. In this context, poverty is no longer a residual phenomenon but has become a structural feature of Cuban social reality,” he adds.
Given this, the proposal should be separated into three phases, although the current document only deals with the first, stabilization and emergency. The other two, which would arrive after the three years calculated for the initial one, are “reactivation and institutionality” – focused on structural reforms to increase competitiveness, improve the allocation of resources and recover financial credibility – and “consolidation of the model – to define the social contract and the medium and long-term development strategy–.
For the moment, the relevant thing is to start with the first, which requires at least six priority areas that the document details. The first is macroeconomics and prices, and its central points are to integrate all state entities (including Gaesa) into the civil fiscal architecture. Unify the exchange market – where three very disparate rates now coexist and only one is remotely close to reality – in a floating scheme administered by a Central Bank of Cuba that performs the functions that are typical of an institution of its type, without limiting itself to transferring what the regime orders. It also calls for liberalizing prices, eliminating caps and updating salaries and pensions. Furthermore, it would mean eliminating automatic subsidies and focusing on the vulnerable; and there is also talk of the creation of a stabilization fund to channel external resources and income from the sale of assets. Transparency is also essential in this area, especially in the national budget.
Regarding energy, the second area on the list, although a high priority, experts urgently call for hiring floating plants and recovering thermoelectric plants; also accelerate solar projects with storage and approve new electricity rates, as well as improve the quality of the national crude oil used in thermal power and open the fuel import, distribution and marketing market in a regulated manner.
Regarding energy, the second area on the list, although a high priority, experts urgently call for hiring floating plants and recovering thermoelectric plants; also accelerate solar projects with storage and approve new electricity rates
Agriculture and tourism are also in this phase. Among the priority objectives, it is proposed to eliminate the “state commission” and replace it with voluntary contracts at market prices, allow the entry of private parties into the agricultural sector – a measure that apparently has already been taken – and create a market for the sale and use of land. The document calls for tax and tariff incentives to invest in infrastructure
agriculture and greater digitalization of marketing. It is also considered necessary to be able to guarantee stable energy supply to tourist centers, strengthen their links with local producers and reposition the Cuba brand.
Regarding property and business transformation, the elimination of obstacles to the growth of MSMEs is requested, with tax incentives that constitute a stimulus. In parallel, the Gaesa military conglomerate must be fragmented, transferring its companies, assets and currencies to civil institutions and the Central Bank, in addition to closing or restructuring unviable state companies and creating “transparent” privatization routes.
The fifth section is that of “external insertion”, for which they ask – and this is also already contemplated by the regime – to eliminate the state monopoly on foreign trade, formally request Cuba’s entry into the main international financial organizations and restructure the external debt. and begin bilateral negotiations to resolve claims for confiscations in the 1960s.
Finally, the document also focuses on “social protection and administration.” In this section, it is considered essential to create a protection package against labor “adjustment” and audit the program with mandatory social indicators, as well as reform the Labor Code recognizing the diversity of ownership, freedom of association and the right to strike. In addition, it calls for the decentralization of fiscal powers and the application of “strict anti-corruption frameworks.”
All these measures and many others must be applied sequentially, and although some may be, they point out, simultaneous, in other cases it is required that some precede the others.
The document ends by asking the international community for help and support, as well as any other experts for their contribution to proposals that they do not consider closed. “The strategic horizon of this process is the construction of a social market economy in the context of a democratic rule of law. The expansion of the role of the market and private initiative does not weaken the State, but rather redefines and strengthens its capabilities,” they conclude.
