Cuba’s communists dig in as Castro’s reform drive hits the sand

Cuba's communists dig in as Castro's reform drive hits the sand

Islanders mystified as 'economic tsar' Marino Murillo not heard in
public for a year

Cuban president Raúl Castro is preparing to step down next year,
Venezuela has cut millions of dollars in aid and Donald Trump's election
has cast a shadow over the nascent US-Cuba detente. Unnerved by the
changes, Havana has allowed its domestic reform drive to grind to a halt
as the Communist party battens down the hatches.

Marino Murillo, the senior official leading Cuba's reforms, has not been
heard in public for almost a year. His absence has mystified Cubans and
dented the high expectations Mr Castro's liberalising drive once
fomented, both at home and abroad.

"There are three reasons for the pause in the reforms — and I say pause,
because inevitably reforms will continue at some point," says Richard
Feinberg, a Cuba scholar at the Brookings Institution in Washington.
"Senior leadership is focused on managing austerity and preparing the
succession as Raúl steps down . . . They are also managing a backlash
over emerging inequality, low state wages and inflation."

Mr Castro made reform the hallmark of his presidency when he formally
took over from his elder brother Fidel Castro in 2008. He sought to
decentralise the economy and boost productivity by allowing
self-employment, slashing state bureaucracy, welcoming foreign
investment and unifying Cuba's dual currency system.

Mr Murillo, who became known as Cuba's "economic reform tsar" when he
was appointed minister of planning and the economy in 2009, was the
technocrat in charge of implementing the changes. In some ways, he and
Mr Castro made up a tag team that repeatedly cajoled Cuba's stolid
bureaucracy to reform.

While Mr Castro's revolutionary stature provided moral cover, Mr Murillo
gave lengthy PowerPoint presentations to party and government members
that explained the changes. His talks, usually an hour long, were later
broadcast on state television, sometimes more than once.

By contrast, Mr Murillo has not uttered a word in public since last
July. At the same time, price controls have been slapped on burgeoning
private sector businesses in agriculture and transport.

The reversal comes as Mr Castro, 85, prepares to carry out his pledge to
step down as president on February 24 next year. If he does so, 2018
will be the first time in six decades that Cuba has not been ruled by a
Castro — although he is expected to remain head of the Communist party
and armed forces. Fidel Castro died last November.

"In a way, the reforms have not gone far enough but at the same time too
far," says Bert Hoffman, a Cuba expert at the German Institute of Global
and Area Studies. "Not far enough to . . . lift up growth [but] too far
in that social inequalities are widening, the cost of living is rising
and the Communist party fears the discontent this produces."

These tensions became clear at a party congress in April 2016, which
admitted that reforms had failed to meet popular expectations in terms
of economic growth, supplies of goods and higher wages. At the same
time, a debate on state television showed party delegates fuming over a
private onion farmer who had earned enough money to buy a car and fix
his house.

In many ways, Cuba has been here before. Reformist officials have often
had their wings clipped after liberalising drives were stifled by
hardliners who feared loss of control. One famous case is that of Carlos
Lage, Fidel Castro's "economic fixer" in the 1990s, who was
unceremoniously dismissed in 2009 and now works as a paediatrician.

One difference today is that Mr Murillo still seems to enjoy official
blessing. He was promoted to the powerful politburo in 2011 and remains
chairman of the government's economic policy commission.

The slowdown in domestic reforms suggests the orthodox wing of the
Communist party is strengthening, says Carmelo Mesa-Lago, professor
emeritus of economics at Pittsburgh University and a long-time Cuba
watcher. He sees reform opponents using Mr Murillo as a scapegoat to
strengthen their position before Mr Castro steps down.

"All this has been a severe blow to Murillo, although the main problem
is the deterioration of the Venezuelan economy," he says.

Caracas has long supplied Havana with 100,000 barrels per day of
subsidised oil, but Venezuela's economic and political crises have
forced it to cut shipments by as much as 40 per cent. Largely as a
result, Cuba's economy shrank by almost 1 per cent in 2016, entering its
first recession since the collapse of the Soviet Union.

In another setback for reformists, Mr Trump has promised to re-examine
the detente begun under his predecessor Barack Obama — although the US
president has taken no concrete steps since his election last November.
His state department has yet to appoint an official in charge of Latin
American affairs.

Some US businesses have scaled back their initial euphoria about
opportunities in Cuba. Although 615,000 Cuban-Americans and US tourists
visited the country last year — of a total 4m foreign visitors —
Frontier Airlines and Silver Airways cancelled scheduled US flights on
March 13, citing lack of demand and market saturation. American Airlines
and JetBlue have also reduced their schedules.

"They [the Cubans] have managed quite well to dampen reform
expectations," says a senior European diplomat, referring to Mr
Murillo's muting.

However, the corollary of prioritising political stability over economic
reforms, at least for now, is that complaints about government inertia,
low wages, high prices, shortages and deteriorating services have become
routine.

One clear sign of that came in a rare private survey carried out in Cuba
late last year by the independent NORC research group at the University
of Chicago, in which 46 per cent described the country's economy as
"poor or very poor". A similar number said they expected it to stay the
same while only three in 10 expected it to improve. Remarkably, half of
polled Cubans said they wanted to leave the country.

Source: Cuba's communists dig in as Castro's reform drive hits the sand
- https://www.ft.com/content/c84eb5a2-0fe3-11e7-b030-768954394623