Cooperation on institutional reform
and social policies
Due to the effects of COVID19 and given the impossibility to travel, the Hamburg Seminar in 2020 was cancelled and it was decided to hold a webinar on February 10, 2021 entitled “Reforms in Cuba in times of pandemic: challenges in year 0 of the monetary reform” of the on the effects of the monetary unification in Cuba that became effective on January 1, 2021 and led to the disappearance of the Cuban convertible peso (CUC).
During the Webinar, available on the CIDOB YouTube Channel, the possible challenges and opportunities for cooperation posed by these reforms were discussed, to which was added the expansion of the activities allowed to self-employed workers to most of the 2,000 activities in the National Classifier of Economic Activities catalog, except for 124. These measures are taken in a context of great economic difficulties due to the effects of the Covid-19 pandemic, which has hit the tourism industry, and has previously paralyzed the country very harmed by the effect of the sanctions implemented by the Trump Administration.
In the session, moderated by Anna Ayuso, Senior Researcher of CIDOB (Barcelona Center for International Affairs, Spain), experts from the network participated, exposing the challenges and possibilities of this reform, and the specific aspects of the effect of the reforms in areas such as agri-food policy, pension reform or economic stability. Raynier Pellón, researcher at CIPI (Center for International Policy Research, Cuba), analyzed the political and economic context, and emphasized the need to diversify Cuba's international relations, expanding spaces to attract investment, in which he mentioned the European Union (EU) as one of the main actors to finance the reforms.
Bert Hoffmann, from the GIGA (German Institute of Global and Area Studies, Germany) referred to the serious epidemiological context that the island is experiencing in this second year of the Pandemic, with the tourism sector being one of the sectors most affected by the health crisis. The researcher highlighted some of the most important aspects of the monetary reform. Among them, there are the need to contain the effects of inflation, to restore the salary value (one of the main causes of inequalities in Cuba), the autonomy that companies will have for wage issues, and the protective role of the State to maintain the cohesion of Cuban society.
Marie Laure Geoffray from Iris/EHESS (Université Paris III Sorbonne Nouvelle, France) analyzed the uncertainties about the relations between Cuba and the United States (USA) with the new Biden administration. According to her, Cuba will not be a priority in the USA’s agenda, due to other greater challenges that this country is facing, such as the pandemic, and it will continue to be marked by the heritage of the Trump administration. Indeed, this administration ranked the island on the list of states that support terrorism, put restrictions on travel between Cuba and the USA, to which is added the radicalization of Cuban-American political elites, with new generations positioning themselves to the right. In addition, she mentioned the possibility of a Cuba mediation in the Venezuelan crisis in exchange for energy supply.
José Antonio Alonso, from the UCM (Complutense de Madrid, Spain) also pointed out the inflation as one of the main challenges of monetary unification, which is related to the shortage of basic goods. Regarding the reason why these reforms were taken amid the COVID19 health crisis, he argued that there was no other option because it was an immediate need. He suggested that the Cuban government should achieve margins of action through international financing, resorting to international organizations that would allow it to compensate the impacts of the reform over the years, and that also includes the EU.
The second part of the Webinar was focused on different comments, starting with Elisa Botella (University of Salamanca, Spain) who focused on the agricultural development of the island and the reforms that can help to promote national production to mitigate shortages, and dependence on imports of products from abroad. Blandine Destremau (Université Paris III Sorbonne Nouvelle, France), addressed the problem of the loss of the real value of wages after monetary unification. This is especially serious in the case of the pensions received by 20% of the Cuban population. The devaluation of the pensions creates more dependence on their family members, as well as a reduction in gratuities and subsidies. Moreover, Katarzyna Dembicz (University of Warsaw, Poland) compared the reforms with those that occurred in Eastern European countries, such as Poland. She pointed out that there is the possibility that the private sector will increase the purchasing power of a part of the population, but also, social disparities will increase, although the pandemic could slow that trend.
Referring to the new Biden-Harris administration, Susanne Gratius (Universidad Autónoma de Madrid, Spain) explained that, among the reasons why these measures have now been taken, there are: the internal pressure, the crisis of legitimacy, the crisis in Venezuela and the pandemic. Nevertheless, the implementation of these measures, could also be interpreted as a signal to the USA to favor a negotiation that improves relations. Francisco Sánchez (University of Salamanca, Spain) wondered if the reforms should be interpreted as a symptom of the weakness of the Cuban government, which is forced to act by pressure from different actors, or if, on the contrary, it is an expression of strength of the current leaders who have managed to contain the most reticent sectors. If it is a sign of strength, no changes will be seen within the internal political structure. However, economic liberalization and the loss of control of part of the resources by the government can lead to a weakening of the centralized power structure and provoke internal political changes in Cuba. Laurence Whitehead from GIGA (Germany) referred to the fact that monetary unification can create incentives in favor of domestic production to substitute food imports, but it should release the energy and creativity of farm workers. Regarding the relations with the USA, he believes that they will be affected by the changes in the control of Congress and the Senate that could take place in the near future. Therefore, Cuba should diversify its relations and seek international support from other actors such as the EU.
In the conclusions it was highlighted that the Cuban government should try to preserve the social cohesion, although, at the present time, the margins of the authorities are limited, as prove the problem of access to products. Moreover, it was pointed out that, although these reforms will have long-term benefits, the costs are immediate and the discontent of the Cuban population can grow and create tensions. However, for the moment it doesn’t seem that the power structures are losing control over the fundamental means of production, and in view of the prospect of a post-pandemic recovery and an improvement in relations with the USA, a hopeful horizon opens up.
Documents of the project:
Working papers on economic reforms and sustainable development
Working papers on institutional and social policies.
José Antonio Alonso (coord.) “Cooperación entre la UE y Cuba para las reformas económicas y productivas. Desafíos de la reforma económica en Cuba” 30-10-2020Call for Papers / Conference Participation