Tuesday, 30 December 2008

Cuba and the 50th Anniversary of the Revolution (Part1)

There was a subject I wanted to talk about days ago: Cuba. I recommend you, dear reader, to check this blog: Generacion Y, by Yoani Sanchez.

On Jan. 1, the Revolution has its 50th anniversary. The celebrations come at a critical point of inflexion for the island nation, where a process of political transition is taking place. Economy Minister Jose Rodriguez last week trimmed the official 2008 growth estimates to 4 percent from 7 percent, alleging the impact of hurricanes in Sept., the surge of oil and commodities and the global crisis. Growth, nonetheless, will be propelled by reforms undertaken in agriculture and wage policy by President Raul Castro since taking office in February.

Raul has boosted prices paid for agricultural products and redistributed idle state lands to private farmers and cooperatives to trim food imports. A few weeks after taking office, the younger Castro established a policy that scrapped caps on earnings, tying wages to individual performance. According to Reuters, more wage reforms are planned.

However, I read the news coming from the Cuban state, what´s reported by the independent media (the best economic reporter in Havana is with no doubt Marc Frank, the veteran Reuters correspondent) and I check Yoani´s blog and the difference between versions of the news are amazing. Frank has been quite right in pointing out the rapid deterioration of economic indicators (especially the external sector and commodity production) and the necessity by the regime to implement radical, credible changes in Cubans´way of life. On the other hand, Yoani´s blog tells us day by day the slow progress made by Raul in terms of implementing institutional and social reforms. She writes: ''The tedium typical of year-end led me to watch the monotonous show of our lawmakers´ last 2008 session. The eternal formula of exposing problems without pointing at the real causes of them is back this December at Congress Hall. It´s all about a style in which, typically, the lawmaker starts saying 'Our Revolution has done a lot to improve retailing, but there are problems we need to tackle on.´Without that indispensable bow, you could be taken either as an ungrateful individual or a hypercritical dumb.´´

Quite graphic, isn´t it? The regime needs to make quick progress in economic reforms to avert social unrest. The military controls 60 percent of Cuba´s $40 billion economy -- and that share may probably increase as a way to dissuade any attempt by citizens to question the regime. But the country also faces significant policy challenges -- an eroding current account situation, supply shortages and a flagging export market. Unless Venezuela continues to extend financial aid, the Cubans will be condemned to go through a period similar to the one they went through in the 1990s. recent erratic decisions made by the government to default on certain trade financing and loans with European countries will only help to shut down more funding windows for the Communist country.

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