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    Cuba’s pre-existing condition

    José Azel:
    Cuba's pre-existing condition
    12:00 AM CDT on Sunday, October 24, 2010

    José Azel is a senior scholar at the Institute for Cuban and
    Cuban-American Studies at the University of Miami and author of "Mañana
    in Cuba." This essay was first published in Foreign Policy. He can be
    reached at jazel@miami.edu.

    Last month, the Cuban government said it planned to fire 500,000 state
    employees, and perhaps more than 1 million, saying "our state cannot and
    should not continue supporting … state entities with inflated
    payrolls, losses that damage the economy, are counterproductive,
    generate bad habits and deform the workers' conduct."

    Some heralded the announcement as a long-awaited sign that Havana under
    Gen. Raúl Castro is finally moving toward a market economy, others
    voiced substantial skepticism, and Marxists denounced it as a betrayal
    of communist orthodoxy. So, where is Cuba headed? Most likely, nowhere
    fast. Far from being a hopeful indication that Raúl is serious about
    economic reform, the abrupt layoffs reveal a government that is simply
    desperate to make ends meet. And they offer yet more evidence that Cuba,
    one of the last countries in the world to cling to Joseph Stalin's
    bankrupt ideology, is not interested in joining – or, to be charitable,
    does not know how to join – the globalized, 21st-century world.

    Ironically, the official announcement of the firings was made by the
    Cuban Workers Union – the labor union controlled by the Communist Party.
    Anywhere but in repressive totalitarian regimes, the dismissal of 10
    percent of all government workers would have been met with massive
    protests. But this is Cuba, where even though about 85 percent of the
    workforce of 5 million is employed by the state, there was nary a peep
    on the streets.

    No room for growth

    The announcement, couched in typical Orwellian doublespeak, raises more
    questions than it answers. "It is necessary to revitalize the socialist
    principle of distribution and pay to each according to the quantity and
    quality of their work," it read, a blundering contradictory attempt to
    tie the layoffs to Karl Marx's socialist maxim, "from each according to
    his ability, to each according to his needs." The government also said
    it would grant permits for those fired to seek to make a living "outside
    the state sector" as if it is unspeakable to talk of a private sector.

    In Cuba, a state permit is required even to shine shoes – along with 178
    other private economic activities that include mostly individual service
    activities from baby-sitting to washing clothes. It is also unclear
    exactly how those selected for dismissal will be chosen; seniority,
    patronage, friendship, ideological purity or some form of capitalist or
    socialist merit? Will race or gender play a role in these massive
    firings? Will the dismissals disproportionately target those who receive
    remittances from abroad? Perhaps more important, how are those fired
    supposed to find jobs? In an economy with developed private competitive
    markets, employees dismissed from one firm have a fighting chance of
    securing employment in another. But in Cuba's economic system, the
    government controls most economic activity. There is no private sector
    to absorb the unemployed. Where will they find employment?

    Perhaps most bizarre is that the dismissal measure seems to assume that
    everyone is temperamentally suited to be an entrepreneur and make a
    living in fields that might be far from his or her work experience and
    professional training. The Cuban government is betting on the
    resourcefulness and entrepreneurship of the Cuban people to somehow make
    up for the inefficiencies of the state sector and do so without access
    to cash, credit, raw materials, equipment, technology or any of the
    inputs necessary to produce goods and services. Ironically, the most
    likely source for these inputs will be the Cuban diaspora, which will be
    eager to help its unemployed relatives and friends. Manuel Orozco, a
    remittances expert at the Washington-based think tank Inter-American
    Dialogue, underlines that, telling Reuters, "Liberalizing the economy
    could lead to 10 percent of Cubans receiving remittances to invest in
    small businesses."

    This could be a motivation for the Cuban government to
    disproportionately target remittance-receiving workers for dismissal.
    Cubans will somehow make do, but in terms of actual economic
    development, these measures will not work; they are not designed to.
    Allowing Cubans to baby-sit or make paper flowers to sell to tourists
    are not serious economic development measures. But just in case, hoping
    to capitalize on any additional economic production, the government is
    ready to collect onerous taxes of 25 percent for social security and as
    much as 40 percent on income depending on the economic activity (e.g.,
    food production will be taxed at 40 percent, artisans at 30 percent, etc.).

    Ripe for black market

    The government is projecting a 400 percent increase in tax revenues,
    presumably to be collected from the fired employees turned
    entrepreneurs. More likely, Cubans will find ways to avoid paying taxes
    by relying on the black market for these economic activities. Cuban
    economist and dissident Oscar Espinosa Chepe writes from Havana of the
    impact of Cuba's economic situation on civil society: Cuban children, he
    tells us, grow up witnessing how their parents, obligated by
    circumstances, live by theft and illegality.

