Back to top
12 figures reflect on the last 60 years

'The current crisis is the worst since the 90s' and "there is no coherent and effective strategy to overcome it'

Carmelo Mesa-Lago, economist.


Can we still talk about "Revolution" in Cuba?

The last issue of the Cuban Studies (2018) yearbook contains an interesting debate about whether the Revolution ended or not at a given time, and the issue is approached from the political and socio-economic angles.

Political scientists and sociologists in the debate identify the year 1976 and the stage of "institutionalization" (1970-1985) as the end of the Revolution, because it was when the Constitution was promulgated and the "Sovietization" of the process ensued. The issue is more complex from the point of view of economic-social goals: economic development, universal social services, the reduction of income inequalities, the elimination of unemployment and poverty, housing construction.

In my opinion, it did not happen at any given point, but rather over a period of time. In my timeline of the Revolution, based on these goals, I show that they began to fade in the 1971-1985 "Soviet Model of Timid Economic Reform" era, and disappeared with "Raúl Castro's Structural Reforms", from 2007-2017.

Two means used to achieve these goals were state ownership of the means of production and central planning, both of which did serious, long-term damage, but were largely successful in the medium-term due to massive Soviet aid.

I point to the decade of the 70s as the beginning of economic/social decline for several reasons: the failure of the ten-million-ton sugar harvest, and moral stimulation, the end of mobilization, the promulgation of the Constitution, the convening for the First Congress of the Communist Party, the creation of the National Assembly, and the process of institutionalization.

Cuban statistics are often questionable, but they indicate that the achievement of goals peaked in 1985: the highest rates of economic growth and investment under the Revolution, no fiscal deficit, a decrease in the monetary surplus in circulation from 88% to 29% of income, and after the failure of the sugar harvest of ten million tons, the country did produce seven million tons, and without hampering the rest of the economy.

Regarding social objectives, a universal and free healthcare system was developed, the protection of the labor force through pensions, a real increase in salaries, considerable equality in the distribution of income, low unemployment, and a boom in the construction of houses. State ownership of the means of production was realised, except for 3% of agriculture.

In 1970-1985 the USSR granted Cuba some 40 billion dollars, mostly in the form of donations, sugar and nickel subsidies (non-reimbursable), and annual Soviet loans to cover trade deficits. This generous support helped achieve goals in this period, but not without sowing the seeds of a very serious crisis.

Under Fidel's leadership in 1986-1990 an idealistic period transpired that further restricted the small private sector, and recentralized the economy, causing declines in GDP and production that weakened the nation, hindering it from withstanding the collapse of the USSR and the countries of Eastern Europe, and leading to the worst economic-social crisis under the Revolution, dubbed with the euphemism "Special Period in Times of Peace".

From 1985 to 1993 all the key economic indicators tanked: the GDP, 45%; investment, 25%; Soviet-Cuban trade, 93%; total exports and imports, 81%; imported oil, 75%; sugar production, 50%; the production of manufactures, 80%; and nickel, 23%. Due to the loss of Soviet subsidies, the export price of one pound of sugar dropped 79%, and the price of nickel, by 55%.

Other indicators soared: inflation was at 26%, the monetary surplus in circulation was at 88%, food imports and external debt were at 116%. The fiscal deficit went from a surplus of 200 million dollars to a deficit of 5 billion. The exchange rate of eight pesos for a dollar jumped to 25.

The social effects of the crisis were terrible: real wages fell by 90%, and real pensions by 84%; the sum of open unemployment and underemployment accounted for 33% of the workforce. Rationing spread, and there was a serious shortage of food. Housing construction decreased by 38%, and income inequality worsened.

Past vices that had been eradicated, such as corruption, prostitution and begging, reappeared. The lack of oil caused repeated and long power outages. The Government tried to deal with the crisis with, for example, a double increase in doctors per 1,000 inhabitants and a 43% reduction in the infant mortality rate. But these measures were manifestly insufficient to protect the people.

Faced with the crisis, Fidel launched a series of timid economic reforms in 1993-1996 to prevent a collapse of the regime, such as the authorization of self-employment, the creation of free agricultural markets, and the transformation of state farms into cooperatives, thereby shrinking the State sector. The central plan was replaced by an emergency adjustment program. Many foreign experts and a good number of Cubans wondered if the Revolution had died.

Raúl's structural economic reforms, however, maintained the predominance of central planning over the market, and of state ownership over private property. These reforms did not achieve tangible economic benefits, but did generate adverse social effects.

The long-term 2015-2030 plan did not take into account the Venezuelan crisis, and is limited to a long list of objectives without any means to achieve them. There is no coherent and effective strategy to overcome the crisis.

It was during this period that the economic-social goals of the Revolution virtually disappeared. Most of the economic indicators in 2016-2017 had not recovered their 1989 peaks: the industrial index was 32% lower; the production of sugar was down 86%, and that of nickel, 30%. The only thriving sector is Tourism, but it can not compensate for the decline of other productive sectors.

Real salaries fell by 61%, and real pensions, by 49%. The combination of open unemployment and underemployment accounted for 28% of the labor force. Meanwhile, income inequality grew enormously, as did poverty. Social outlays as a percentage of GDP fell by eight percentage points between 2007 and 2017, affecting access to health care and education, and their quality

In 2006-2017 the number of Health personnel fell by 22%, and all rural hospitals were closed. Enrolment in higher education declined by 71%, and all high schools in more isolated rural areas were closed. The decline in infant mortality was maintained, but maternal mortality increased from 29% to 49% per 100,000 births; the number of doctors per 1,000 inhabitants continued to grow, but 44% of them work abroad. The construction of houses plummeted 80%. In view of the growth in the vulnerable population, social assistance should have been expanded. Instead, it was cut by 30%.

All the above occurred despite the fact that, starting in 2002, Cuba received massive economic aid from Venezuela, which became Cuba's leading commercial partner, supplying it with 60% of the oil the country needed, the purchase of 9 billion dollars of Cuban professional services, and substantial investment.

In 2010, the total economic relationship was equivalent to 10% of Cuba's GDP, reaching 15% in 2013. But the crisis in Venezuela has seriously damaged Cuba. GDP, which had grown 12% in 2006, averaged just 1.2% annually in 2016-2018. The current crisis is the worst since the 1990s.

What should be saved from the revolutionary period?

From a social point of view: universal and free education and health systems, but not entirely State, as private competition should be allowed, and education must shed its ideological content.

How would you describe what Cuba is going through today?

The Cuban Revolution depended heavily on generous aid and beneficial trade with the USSR, and then with Venezuela. Between 1960 and 2017 the island received some 100 billion dollars in aid (two billion dollars a year), but it was not able to transform the country's economic structure to generate enough exports to finance its imports, or produce adequate and sustained economic growth. The latter has been erratic and, in part, the result of foreign aid. Temporary advancement towards social goals was bolstered by this external support, and suffered when it ended.

Today Cuba is suffering the worst crisis since the 1990-1994 period. There is no real possibility of meeting the original goals, unless a genuine structural reform of the economy is carried out.

Sin comentarios

Necesita crear una cuenta de usuario o iniciar sesión para comentar.