The situation and development in Cuba

Having a development plan that runs until 2030 does not mean that in 2030 Cuba will be a developed country.

Now that the archipelago has begun to discuss the documents from the Seventh Party Congress, where the development model that we want to achieve is set out. In order for it to be prosperous; I think that the topic of the moment, or that of time management, is decisive.

Advancing along the path of development with a plan (I would have preferred to call it a program) means that we work together in a coordinated and determined way looking for that plan. It also means that this plan will have to undergo constant updates throughout the years, right up until 2030.

The first step with then be to agree about what development we want and what is the standing of the development that we can aspire towards, being, as we are, a poor country, still subject to an embargo, whose population is ostensibly decreasing and aging.

We cannot take a great leap forwards in development because we have many accumulated deficits. In essential areas (like that of computerisation) we are advancing at a speed which is slower than the rest of the world and we still have not obtained the kind of mentality which we need.

To all that, the economic problems that the country’s administration must face must be added. Among other things, these are exposure to the vagaries of the world economy, the price cycles of products that are exported, the economic situation of its main trading partners and changes in interest rates, among other things.

The situation is one of the most pressing factors in achieving the long term goals. Managing it skilfully, finding opportunities where there seem to be only threats, is perhaps the talent that is most required in those who drive the economic processes.

The advantage of having long term goals that is that they help the making decisions in the short term that contribute to larger goals. That is, in my opinion, one of the most important values in having a Vision and Development Program agreed upon by all the people.

But as my friend Goyo says, to get to tomorrow we have to go through today. And the situation today is not favourable.

Global Prices

As with nearly all the countries of Latin America, Cuba faces the end of the boom in the price of prime materials.

Some estimates suggest that countries like Brazil will have negative growth (-3%), Ecuador will border on 0%, as will Argentina, and Venezuela will probably face a decrease of over 4% in its gross domestic product. Others like Bolivia, Colombia, Paraguay, Peru, Chile and Uruguay, are expected to have moderate, but slow, growth.

For us this evolution is important because, although our export structure has changed and today is only about 30% of our revenue depends on the export of basic products, this income is very important.

Nickel, the main export commodity, was traded at $ 14,393 a tonne in 2015. However, in the first three months of this year it has only managed to reach $8,500 USD per tonne. If we calculate the income that we could stop receiving on the basis of producing 56,000 tonnes for this year the total that Cuba would not receive due to this price differential would amount to $330 million USD.

But as Cubans we either under or over achieve. So in sugar production, where price developments are positive (it increased from $300 a tonne in 2015 to 310 in the first quarter and to 380 in May 2016) this year we will not reach the planned target. Failure to fulfil the plan will mean that some 360,000 tonnes will not be sold, which is equivalent to preventing $136 million entering the country’s economy.

In summary, because of the low prices of raw material and low production of another, 516 million dollars will not enter the country. I draw the attention to the fact that our exports of goods in 2015 only reached $3,903 million, almost 25% less than in 2014, according to the National Bureau of Statistics and Information. So what we have lost between nickel and sugar this year is 13% of what we earned 2015.

Because of this and other reasons that are in the documents that are being discussed, we should productively transform ourselves and we have to find better ways of joining the global economy. This strategic focus, productive transformation, becoming an international player, is more than a goal – it is the philosophy of how our system of production should be in the future. And while it is true that we started out on this path a long time ago with tourism and biotechnology, much remains to be done.

There are promising signs. Tourism is developing properly and in the first half of this year, it more than reached its targets. It remains a sector capable of holding out our economy together, but unfortunately it has failed to foster all the connections that it is capable of.

I repeat, the short term matters, because, as Keynes said, we are all dead in the long term. And I always think that we have the possibility to improve in the short term.

There is a great opportunity that I believe we do not fully take advantage of: the ‘Cuban myth’ the competition for Cuba, the enthusiasm for Cuba that manifests itself palpably in the dozens of foreign businesses that want to invest in our country.

There is so much uncertainty in the world today, this foreign investment is a resource that could reactivate our economy. Particularly in this difficult situation which we will confront over the rest of the year.

However, the procedural obstacles in achieving a business that is a joint venture or 100% foreign owned business are so substantial that in the process of creating said business they become a crucifix, even though the country’s president has called for the archaic ways of treating foreign investment to be left behind.

What are the reasons for the survival of these archaic ways of dealing with foreign investment? Why did we not finish eradicating them years ago? Why can we not adopt ways which expedite the red tape?

An interesting exercise that we could do now, just as a way to imagine how it could be in the future, is to look at how the portfolio of opportunities presented by Cuba in 2016 fulfils the Vision of the country that is currently being discussed. How the strategic areas focus are present in the same portfolio and how they contribute to productive transformation and international economic integration, or how to help equity and social justice.

Imagine, for example, that our future foreign investment policy should incorporate the vision and strategic areas as key elements for project approval and that the decision of whether to adopt a specific form of ownership is also determined by the concept of means of basic production that appears in the conceptualisation.

A foreign investment project could be approved by “default”. That is, if it meets the guidelines defined for the strategic focus areas, then it is approved, if it is not in any of the priority fundamental areas of production, then it may take any type of ownership and the decision may be taken by a business (state, cooperative or private), or the president of a local government or a provincial government.

Can you imagine something like that? Of course it would require total transparency, from the bidding process through to its adjudication, and for that, in addition to our institutions, it should be possible to follow the whole process via the internet.

And what about the need to export? How do we ensure that exporting is exciting? There should be some sort of sign that says something like: “Do not ask permission, just export!” Of course not everything is solved with slogans. To export first of all you need to produce something and then have incentives to stimulate export. The first of all these incentives is that those who export (a state business, a cooperative, or a small or medium sized private enterprise, along with their workers) should adequately benefit from their exports.

Definitvely, the homo cubanis is a successful hominid. That has been demonstrated in and outside of Cuba. We are champions in overcoming obstacles. Eternally, the blockade is the most significant, but internally we still need to overcome the resistance to change, the archaic ways of thinking which Silvio Rodríguez defined as opposition to anything new from those too stuck in the comfort of their own mould.

We will have to beat it day by day to get to the long term. The future matters and depends on us.

 

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Comments

Raidel

17 July, 2016

Listen man! I don’t know if it’s the translation or the excess of baurocratic language, typical of Cuban officials, but this article is not easily understood.

Mientras no le den mas participacion en la economia a los cubanos de dentro y fuera nunca van a lograr salir del bache, mas bien del presipicio, una nacion la hace el pueblo de a pie.

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