Cuban Gov. Announces the End of Several Prohibitions
While clinging to the “Socialist Project”
The list of measures includes eliminating price controls, the ration book, the State’s monopoly over foreign trade, and its monopoly on hiring personnel for foreign companies.
HAVANA TIMES — While it remains to be seen when and how these measures will be implemented, the Cuban regime has finally put forward proposals for real change. In a lengthy speech before the Central Committee of the Communist Party of Cuba, Miguel Diaz-Canel outlined on Wednesday several initiatives that break with previously untouchable dogmas, beginning with the end of generalized price controls.
“We are going to correct a policy that did not produce the expected results,” the president explained to an audience that readily approved everything presented. “In practice, price caps failed to contain inflation. They often led to product shortages, diversion into illegal markets, higher prices, lower tax revenues, and an impossible race between real prices and administrative decisions that always arrived too late.”
The plan contains 23 strategic areas and 176 proposals, many of them already known, as this newspaper had previously reported, but also others that, if implemented as announced, would contradict longstanding ideological orthodoxy.
One of the most significant measures is allowing direct foreign investment in private businesses. Since 2013—when it was first permitted—such investment had been restricted to the State sector. Now, Diaz-Canel said, it will be facilitated “with clear rules regarding ownership, repatriation [of their own funds], reinvestment, and dispute resolution.” This is no small matter, considering that just over a year ago foreign companies panicked when they were prohibited from repatriating foreign currency.
These investors also finally heard some of their longstanding demands acknowledged. One is the ability to hire personnel directly rather than through State employment agencies, which until now kept a large percentage of the salaries paid in foreign currency while passing on only a small portion in local currency to workers. Diplomatic sources told 14ymedio as far back as ten years ago that this issue hindered many business ventures because it “limited investors’ ability to directly select qualified personnel.” In addition, Díaz-Canel guaranteed that foreigners will no longer be told where to invest according to the government’s business portfolio but will instead be free to pursue their own initiatives.
Less novel is the renewed invitation to Cuban Americans to invest in the Island. For years they have been encouraged to put money into Cuba, and now they will likely divide between those who see an opportunity and those unwilling to participate in a project ultimately aimed at “preserving the Revolution,” as Prime Minister Manuel Marrero stated in a speech that offered little else of substance.
The real substance came from Díaz-Canel’s address, which outlined several other genuine reforms, though in less detail. Among them was the possibility of swapping debt for assets. Using carefully chosen language, he suggested that properties—such as hotels, mines, or other assets—could be transferred to satisfy debts that the government is unable to pay. However, he emphasized that this would occur “without permanently alienating ownership,” implying that the assets could eventually be recovered once the debt is settled. This qualification is ideologically significant, since doing otherwise could be viewed as a betrayal of Communist Party principles.
Another change, already announced by Díaz-Canel last Friday, is a review of the list of activities prohibited to the private sector. It remains to be seen how this will be implemented, but the principal promise is to “comprehensively review the list … with a clear principle: whenever possible, replace prohibition with responsible regulation.”
The government also plans to expand the permitted activities of small and medium-sized private businesses, reduce bureaucratic burdens, and make electronic invoicing, digital payments, and interoperable public registries mandatory “to combat tax evasion and corruption.” However, as Díaz-Canel did not mention, such measures will be difficult to implement while internet connectivity and electricity remain in their current state.
He also addressed the energy sector, though with fewer new developments. Foreign companies supplying solar panels, batteries, and inverters will be allowed to enter the market directly, and additional taxes related to the sale, installation, and maintenance of these technologies will be eliminated. Solar energy facilities will also be expanded, with the government promising to encourage foreign, cooperative, and private investment alongside State participation through mechanisms not yet disclosed.
Expedited licenses will be granted to transport operators and taxi drivers using electric vehicles, and tax exemptions will be offered for parts used in collective pubic transportation vehicles powered by photovoltaic energy.
Raul Castro gives his approval
The president renewed Raúl Castro’s long-standing promise—Castro reportedly watched the meeting by videoconference and sent a message of approval through intermediaries—to eliminate generalized subsidies distributed through the ration book system and replace them with “direct assistance to vulnerable individuals.” In addition, the private sector will be required to “sponsor soup kitchens and nursing homes,” effectively transferring some social responsibilities away from the State.
This measure represents a major shift in philosophy and would constitute a genuine break with past policy if it is ever implemented. However, its arrival has been awaited since Raul Castro first proposed it in 2008.
Díaz-Canel also listed several additional measures, including one of major significance: ending the State monopoly over exports. Others, already anticipated, concern land ownership and the promotion of agricultural production, as outlined in legislation expected to be approved in July. Additional plans include reducing the number of ministries, promoting municipal autonomy, and establishing a Community Youth Network focused on training, networking, improving neighborhood relations, and supporting community organizations.
The speech was heavily infused with political messaging. Díaz-Canel detailed what he described as hostile US policies but also acknowledged:
“There are obstacles that do not come from abroad or from the blockade. There is slowness, bureaucracy, regulations that hinder those who want to produce, and decisions we have postponed. What depends on us, we must change ourselves, and we must change it now.”
Without departing from his message of resisting pressure from Washington, the president declared that the Cuban people would not be called upon merely “to resist”. Noting, “ We are going to be called upon to create. To produce. To decide. To oversee. To prosper and to transform.”
At the same time, he defended the legacy of Fidel Castro and made it very clear that all of these changes are being undertaken for the purpose of defending the Revolution.
First published in Spanish by 14ymedio and translated and posted in English by Havana Times.