Cuba – New Economic Model

September 19, 2010

By Padmini Arhant

The island nation is in the process of shifting towards an economic model to rescue the state from the employment burden across the public sector.

State’s overwhelming expansion in all areas of the economy is forcing the government to change course in an effort to salvage the sagging public enterprises into private industry.

The combined woes of political sanctions, global economic crisis and natural disasters have produced massive revenue losses for the socialist system struggling to maintain the infrastructure.

As a result, Cuba has reportedly decided to lay off 500,000 state employees by March 2011 and promoting the private entrepreneurial opportunities by issuing business licenses to its population in a limited measure.

Such economic strategy is a wise move for Cuba and could potentially ease the pressure off the government funded organizations that are becoming unaffordable.

The underground economy that managed the private businesses in the state controlled environment is apparently being considered for legal recognition.

Again the consideration is a positive step that would guarantee state revenue through taxes and necessary fees besides facilitating free flow of goods and services not only within the island but across Latin America.

In terms of public education, health care, subsidized food and housing – Cuba could adhere to universal public education and health care alongside private developments in these areas forging a competitive market with enhanced services focused on research and innovation attracting the higher income groups upon the private sector growth.

With respect to subsidized food and housing – the state could perhaps reduce the percentage to the optimum based on means test for families with little or no income to address poverty and let the remaining population assist the market economy.

That way there is tremendous access for small businesses in the food supply enabling the wholesale and the medium to large size corporations to emerge in the long term.

Activating the manufacturing side is equally important for it would absorb the massive workforce expected to be without jobs following the state retrenchment.

The private markets cannot surface overnight without the adequately funded and regulated financial sector which in turn might require IMF and World Bank monetary assistance to expedite the transition.

Initially the federal authorities could divert the savings from the half a million workforce wages to the community banks for private sector lending and earn interest on the borrowings, thereby converting the state liability to income.

Cuba with a much better supply demand prognosis has a greater ability to implement the changes and prepare the Federal Reserve along with the Treasury to monitor the hybrid economic activities.

The questions are raised on Cuba’s capacity to import the essential resources and technology for the proposed transformation by March 2011 and relevantly the state’s action plan on the immediate income surge from the private economy boosting middle and higher earnings categories in the society.

Importing necessary items could be made possible by approaching current trade partners and the industrialized nations like the United States, Germany… have unique advantage in being the supplier especially with the higher end equipment and machinery contributing to the overall benefits in creating and retaining manufacturing jobs in their respective domain.

Obviously ending the economic trade sanctions would serve the international purpose.

Adjusting to the inevitable income hierarchy post economic model could be effectively addressed through a progressive tax structure that protects the lower income and the middle class while the wealthier groups offered tax incentives for domestic investments preventing tax evasions.

Cuba would prosper through reconciliation with reality in accepting the private enterprises
role and build the national economy with a harmonious balance between the state and free market owned assets.

Except for the regular public services, health care and education under state management – the vast areas of the economy are best run by the private industry delivering the people with quality products and services at a market price.

Any concerns about the capitalism risk experienced in the developed economies is legitimate and could be avoided with appropriate regulations comprising checks and balances for smooth operation.

In other matter, Cuba released seven dissidents in July 2010 and vowed to free the 52 political prisoners recently. These actions are praiseworthy and promising in improving human rights record which is significant to win the trust and confidence among the majority in the international community disappointed with the state human rights violation.

President Barack Obama pledge to lift travel ban allowing Cuban Americans and others to travel to Cuba is an optimistic beginning in the U.S – Cuban relationship for the policy would revive the flat travel industry with many dependent livelihoods.

Cuba is gradually heading towards the direction desirable by not only its people but also the global citizens. Similar initiatives in the political dimension would be highly beneficial now for Cuba considering the economic urgency and the trade sanctions posing obstacles for imports to mobilize privatization.

Nevertheless, it’s a refreshing start and there is hope for the Caribbean nation to make progress in every aspect.

As long as there is political determination to evolve and embrace the new possibilities then sky is the limit.

Best Wishes to the wonderful Cuban population for a bright future.

Thank you.

Padmini Arhant

Republic of Cuba in the Twenty First Century

July 23, 2010

By Padmini Arhant

The Caribbean nation has been through many political and social challenges in the past three centuries. Beginning with colonization leading to revolutions, military coups and the unfortunate communist rule prevalent until today, the 11 million Cuban population continues to suffer in silence without any hope on the horizon.

From the Cuban revolution, Bay of Pigs invasion to Cuban Missile crisis and Guantanamo bay, Cuba has remained a significant Latin American nation.

With the political system modeled after the former Soviet Union and China the three nations’ paradoxical images in the new millennium are striking.

China as a Communist nation is regarded the emerging economic power with extraordinary privileges prominently – permanent membership at the U.N. Security Council, ‘Most Favored Nation’ status renewed regardless of the Republican or Democratic administrations at the White House. China is also a WTO, G-20 and ASEAN member.

