Caribbean & Central America - October 2009 (ISSN 1741-4458)

Economic realities have forced the Cuban government to cut spending . This austerity, advocated by President Raúl Castro, has been accompanied by efforts to incentivise workers, decentralise decision making and inch towards more targeted social spending. These are not just interim cost saving measures - they also point to an unprecedented shift away from the 'egalitarianian' ideology of the 1959 Revolution. 

On 1 October the central government closed a handful of state-workers' canteens as part of a pilot programme to cut costs. A week later the editor of the island's main daily, Granma, suggested that the monthly ration book, the libreta, ought to be phased out. Both measures suggest that Cuba's financial situation remains perilous. The cash-strapped island, which imports up to 80% of its food (at a cost of US$2.5bn in 2008, up from US$1.1bn in 2007) simply cannot afford the bill and measures to boost domestic food output have been slow to deliver.

In the pilot scheme, workers in four ministries (labour, finance, commerce and economy and planning) will get a daily voucher of 15 pesos (worth about USS0.57), to buy their lunch from private food stalls. Nationally, 24,700 state canteens serve around 3.5m workers, at an official cost of US$350m a year for the necessary food imports (mostly rice, grains, meat products and cooking oil).
A local economist, Ariel Terreno, calculated that workers, whose average monthly pay is 408 pesos (US$16) a month, could increase their pay by 300 pesos a month by bringing in a packed lunch and selling their lunch vouchers. Terreno calculated that the daily luncheon stipend, if extended to all 3.5m state workers, would  cost the state a hefty 13bn pesos a year (US$500m). Along with the rumoured move to overhaul the libreta, which costs an estimated US$800m annually, these moves are clearly a shift to market-based economics.

Raúl may not be a capitalist but he does seem to be more of a pragmatist than his brother and predecessor, Fidel. The core of Raúl's reforms lies in the management system pioneered by the Cuban military (which runs several key sector enterprises and on some estimates controls up to 60% of the economy), known as 'Perfeccionamiento Empresarial'. Beginning in the 1980s, the military introduced profit-oriented management, production-linked wages and capitalist-style accounting and efficiency standards into their enterprises.  Raúl aims to transfer these practices to other ailing state sectors, without resorting either to capitalism or even moving towards a Chinese or Vietnamese model. Rather, in keeping with the 1959 Revolution itself, Havana hopes to develop a hybrid Cuban model of its own.

• The role of the state media

Throughout this year, the Cuban press has openly discussed the merits of wage reform and incentive-based work, decentralisation and a shrinkage of the bloated state system. On 9 October,  Lazaro Barredo, the editor of Granma, argued that the libreta was “an ill" preventing Cuba's economic development and warning readers to prepare for life without it. Echoing recent speeches by Raúl, Barredo urged Cubans to work harder and contemplate life without the cradle-to-grave social support that has been the cornerstone of the Revolution.  “The ration booklet was a necessity at one time, but it has become an impediment to the collective decisions the nation must take," he added.

Some articles have been more critical of the government. A 4 October article in Juventud Rebelde entitled 'Viene de todos' appeared to represent genuine frustration with the small military gerontocracy that now runs Cuba under Raúl. The author, José Alejandro Rodrí­guez, was blunt in his criticism of the ruling hierarchy and called on it to open the doors to genuine debate, from the ground up. He declared that “the solutions to our own problems, the framework of 21st Century socialism, have to be constructed with the consensus of everyone, _so that no-one can try and quiet us by saying that 'that comes from above'. No, it comes from everyone".

• The Libreta

The libreta, in place since 1962, provides every Cuban (pop 11.2m) with monthly rations including rice, salt, green vegetables, potatoes, bread, eggs, sugar and some meat. Most people say it only provides 10 to 15 days of food, forcing them onto the black market. The government may seek to limit the libreta to the most vulnerable families. Economists, however, point out that without much bolder wage reforms, many already vulnerable Cubans could be tipped into outright poverty without the ration book.