Cuba’s economic reforms debated at Miami conference

Posted on Thursday, 08.01.13

CUBAN ECONOMY



Cuba's economic reforms debated at Miami conference

BY MIMI WHITEFIELD

MWHITEFIELD@MIAMIHERALD.COM



As Cuba struggles to reform its faltering economy, it has engaged in a

delicate balancing act of trying to spur growth while maintaining

control and keeping market forces from getting out of hand.



That was the quandary under discussion Thursday as economists, political

scientists, business executives, lawyers and scholars from the United

States, Latin America, and Europe came together in Miami to discuss the

theme "Reforming Cuba?" at the 23rd annual meeting of the Association

for the Study of the Cuban Economy.



"The Cuban government functions like a broken enterprise,'' propped up

by support from Venezuela and remittances from Cubans living abroad,

said Emilio Morales, president of The Havana Consulting Group during the

opening session of the three-day meeting.



A recent study by the Havana Consulting Group estimates that 600,000

American citizens and Cuban-Americans are expected to travel to Cuba

this year — carrying with them an estimated $2.2 billion in cash.



That's in addition to the clothing, food, medicine and household items

that Cuban-Americans send or take to their families, said Morales, who

now lives in Miami but is the former marketing director of CIMEX, Cuba's

largest commercial corporation.



Meanwhile, he said emigration from Cuba reached a peak last year with

more than 56,000 Cubans leaving the country.



This year's conference at the Hilton Miami Downtown Hotel also includes

10 speakers from Cuba and five other participants from Cuba, said Ted

Henken, a professor at Baruch College and ASCE president.



In past years, Cuban scholars have sometimes been unable to obtain exit

visas from the Cuban government to participate in the event or haven't

been able to get visas from the U.S. government. Cuba did away with the

exit visa requirement in January.



"This year no one got turned down,'' said Henken, although he said that

some Cuban scholars who had expressed a desire to attend were unable to

get permission from their universities.



There was a consensus among many conference participants that the pace

of reforms in Cuba is too slow and they are not far-reaching enough, but

speakers said the jury is still out on the impact of the reforms.



Among the reforms announced so far are allowing self-employment as the

government seeks to remove workers from bloated government payrolls,

allowing Cubans to buy and sell homes and cars, increased private and

cooperative farming, and allowing workers at formerly state-run hair

salons, barber shops and restaurants to run them independently and rent

the facilities from the state.



Economist Carmelo Mesa-Lago, professor emeritus at the University of

Pittsburgh, said there are still some missing ingredients if the goal is

to transform the Cuban economy. Cuba, he said, needs banking reform, the

unification of its dual-currency system, a realistic exchange rate and

tax system and more far-reaching agricultural reform.



"The success of the reforms is made more difficult by excessive

regulation and control,'' he said. But Mesa-Lago added, "The biggest

obstacle for reform is the Cuban model itself.''



Among other reasons that creation of small businesses and

self-employment hasn't produced the desired advances, said Morales, is

the lack of financing and loans for private enterprises, no system for

home mortgages and the failure to include professionals in

self-employment initiatives.



Marino Murillo, Cuba's economic czar, said in July that the most complex

part of President Raúl Castro's reform program will come over the next

18 months. Among the changes that will be implemented will be the

decentralization of state-run businesses, allowing them to keep 50

percent of their revenue to reinvest instead of sending it all to the

government.



At this point 124 non-farm cooperatives — most former state-run produce

markets — are operating and 71 others in areas ranging from light

manufacturing to food services have been approved.



The non-agricultural cooperatives have potential and could lead to a

"hybrid mixed economy'' if they come to fruition, said Archibald Ritter,

an expert on the Cuban economy who teaches at Carleton University in Ottawa.



When the decree law that established the legal framework for the

cooperatives was announced last December, there were no restrictions

placed on the number of employees a cooperative could have or on what

activities it could engage in, Ritter said. In theory, he said, there

could be manufacturing cooperatives, a cooperative of building

tradesmen, or even a group of accountants.



It remains to be seen whether cooperatives of professionals will be

permitted, how the initiative will be implemented and whether the

Communist Party will try to control or influence the governance of the

cooperatives. But, he said, if the cooperative system is "implemented

fully,'' it could lead to a significant degree of "economy democracy for

Cuba."



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