    Because Cubans cannot live by the results of their legitimate labors and
    work has ceased to be the principal source of one's livelihood, a
    survival ethic has evolved that justifies everything. One lesson to be
    learned from the transitions in the former Soviet bloc is that the
    success of reforms hinges on placing individual freedoms and empowerment
    front and center. In the decade following the collapse of the Soviet
    Union, the most successful transitioning countries were those that
    embraced political rights and civil liberties decisively: the Czech
    Republic, Estonia, Poland, Slovenia, East Germany and Hungary. This is
    not where Cuba is headed with its "actualization of socialism."

    The main reason is Cuba's Stalinist political order, which remains
    unchanged by this announcement. In a system that denies basic freedoms,
    society is debilitated and corrupted by a miasma of fear. For five
    decades, fear has been an integral part of the everyday Cuban existence.
    This fear must be conquered if any national project of transition is to
    stand a chance of success.

    The Cuban penal code that is used to suppress dissent defines
    disobedience, disrespect, illicit association, possession of enemy
    propaganda and socially dangerous and more as "crimes against socialist
    morality." In Cuba, the crime of "social dangerousness" permits the
    government to imprison people for activities they may commit in the
    future. Until this totalitarian document is reformed or wiped away,
    expect little to change.

    Yet, some Cuba observers characterize Raúl Castro as a more pragmatic
    leader than his older brother. And though this might be the case in some
    aspects of governance, it is not a pragmatism that will lead him to
    embrace policy changes that may jeopardize his hold on power. More
    likely, this pragmatism that will induce him to formulate policies
    designed to perpetuate power. When Soviet leader Mikhail Gorbachev
    visited Cuba in 1989, Fidel Castro reportedly warned him "if you open a
    window [to democracy] you will lose all power." Even after his brother's
    passing, Raúl is unlikely to open the window.

    Hope in succession

    There is another model that Cuban leaders ought to know well: Spain's
    rapid transformation in the 1970s from a dictatorship led by another
    aging tyrant, Francisco Franco, to a vibrant democracy that has posted
    some of the most impressive growth numbers of the last few decades. The
    ideal Cuban transition would look at lot like Spain's, though Cuba most
    likely doesn't have a strong enough civil society to pull it off.

    Another, less hopeful parallel is that Cuba goes the way of the Soviet
    gerontocracy epitomized by Leonid Brezhnev, who was barely functional
    before his death in 1982. His successor Yuri Andropov, who was 68 years
    old, died two years later. He was, in turn, succeeded by the also
    elderly Konstantin Chernenko, who died a year after and was succeeded by
    Gorbachev. Compare this progression to Cuba: Fidel Castro is 84 years
    old and in poor health, Raúl is 79, and his supposed successor, José
    Ramón Machado Ventura, will turn 80 this month.

    A new generation of Cuban leaders eventually will assume power. To be
    sure, they will likely favor continuity over radical change, but unlike
    the Castros, they might be receptive to democratic reform. These (likely
    military) officials will inherit not only a bankrupt economy, but also
    paralyzed, dysfunctional institutions, a discredited ideology, a
    disenchanted society, myriad social problems and more. Cuba will be
    close to meeting the technical definition of a failed state, one that
    can no longer reproduce the conditions necessary for its own existence.

    The Castros' successors will become heirs to a dangerous, unstable
    situation. With questionable legitimacy and a repressive apparatus in
    disarray, they will have to confront significant internal and external
    opposition. Their options will be very limited.

    They can stay the totalitarian course and face the potential unfolding
    of uncontrollable events, culminating in a Ceausescu-like bloodbath, as
    happened in Romania. Or they can choose to become leaders of a
    democratic political opening and confront more manageable political
    loses. It may take the death of both Castros for this to pass, but they
    will likely conclude that, for them, the safer and more prosperous life
    is the latter.

    For now, the firings only highlight the dismal state of the Cuban
    economic model, perhaps best depicted by the old Soviet joke: "We
    pretend to work, and they pretend to pay us." The regime in Havana is
    peddling a similar story today: They will pretend to reform, expecting
    that the world will pretend to believe it. Let us hope nobody in
    Washington is buying.

    José Azel is a senior scholar at the Institute for Cuban and
    Cuban-American Studies at the University of Miami and author of "Mañana
    in Cuba." This essay was first published in Foreign Policy. He can be
    reached at jazel@miami.edu."


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