The Cuban Economy: What’s Next for the Private Sector?

Irene Estefania Gonzalez / Inter-American Dialogue

On October 16, the Inter-American Dialogue hosted an event to explore the Cuban economy’s future, its growth prospects, and the internal and external obstacles it faces. The panel was composed of Ted A. Henken, Professor of Sociology and Latin American Studies at the City University of New York (CUNY); Camila Piñeiro Harnecker, Researcher and Consultant on the social economy and enterprise sector in Cuba; and Ambassador Jeffrey Delaurentis, Centennial Fellow at the School of Foreign Service of Georgetown University. Peter Hakim, president emeritus of the Dialogue, moderated the event.

Over the past few months, a series of momentous changes have drawn global attention to the largest of the Greater Antilles. In April, president Raul Castro stepped down from his role as head of government and was succeeded by Miguel Diaz-Canel, the former first vice president, marking the start of a long-awaited generational transition. Since then, the government has been working on redrafting the country’s constitution which, for the first time since the Castro-led revolution, includes a period of “popular consultation” from ordinary Cubans. Although the document has yet to be ratified, the draft currently under consideration suggests changes to the country’s property rights (including the acknowledgment of private property) and self-employment—areas that could potentially have a large impact on the island’s lackluster economy.

Ted Henken began the conversation by analyzing the work of economist Carmelo Mesa-Lago, as presented in his “Voices of Change in Cuba from the Non-State Sector.” The work emphasizes the importance of separating the state sector from the non-state sector, which, the scholar noted, is not necessarily private and frequently adopts the form of co-operatives. Henken shared the views of the self-employed Cuban cuentapropistas, who want the government to “facilitate the flow of business, not obstruct it and control only what should be controlled.” Among their main demands, these entrepreneurs have been seeking better access to inputs, imports, and raw materials; dialogue with the government; and a legal standing which would legalize their businesses and help them establish themselves as property owners.

Henken continued by presenting some of the findings he published on his paper titled “The Revenge of the Jealous Bureaucrat,” where he concludes that the current trend of reform in Cuba is not about “perfecting” the rules for the private sector, but more about politics, control, and power from a public sector that does not want to lose its influence. Given the limited scope of change so far, Henken believes it is too early to talk about a “post-Castro Cuba.”

While acknowledging the ineffectiveness of the state-dominated economic system, Camila Piñeiro Harnecker pointed out that the system still had some merits in the areas of social cohesion and safety nets, healthcare, and education. The scholar continued by calling into question the neoliberal ideals proposed by detractors of the current Cuban system and raising doubts over Cuban society’s willingness to dispense with the principle of equality. Turning towards growth, Delaurentis stated that there is more than one alternative to make the Cuban economy grow. Piñeiro Harnecker and Delaurentis agreed that coherent regulation and coordination between the different sectors of society are key factors to be considered in order to bring the Cuban system into the reality of the times. They summarized by referencing the continuity of the regime, which they agreed needs to change in order to survive.

The event concluded with a Q&A session that addressed concerns about the role of Diaz-Canel, the future of Cuba’s educational and health system, and the reasons behind the retrenchment that the island has recently experienced. Additional questions focused on the State of play in the currency system and the prospective impacts that the private sector might have in the process of currency unification.

Press coverage: 

Experts Debate Future of Cuba’s Private Sector, Diplomatic Pouch

WATCH THE FULL RECORDING OF THIS EVENT HERE