Russia shares equivalent position with China among the international community and currently has the United States endorsement for WTO membership at the Toronto G-20 meeting held in June 2010.

Cuba, on the other hand is isolated with various sanctions particularly the economic embargo crippling the island nation in the Western Hemisphere.

Under the previous U.S. administration, there were restrictions on foreign remittances and travel by the Cuban expatriates. However, President Barack Obama reversed it in 2009 along with the resolution adopted in June last year to end the exclusion of Cuba from OAS (Organization of American States). Cuban leaders apparently expressed their lack of enthusiasm in the OAS readmission.

Cuba’s isolation is attributed to the appalling human rights abuse from the international standpoint and nationally the political oppression combined with the state controlled failed economic policies having a drastic impact on the once prosperous middle class in the society are the reasons considered for the Cuban exodus.

The parallels and the ironies between Cuba and other nations in this context are noteworthy.

Haiti – Another Caribbean nation and Cuba’s neighbor on the east was systematically deprived of self-sustenance and economic success during the currently exiled democratically elected President Jean Bertrand Aristide due to the U.S. imposition on Haiti to allow imported crops over the national rice production and other consumer goods resulting in Haiti’s status quo.

Whereas Cuba as a Communist authority holds direct control over two-thirds of the economy with the private sector functioning under federal governance on capital investments approval to hiring policy and wage distribution.

With the exception of public education and universal health care, the state’s macro management of the economy proved to be inefficient on various accounts such as food rationing and inadequate housing for the growing urban population.

Cuba is reported to have found large oil reserves through the environmentally devastating “oil exploration” in North Cuba Basin.

It’s time for nations to realize that the planet sustenance is dependent upon the clean renewable energy resources viz. solar, wind, bio-fuel, hydrothermal projects. Pursuing other sources despite the catastrophic damages to the economy and the environment is denying reality.

On Cuba’s foreign relations – Strong ties with China and Venezuela in the aftermath of the Soviet Union collapse seemingly eased the economic sanctions impact.

National health care in Cuba guarantee free medical aid to all in the rural and urban areas.

Therefore, the infant mortality rate and maternal care are either comparable or better than some developed countries.

The trade embargo affecting the core services like the health care facilities is reportedly deficient in latest medical equipments, drugs and essential supplies undermining the expected standards.

Mandatory education at the basic and higher levels including vocational training appears to be beneficial for Cuba with the highest per capita medical personnel available to serve within and outside the country.

Notably, Cuba is acknowledged for the medical professional help in the disaster relief programs – witnessed recently to Haiti earthquake victims.

Human rights violation is not uncommon in any form of government. If not towards the majority, it is often directed against the minority or the ethnic groups in a society.

Arguably, the repressive governments’ conspicuous abuse of power against their nationals is well known.

Cuba is believed to rank only second to the People’s Republic of China in the imprisonment of journalists voicing their concern against government agenda.

Per – Thank you.

“The Cuban government has been accused of numerous human rights abuses including torture, arbitrary imprisonment, unfair trials, and extrajudicial executions (a.k.a. “El Paredón”).

The Human Rights Watch alleges that the government “represses nearly all forms of political dissent” and that “Cubans are systematically denied basic rights to free expression, association, assembly, privacy, movement, and due process of law”.

Cuba was the second biggest prison in the world for journalists in 2008, second only to the People’s Republic of China, according to the Committee to Protect Journalists (CPJ), an international NGO.

As a result of computer ownership bans, computer ownership rates are among the world’s lowest.

Right to use Internet is granted only to selected people and these selected people are monitored.

Connecting to the Internet illegally can lead to a five-year prison sentence.

Cuban dissidents face arrests and imprisonment.

In the 1990s, Human Rights reported that Cuba’s extensive prison system, one of the largest in Latin America, consists of some 40 maximum-security prisons, 30 minimum-security prisons, and over 200 work camps.

According to Human Rights Watch, political prisoners, along with the rest of Cuba’s prison population, are confined to jails with substandard and unhealthy conditions.

Citizens cannot leave or return to Cuba without first obtaining official permission.”

Upon viewing the economic and political conditions in Cuba, it’s clear that the real beneficiaries in the economies under authoritarian rule and the democracies run by Corporations are not the average citizens, instead the ‘selective-powerful’ focused on self-interest rather than national interest.

Yet another irony is the statehood declaration as the “Republic” –

Whether it’s Republic of Cuba, Republic of North Korea, Islamic Republic of Iran, or People’s Republic of China and those not truly representative of the republic in the electoral and legislative process confirm the connotation.

A nation’s progress is measured by the political freedom, economic opportunities and social equality.

All are born to be free and economic prosperity in the absence of freedom is life without a purpose.

In the twenty first century, the people of Cuba and others facing persecution for their freedom quest deserve international support.

Liberty especially the freedom of expression is the inalienable human right.

Leadership is honorable when committed to celebrating life and not suppressing it.

Democracy is imminent with a bright future for the people of Cuba.

Thank you.

Padmini Arhant

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December 5, 2008

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