What Raul's Cuba might look like

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As Fidel Castro's long-standing rule over Cuba nears its end, speculation is mounting over the future of the island under acting president and designated successor Raul Castro.

A common view among U.S. scholars is that Fidel's younger brother, who has expressed strong interest in the Chinese model of liberalization, will implement significant free-market economic reforms while retaining political power in the hands of the Communist Party. But it remains to be seen whether Raul's alleged admiration for the Chinese path of capitalist reforms will translate into rapid and sweeping changes to Cuba's economic system or rather into a more gradual and relatively narrow acceptance of market mechanisms within the existing socialist framework.

Since the aforementioned scholars fairly point out that economic growth will provide political support for the new Cuban leadership, an analysis of the current economic situation in Cuba may hold important clues to predicting the island's future.

Here is what Raul's Cuba might look like and why:

Cuba's remarkable macroeconomic performance in the past two years, mainly fueled by a productive partnership with Venezuela and, to a lower extent, soft credits from China, will reduce the need for major liberalizing reforms and offer incentives to stay the course. Albeit using a new calculation method that substantially inflates the value of its economy, Cuba reported a GDP growth of 11.8 percent in 2005 and 12.5 percent in 2006.

Just to give an idea about Venezuela's vital role in the Cuban economy, exports of professional services, mostly medical ones under special agreements with Caracas, generated $2.9 billion or about 40 percent of Cuba's total hard-currency revenues in 2005, replacing international tourism as the island's most important source of foreign exchange. And while earnings from tourism stagnated and remittances from abroad suffered a decline in 2006, Havana's authorities estimate that exports of professional services will peak at $5 billion this year, accounting for almost half of total revenues.

Considering Cuba's growing dependence on Venezuela, and the fact that President Hugo Chavez has just won re-election to another six-year term, it is likely that Raul will retain close ties with Caracas and avoid major policy changes that could jeopardize such a profitable relationship.

It should be noted that the bulk of Cuba's booming foreign exchange earnings is money committed to purchasing oil, food, and other consumer goods from Venezuela and China rather than fresh capital that can be reinvested in the domestic economy. Cuban imports of goods increased from $5.5 billion in 2004 to about $9.5 billion in 2006. Yet greater resources have been devoted to upgrading infrastructure and machinery, including $1 billion on an energy grid and hundreds of millions on the construction and renovation of more than 100,000 homes, waterworks and transportation. Along with high food prices, chronic deficiencies in housing and public transportation are the biggest complaints among Cubans.

http://www.progresoweekly.com/index.php?progreso=Paolo_Spadoni_ant&otherweek=1169100000

Don't think we have to worry about that ;-)

that Raul in the past pushed Castro to be more Marxist. So I can't see this happening. this is wishful thinking in D.C. Castro's niece is head of the sexual education department. She supports gay marriage and is on record supporting glastnost and perestroika. So anyone who says there is no debate in Cuba doesn;t know the facts. Alarcon (head of the general assembly) supports co-operatives and says capitalism can be reformed for good (i.e. social democracy) and others don't think the country is Marxist enough.

flock to fast food outlets.

The system should be decentralized for the fact that a central bureaucracy is simply not able to process adequately the massive amount of information a dynamic economy produces. Gorbachev was aiming for this before The management decisions with respect to pricing of goods and services, output levels, etc. should be up to workers in their respective firms. Workers should be encouraged to be owners of their respective firms (such as worker co-ops).

They can be supported by a system of public banks fueled by a capital assets tax. The theory is that since the resources belong to society, then one pays a fee to use those resources such as machines, buildings, land, etc. The revenue generated would run the community banks.

There can be a thriving sector of capitalist investors to "grease the wheels of progress," but they need not be the dominant political force on the island. You don't put wolves in charge of the hen house; you put the wolves in a pen and let them do whatever they want as long as they don't get out of the pen. If people want to be barons of industry, they are free to do so, but workers should also be free to refuse and move over into the co-op sector if they choose to do so.