The new model

On Sept. 13, the Cuban Workers Confederation announced to lay off 500,000 state employees and provide them with the opportunity to enter into the private sector. The largest shift to the private sector since the country’s revolution in 1959 is an attempt to revive Cuba’s struggling economy.

The announcement comes on the heels of the media frenzy where columnist Jeffrey Goldberg for the Atlantic quoted Cuban leader Fidel Castro stating, “The Cuban economic model doesn’t even work for us anymore.”

The remark that has been interpreted as an admission of failure was made in response to Goldberg’s question on whether “the Cuban model was still something worth exploring.”
Following the Sept. 8 column, speaking at the University of Havana, Castro claimed to have been misinterpreted and to have meant “exactly the opposite.”

According to the Washington Post, approximately 823,000 Cubans are currently employed within the private sector. However, the state still employs 85 per cent of the country’s work force.

Economic restructuring began last year when the government granted licenses to barbershops and taxis, giving them more control over pricing. Reforms have also been implemented in agriculture where farmers no longer have to rely on a state-run farm produce contracting system, but are now able to sell produce directly to consumers. The latest reforms include issuing licenses for individuals to run small-scale, private enterprises such as restaurants, construction companies and repair shops.

Cuba’s economic reforms have been seen by some to signal the end of Cuban communism and hostilities with the U.S.

However, these reforms do not mean an extensive overhaul of Cuba’s communist economic system. “This is not the end of communism or socialism in Cuba,” wrote Stephen Wilkinson of the Centre for Caribbean and Latin American Research and Consultancy, a view shared by Laurier professor and director of ACUNS, Alistair Edgar. “No, Cuba is not about to become a western-style capitalist state, whether on a U.S., British or a Swedish model,” he said.

Rather, “they may seek to move towards a more mixed model, in line with China and with Vietnam, opening space for limited privatization and greater consumerism while seeking to exercise strict authoritarian central control by the Party and the regime,” he continued.

These economic reforms will not be enough to persuade the U.S. to lift the embargo. They will help Cuba to move towards an economic system similar to that of China.

Such a move is useful because, as Edgar explained, “Cuba will need investment funds and the country with the largest surplus of cash in the global economy is China.”

Although China may not want to go up against Washington by “investing heavily in Cuba, there will still be room for Chinese funds to flow.”