Cuba proposes sweeping reforms to socialist model amid US pressure

HAVANA - Cuba’s prime minister on June 18 presented lawmakers with sweeping reforms backed by the Communist Party and former leader Raul Castro that would privatise a vast swath of its socialist economy in a bid to survive punishing US sanctions.

The measures, if approved by lawmakers and implemented, would represent the single largest change to Cuba’s socialist model since former leader Fidel Castro’s 1959 revolution and a major shift towards a market economy.

The reforms would open the door to private real estate development on the Caribbean island, transform state-owned businesses into private commercial ventures with shares and equity stakes and allow private banks to enter Cuba’s once state-dominated finance sector.

They would also allow the “sale of state-owned properties to national and foreign legal entities and individuals, including Cubans residing abroad,” according to the televised presentation to lawmakers – a major change in a country where the state has long held control over land and industry.

Prime Minister Manuel Marrero told legislators the measures recognise the market as “an instrument for the efficient allocation of resources”, in a highly unusual concession from a Communist Party official in Cuba.

But he cast the proposed changes as true to Cuba’s socialist roots.

“These transformations do not constitute a deviation from our socialist project; on the contrary, they respond... to its development,” Marrero said.

“The updating of the economic and social model has the essential purpose of improving the quality of life of our compatriots.”

The list of upwards of 175 measures, presented in a nearly two-hour-long speech to lawmakers by the prime minister, now requires a vote of the National Assembly for implementation.

Debate and discussion of the measures ensued in the assembly immediately following their presentation.

It was not immediately clear how quickly – nor via what mechanisms – the vast array of new measures would be implemented, leaving many unanswered questions amid the legislative debate.

US pressure

Many of these open-ended proposals have surfaced, both inside and outside Cuba, for years, but extreme pressure from the United States has once again pushed them to the fore.

Cuba`s state-run economy, bureaucratic and inefficient, has struggled to provide for its people since the collapse of the Soviet Union, which long helped underwrite Cuba`s brand of socialism.

But severe Trump administration sanctions – including a months-long oil blockade – have now left Cuba with little room to manoeuvre, devastating its already ailing economy, forcing an exodus of foreign businesses and decimating the all-important tourism industry.

The US State Department did not immediately respond to a request for comment.

Long-time Communist Party leader Raul Castro – indicted in May in the United States on murder charges - threw his weight behind the measures – which would roll back many of the socialist reforms implemented following the Castro brothers 1959 revolution.

In a written letter presented first to the politburo on June 17, and later to lawmakers on June 18, he called them “beneficial” and urged their speedy implementation.

Open for business

The transformational package would greatly scale back the prominence of state-run business in Cuba while unleashing private enterprise long limited by a bureaucratic state weary of private capital.

Businesses in Cuba would for the first time be permitted to hire more than 100 employees.

Entrepreneurs, meanwhile, would also be allowed to hold multiple private businesses - another first.

Marrero said movements of private capital would be facilitated by a more limber, private banking system, overseen by the state, as well as a real-time digital foreign exchange market with authorised agents.

Cuba has long offered its citizens steeply subsidised public services, including free or low-cost education, medical care and transportation.

Many of those services have in recent years collapsed amid government ineffciency and a failing economy.

The new measures would establish a new taxation system and make public and private sector businesses, both foreign and domestic – in part responsible for underwriting public services.  REUTERS