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For Cuba, 2012 brought the massive implementation of a package of revolutionary measures that are part of what is known as the “updating of the economic model,” promoted by President Raúl Castro in pursuit of efficiency, sustainability and prosperity for the country’s social and political system.
In retrospect, many of the changes that were made over the past year have remained unfinished and therefore have not led to any spectacular leaps or all of the tangible benefits expected from them. However, quite a few people believe that the foundations are being laid for a decisive upturn.
Others, in contrast, prefer to see the “glass half empty,” and are demanding more speed in weighty matters that are yet to be resolved, some of the most urgent of which are high prices, low wages and the dual currency system.
In January, the first visible signs appeared that political discourse was in sync with what is being implemented, with the opening-up of possibilities for leasing state facilities to private workers, something that had been tried on an experimental basis with small barbershops and hair salons.
The government added 25 trades and/or activities to the approved list of licenses for self-employed workers, known as cuentapropistas; many of these were for retail services that were previously provided only by state companies.
The changes had come to a standstill until the Cuban Parliament in July passed a new tax law, which went into effect this past January. The new law adapts the tax system to the country’s reality, and includes taxes on income, sales and services, hired labor and an obligatory Social Security contribution.
The changes accelerated in the fourth quarter of 2012, when the government, in an effort to revive agricultural production, approved a package of 17 measures to give autonomy to the Basic Units of Cooperative Production (Unidades Básicas de Producción Cooperativa, UBPC). This type of collective organization is widespread in Cuba, but its development has been held back by bureaucracy in the sector tying it to state companies, something that is now being publicly criticized.
The UBPCs were created in 1993, in the middle of Cuba’s economic crisis, when Cuba made state land available with usufruct (beneficial-use) rights to agricultural workers, who could then form a productive unit. In theory, these units were to be autonomous, but in practice, they were subordinated to state companies, which imposed their own production plans, structures and even leaders.
For almost 20 years, the UBPCs were bound hand and foot, despite the fact that they were the principal form of land use: more than 2,500 were created, holding almost one-third of the country’s arable land. One example of their inefficiency is that today, one-fifth of that land is idle.
With the same goal of increasing agricultural production, in October the Council of State issued Decree-law 300, which went into effect in December. Its measures eased regulations for transferring unproductive state land to private farmers with usufruct rights, and allowed those landholders to build permanent family housing on that land.
“The usufructary, with his or her resources, can build or further new additions or improvements, as well as rebuild or remodel or expand on such additions or improvements,” the law says. It also permits “buildings, installations and other works needed or useful for adequate attention to and protection of crops, animals and plantations.”
The decree-law also increased the amount of land than can be transferred to individuals with usufruct rights from 40 to 67 hectares, for a term of 10 years, which can be extended in 10-year periods for as long as both sides (landholder and the State) agree. However, in the case of legal entities, such as cooperatives, the contract is for 25 years, likewise extendable.
From September 2008 to late 2012, the government transferred about 1.4 million hectares to 170,000 people, in an effort to make that land productive as part of achieving what is referred to as the country’s strategy for “food sovereignty.” This means replacing large amounts of food imports with local production.
Opening-up of sugar industry to foreign investment
Another unusual decision was to open up the sugar industry to foreign investment by companies from Brazil and the UK, which began injecting funds into that industry in December, when the sugar cane harvest began.
For the next 13 years, Brazil’s Compañía de Obras en Infraestructura (COI) will run the Cinco de Septiembre agro-industrial complex in the central province of Cienfuegos, about 226 kilometers southeast of Havana.
Meanwhile, Havana Energy Ltd., a company with British capital, and Zerus S.A., a Cuban state company, are building the first of five plants that will generate 30 megawatts of electricity by burning sugarcane bagasse and marabu (an invasive plant that is widespread in farmland here).
In December, the government began an experiment in which small state cafes and restaurants began to be run by their workers as cooperatives in Artemisa, Villa Clara and Ciego de Ávila provinces; the plan is to extend this to the rest of the country beginning this year.
Likewise, the gradual creation of cooperatives in non-agricultural sectors is being attempted, with the first 220 scattered around the country in diverse sectors, such as transport, gastronomy, fishing, personal and domestic services, recycling and construction materials production and services.
While progress has been made, 2013 looks to be a complex and decisive year, because changes are anticipated that will affect the very fiber of the most important structural change in the “updating” process: the socialist state enterprise.
In Cuba’s planned system for the creation of wealth, socialist state enterprises play a predominant role, and therefore, their efficiency is indispensable to solving the most important problems for which citizens are demanding solutions.
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