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Cuba Moves Toward Market Socialism Amid the US Assault

As unprecedented US sanctions push Cuba deeper into crisis, Havana is embracing sweeping market reforms while insisting it is not abandoning socialism.

The Cuban government is implementing a dramatic opening to foreign and domestic capital, private business, the market and the dollar, and has promised to take a machete to its traditionally obstinate bureaucracy, as it grapples with a US fuel blockade and devastating secondary sanctions that threaten to bring economic activity to a standstill.

As the government moves definitively past decades-old taboos on the exploitation of man by man, Cuban officials have taken pains to explain it is simply trying to free the forces of production from any internal obstacles as it defends the socialist country’s universal healthcare, education, culture, and sports.

“The transformations do not imply giving up the social responsibility of the State but recognize market mechanisms as instruments for the efficient allocation of resources,” Prime Minister Manuel Marrero said on June 19, upon presenting the plan for final approval to an emergency session of the National Assembly of People’s Power.

No Cuban official has suggested that the 176 measures will counter the US assault on the country in the short term. Rather, they aim to rectify the government’s mistakes by eliminating festering regulatory obstacles amid a grave economic and energy crisis. The measures also offer an opportunity to US businesses if sanctions are loosened or lifted. They include negotiating US claims over property lost at the time of the 1959 Revolution and property swaps for such debt.

The new measures will be rolled out urgently in the coming weeks and months, Marrero said. Instead of different rules for state and private economic actors, all will operate under the same loosened regulations, ending years of debate over the issue. State companies will have to sink or swim in a market environment in competition with private companies. Joint ventures will be able to hire and fire directly, without going through government hiring halls, a long-standing investor demand.

There are an estimated 2,650 state companies that account for the lion’s share of goods and services produced in the country. There were 12,650 privately incorporated, nonagricultural, micro, small and medium-sized businesses as of June, with more than 7,000 applications pending. A cap on private businesses’ having more than 100 employees will be lifted and individuals authorized to own more than one company. While most sectors of the economy are open to nonagricultural private business, for the first time they can enter the financial and agricultural sectors. The government said all pending applications would be processed by July.

“We submitted our application some two months ago (so it was relatively far down the list of pending applications), and it was approved today…. It seems the promise to approve them all by month’s end is being kept. A good signal,” a local businessman said on June 29, requesting anonymity.

According to the reform plan, all economic actors will be able to invest in one another’s businesses, including purchasing shares, and form partnerships. Prohibitions on Cubans living at home and abroad partaking in economic activities of all kinds will be lifted. All economic actors will be encouraged through tax and other incentives to use solar power. The state will control the fray through taxes and other financial tools, versus assigning........

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