May 2, 2011

Cuba's announcement at the end of its much-awaited Communist Party Congress this week that it will allow Cubans to buy homes and cars for the first time in five decades proves the wisdom of an old joke -- that communism is the longest road between capitalism and capitalism.

The VI Congress of Cuba's Communist Party approved a wide array of pro-market economic reforms. Their details have not been disclosed at the time of this writing, but some well-placed Cuba watchers say the new rules are likely to lead to an economic opening, much like China's economic reforms of 1978 or Vietnam's transition to a "socialist-oriented market economy" in 1986.

Hours after the conclusion of the Congress -- where 79-year old military president Gen. Raúl Castro was appointed head of the Party's Central Committee and 80-year old José Ramón Machado Ventura was named his No. 2 -- I asked several economists and legal experts whether the party congress will mark the official start of Cuba's economic opening.

Omar Everleny Perez, deputy director of the Center of Cuban Studies of the University of Havana, told me in an e-mail from the island that "we are witnessing a profound updating of the Cuban economic model, much like those of China and Vietnam, with the existing differences of each model.''

Everleny Perez said the economic "transformation" of Cuba will give the private sector "a significant weight, which it has not had in the past." He said that, among other things, Cuba will eliminate more than 1 million jobs to reduce its "bloated" government payroll -- the figure may be as high a 1.5 million -- and that it will give land to private farmers so that they can increase food production.

Rolando Anillo, an attorney with the Miami firm Fowler, Rodriguez Valdes-Fauli who visits Cuba frequently, agrees that "for the first time, there's a deeper economic reform" that allows things such as private ownership of homes or cars.

Until now, Cubans could only "exchange" their state-owned homes, a mechanism that has triggered a massive housing black market because people wanting to move to a bigger house have to pay extra cash under the table to the person giving up the property.

"It will have a huge impact," Anillo says. "It can unleash a big movement of capital because there are people who have money, and they will start to repair and improve their homes."

Carmelo Mesa Lago, a University of Pittsburgh economist who is one of the most respected analysts of the Cuban economy, is more skeptical. Barring surprises once the Congress's resolutions are published, this is not comparable with China's or Vietnam's economic openings decades ago, he said.

In China and Vietnam, the opening started with sweeping agricultural reforms that gave farmers virtual ownership rights over their land. In Cuba, farmers will only get usage rights of the land, which will be limited to 10 years and subject to stringent restrictions, he said.

Mesa Lago said that the most important steps for Cuba to solve its economic crisis would be -- in this order -- giving private farmers greater property rights, implementing the announced layoffs of up to 1.5 million government workers, and implementing the new rules allowing people to own homes and cars. "The latest reforms are very timid, and with too many strings attached," he said.

My opinion: Unlike Cuba's previous economic reforms, which the regime quickly reversed as soon as it got new subsidies from the former Soviet Union or Venezuela, this one may go down in history as the first official move toward a market economy. The reason: The regime's octogenarian leaders are not likely to be around to convene a new Communist Party Congress in another 14 years.

But the new reforms will not be implemented by the current crowd of octogenarian political dinosaurs. As Cuba's military dictator Gen. Raúl Castro himself reminded the Party's Congress, "it is useful to clarify, to avoid misinterpretations, that the agreements reached at the Congress are not automatically turned into laws, but are political and moral guidelines" that must be implemented by the government.

What Cuba's gerontocracy has done is buy time so that they don't risk opening a process of gradual freedoms that could land them in jail, like Egypt's Hosni Mubarak. They want to die in bed, peacefully, making sure that their successors will later credit them with having started Cuba's economic opening.

 

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(C) 2011 Andres Oppenheimer, The Miami Herald Distributed by Tribune Media Services