Stagnant Cuban economy awaits reform
Agence France-Presse
First Posted 18:56:00 02/19/2008
WASHINGTON -- Cuba steers into uncertain economic waters with the end of Fidel Castro's era, with many analysts saying a new leadership could push the Caribbean socialist nation toward China-style market reforms.
It was unclear who would take power this week, but Fidel's brother Raul Castro, who took over when Castro temporarily stepped aside in 2006, is seen as open to looser economic controls, having presided over the military's development of tourism businesses.
But in 19-months at Cuba's helm, Raul Castro has not had the leeway to launch major reforms.
"Now Raul Castro will be able to take on his reform project with a greater capacity, toughness and confidence. He has spoken of it (the project) himself and I think he will be able to start these very important reforms," Spain's Latin America minister Trinidad Jimenez said Tuesday in Madrid.
Kirby Jones, who heads the US-Cuba Trade Association and has met both Castro brothers, said when the transition from Fidel Castro's reign began there would be pressure for reform.
As defense chief, Raul was "in the forefront of entrepreneurship and (the Cuban military's) involvement in the tourism industry," Jones said.
"There certainly seems to be an understanding by Raul that things can't be centrally controlled as perhaps they once were -- that totally centrally controlled, or command economies, don't function today."
In the short run, the United States, geographically close to Cuba's market of 11 million people, has tied its own hands on involvement in the economy of the Americas' only communist-ruled country.
For four decades, Washington has maintained a trade embargo on Havana, and since 1996, US law has forbidden Washington from talking to any Cuban leader who was not freely elected.
The embargo and Havana's obstinate communist controls have left Cuba perpetually strapped for cash. It gets key support in the form of discount-priced Venezuelan oil, hard-currency-generating tourism, and money sent home by Cubans abroad.
It also increasingly reaches out to China in trade deals, and courts investment in its oil sector from India, Europe and reportedly China.
Some analysts believe Raul Castro, if he remains at Cuba's helm, could give a green light to the Chinese model of liberalization, which involved maintaining firm political control by the Communist Party while allowing freewheeling state and then private commerce to develop.
"Some people who know him believe (Raul) is a pragmatist and believe he will be more favorable to market-oriented reforms than Fidel ever was," said Carmel Mesa-Lago, a Cuba expert and economics professor at the University of Pittsburgh.
"Maybe China will be the model for him. I think it could be, because the party has the political control but the economy has phenomenal growth," said Mesa-Lago.
If that happens, Mesa-Lago said, "then eventual negotiations would be easier" between the United States and Cuba.
"For American investors, that would be a sign that Cuba is ready to do business."
Mesa-Lago believes there will eventually be keen US interest in Cuba's oil industry, tourism, technical services and nickel mining.
"Cuba was, and could be again, a major supplier of fruits and vegetables for the US in the winter season," he added.
Yet in the short run, Jones warned, no one should overestimate how quickly change will come.
Young, new-guard Communist Party cadres have been placed in many key government agencies in Cuba, and could resist change, he said.
And foreign investors already involved in Cuban industries like tourism, farming and mining could also impede reform to protect their own interests.
"There is interdependence. So in terms of cataclysmic change in the economy, I wouldn't expect that," said Jones.
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