The problem with Cuba’s ‘new economy’


When Raúl Castro steps down as Cuba’s president in February 2018, he will hand off to his successor the unfinished task of reforming the economy, notes William LeoGrande, Professor of Government at American University in Washington, DC. Amongst other problems, ideological suspicion has hampered Cuba’s search for foreign direct investment (FDI), he writes for Americas Quarterly:

While the reform process has had limited success stimulating growth, it has produced a noticeable rise in inequality, price increases that outpace wage growth, and rumblings of political discontent. When food prices surged in 2015-16, the state stepped in, imposing price controls. It did the same to taxi drivers, some of whom resisted by stopping work. The message, Castro made clear, was that markets had a role to play in the new economic policy, but a strictly regulated one, subordinate to political exigencies.

Cuban workers enjoy only a theoretical right to freedom of association, say human rights groups.

But labor rights are a precondition of democratic development, says a new UN report. Freedom of peaceful assembly and association lie at the core of any functioning democratic system, according to a report by the new Annalisa Ciampi, the new United Nations (UN) Special Rapporteur on the rights to freedom of peaceful assembly and of association.

“It is the combination of the right to freedom of peaceful assembly and the right to freedom of association that strengthens responsive democratic governance systems and ensures the full and meaningful exercise of the right to participate in public affairs,” writes Ciampi in her first report to the UN General Assembly.

“As the Special Rapporteur previously reported, ‘workers face considerable opposition, harassment, stigmatization and even physical attacks’ in the exercise of these fundamental rights,” says Solidarity Center Legal Director Jeff Vogt. [HT: Tula Connell, Solidarity Center, a core institute of the National Endowment for Democracy].

U.S. investors hoping to do business in Cuba face numerous problems/issues which include dealing with the Cuban government’s violations of the most basic human and labor rights, notes analyst Jaime Suchlicki of the Cuban Studies Institute:

  • Foreign companies pay the Cuban government in foreign currencies (e.g. euros, Canadian dollars) for their workers. The government pays the workers in Cuban pesos which are worth 1/20 of a U.S. dollar, pocketing 90% of every dollar it receives.
  • All Cuban workers in the tourist industry or any industry that comes into contact with foreigners are carefully screened and selected by the government. Lighter skin workers and those loyal to the revolution are picked for hotel, resorts, and other tourist destinations.
  • All labor arbitration must take place in the corrupt and arbitrary government offices where little protection is given to the worker or the foreign investor. There is no independent judicial system in the island and all judges are appointed by and work for the government.
  • There is only one labor federation in Cuba, the Central de Trabajadores de Cuba (CTC), organized and controlled by the Cuban government.
  • All workers must be members of the CTC and pay dues.
  • “Elections” are held periodically. Only candidates approved by the Cuban Communist Party are allowed to run for local or national leadership positions.
  • There is no collective or individual bargain in Cuba.
  • Workers cannot change jobs without government permission.
  • Most businesses/agricultural and industrial enterprises are owned by the government- most Cubans work for the State.
  • All salaries and benefits are determined by the State.
  • Workers are hired, disciplined, and fired by the government.
  • The Cuban government hires out physicians, artists, musicians, bartenders, etc. to foreign countries and foreign companies abroad. Cubans usually reside for six months in foreign countries and are paid in hard currency. Yet 40% of their salaries are deducted by their employers and sent to the Castro regime.
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