Cuba still allergic to private property as reforms creep forward

Cuba still allergic to private property as reforms creep forward

By Marc Frank



HAVANA (Reuters) - Every Monday in the bowels of Cuba's Palace of the

Revolution, a group of men and women charged with revamping the island's

moribund economy meets to review progress in building what they have

dubbed "a prosperous and sustainable socialism."



They have their work cut out for them, as demonstrated by the recent

discovery by Panama of decrepit Cuban weaponry on its way to North Korea

for repair, a walk down any potholed Havana street or the Cuban

government's admission that 58 percent of water pumped from reservoirs

is lost to leaky pipes.



The men and women are members of a Communist Party commission charged

with carrying out a 313-point, five-year plan to modernize the economy

that was adopted in 2011.



First Vice President Miguel Diaz-Canel, in a recent interview with Cuban

journalists, said the weekly gathering was chaired by the man he is in

line to succeed, 82-year-old President Raul Castro, and reviewed "all

the advances in terms of designing policy."



Talk of selling the state's more than 90 percent stake in the economy is

apparently not on the agenda of the Monday meetings, according to the

head of the party's reform commission, Marino Murillo.



Murillo told National Assembly deputies earlier this month that those

outside and inside the country who thought his commission was restoring

capitalism or planning a fire sale were terribly mistaken.



"You can't confuse transformation of property with modernization of its

management; they are two different things," Murillo said in a two-hour

speech.



"It (modernization)... does allow for new actors in the non-state sector

(farms, small businesses, cooperatives and joint ventures)," Murillo said.



The non-state sector, which includes employees of small businesses and

many people "working for themselves," such as taxi drivers and produce

vendors, currently comprises 23 percent of the 5.1 million member labor

force, according to Carlos Mateu Pereira, an adviser to the minister of

labor and social security.



Murillo said central planning still ruled but would become more of a

"regulator, not administrator" as the market was given more sway in

pricing and other business decisions.



Murillo used agriculture to illustrate what he meant. He said 70 percent

of the land is leased to co-operatives and small farmers while 20

percent is owned by private farmers and their cooperatives. State

companies occupy 10 percent of the land.



Murillo said an increasing amount of what the farms produce was being

sold on the open market, about 47 percent currently, bypassing the

state's wholesale trade monopoly.



CAUTION RULES



To those who believe modernizing the economy is moving too slowly

halfway through the five-year Party plan, Cuba's president at the July

parliament meeting said, "There will be no shock measures here like in

Europe."



Economic growth in recent years has averaged around 2.5 percent despite

reforms, compared with the 5 to 7 percent economists believe is needed

for development. Achieving that will require significant foreign

investment, they say.



No speaker at the week-long National Assembly meeting dedicated to the

economy mentioned foreign investment.



None of the foreign companies managing and participating in joint

ventures in Cuba, 190 at last count, own any property outright, nor do

they have the right to sell shares except with the authorization of

their state partner.



According to Diaz-Canel, reform is indeed a painstaking process as it

moves from lifting prohibitions on personal property, travel, minor

economic activity and farming, to "a crucial and defining stage" where

such thorny issues as the island's dual monetary system and the

inefficiency of state companies are the focus.



Since the fall of the Soviet Union Cuba has had two currencies in

circulation - the peso, valued at 25 to the dollar, and a dollar

equivalent called the convertible peso, making accounting, budgeting and

other matters extremely cumbersome.



Policies are proposed at the Monday meetings by commission

subcommittees, he said, and then experiments launched to prove their

efficiency, with studies to examine the impact of cutting subsidies and

unleashing market forces on a society unaccustomed to living this way

for the past 50 years.



There are many pilot projects these days.



For example, a wholesale market where farmers can buy supplies, instead

of the inputs being assigned by the state, or an experiment in two

provinces aimed at downsizing government.



At the same time, earlier pilot projects are now being generalized, such

as the leasing of thousands of tiny state retail services to employees

and larger ones to cooperatives, or allowing state companies to sell

excess product on the market and keep 50 percent of their profits after

taxes.



"This is very much like the early days of reform in Asian communism,

when the Communist Parties tried to hold on to everything and restrict

all investment," a western diplomat said.



"They soon learned that it wouldn't work and opened up further."



(Editing by David Adams and Cynthia Osterman)



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