Cuba faces its future between political continuity and the inevitable economic reforms

Cuba faces its future between political continuity and the inevitable economic reforms

  • The IV Congress of the Communist Party confirmed the resignation of Fidel Castro as first secretary, but reaffirmed the old guard.
  • The influence of the Cuban ex-leader is still strong.
  • The population, between expectant and suspicious before a timid economic opening that tries to keep afloat socialism.
  • How the island has changed in five years and what awaits you in the next five.

An old woman walks through the Plaza de la Revolución in Havana, on the eve of the 50th anniversary of the victory of Playa Girón and the start of the VI Congress of the Communist Party of Cuba. Alejandro Ernesto / Efe

For now, nothing of revolution. The only revolution will continue to be the one that has always been. Cuba will face the next five years immersed in political continuity, at least as long as it holds the (increasingly) old guard.

Fidel Castro has stopped being the head of the Party, but he is still there. And Raul, his brother and current president of the country, thinks to stay in his line: There will be reforms, yes, but only economic ones. A matter of mere survival and trying to save as much as possible the socialist system through a timid market economy to the Cuban, a kind of low profile pseudocapitalism . To this end, a new term has been invented, the “cuentapropismo”, or, what is the same, the possibility of working on its own. The expression “private initiative” remains, for now, in the realm of taboo.

This Tuesday, in celebration of the 50th anniversary of the historic victory against the United States in the Bay of Pigs (Playa Girón), concluded the VI Congress of the ruling (and only) Communist Party of Cuba, an event in which, perhaps naively, The critics of the regime had placed some hopes of change. In the end, however, few surprises. As expected, Raúl Castro (79 years old) was elected to replace his brother Fidel as first secretary of the party, the only one who had held the post since its foundation in 1965 until now.


Fidel’s shadow continues to have an inhibiting effect on those who now take the reins of the island At 84 years old, Fidel, who attended the Congress wearing his traditional tracksuit jacket, among the equally traditional ovations of the delegates, moves away little by little from public life, but the shadow of the commander is still projected strongly.

Although he left power in 2006, his mere presence, his legacy and, especially, the opinions that he still pours from time to time in interviews and, regularly, through his articles in the newspaper Granma, still represent a real effect inhibitor for those who now carry the political reins of the island.

As a first and fundamental sign of continuity, the maintenance of the aforementioned old guard: The appointment of the first vice president, José Ramón Machado Ventura (80 years old and hardline communist), as number two, thwarted the recommendation he had made previously Raul Castro himself to limit the time of the people in the positions to “rejuvenate” the leadership of the party, and questioned his criticism of the inability to achieve a generational replacement after half a century in power.

The new Political Bureau, of 15 members, includes six generals of the lifetime and several members who are around 70 years. More than 60% of the apparatus is composed of general or historical, something that does not satisfy Raúl, for whom everything is due to the “errors” committed by the Communist Party and its failure to form young cadres “properly prepared.”

More than 300 economic reforms

Another thing, however, was economics. After all, that was the true objective of the Congress, taking into account that the political changes were little less than discarded.

The Congress, which lasted four days and gathered about 1,000 delegates, wanted to convey to the population the message that the Party has taken seriously the need to seek solutions to the deep crisis suffered by the island and, although not has dared to embrace, far from it, ‘capitalism’ in the Chinese way (total economic opening with a political lock), it has approved more than 300 reforms aimed at modernizing the stagnant economy of the country.

The measures, however, could not wait too long either: Cuba, very dependent on short-term loans to finance its imports of food and fuel, with great difficulties to obtain credit and with a debt of close to 11,000 million dollars, It has recovered from the disastrous last year, which was hit hard by the international financial crisis, the US embargo, the aftermath of the 2008 hurricanes, the fall in nickel prices in 2009 – its main export product – and the decrease in income from tourism.

In this sense, Raul Castro, who since he came to power in 2008 has insisted on the need to gradually transform the economic model, said his government will try to “improve the lives of Cubans” and criticized the “excess of paternalism that has reigned for half a century “.

Bobbin lace between socialism and the market

The approved reforms include the end of the ration card, the gradual reduction of more than one million state jobs (the cut of some 500,000 is already underway, the largest adjustment of officials in 50 years), the expansion of the private sector, the increase in foreign investment and the granting of greater autonomy to nearly 3,700 state-owned companies that have been inefficient for decades. The expansion of bank loans is also planned to boost the private and cooperative sector.

The reforms include the gradual reduction of more than one million state jobs. It will not be easy. On the one hand, the government will have to find what appears to be a complicated balance between pure and simple socialism and economic openness (Congress gave the green light to decentralization, but at the same time remained firm in not abandoning the path of state planning) . On the other hand, some measures, such as cutting food subsidies, which Castro considered an “unbearable burden” for the economy, have been received with concern by many Cubans, who have been forced to subsist for years with very low wages.

Perhaps for that reason, the president stressed that things will be done “without haste but without pause”. The emblematic free health and education services will be maintained, and the subsidies, he said, will be withdrawn to the products, but not to the people. To clear up any doubts, Castro made it clear that he assumes his new role as first secretary of the party “with the commitment to defend socialism and never allow the return of the capitalist regime.”

It is, in short, what the Cuban communists have dubbed the “updating of socialism”, a path that aims to progressively generalize concepts such as taxes, microcredits, hiring between individuals (in a historical measure, the Cubans will be able to sell cars and houses among them), or the already famous “cuentapropismo”, that is, the possibility of working on their own.


The new regulations on “self-employment” were published a few months ago and, since then, little is said about anything else on the island. The document in question contains the list of the 178 activities in which you can work on your own, and details that 83 of them will even allow the hiring of employees . All a novelty that has awakened as much expectation as misgivings. People are concerned, above all, about the taxes that are coming: A special tax plan will apply to “self-employed workers”, to whom, among other things, a “personal income tax” will apply, ranging from 25% to 50%, depending on the annual rent.

With these measures, the Government expects 250,000 Cubans to join their self-employment or “self-employment”, an activity that at the end of 2009 already employed some 144,000 inhabitants of the island. And with this increase in private economic activity, the Cuban State expects to increase its tax revenues this year by 1,000 million dollars, always according to official data.

Many, yes, they will have to learn the trade, in a Cuba in which lawyers and engineers abound, but technicians and manual workers are lacking.

Towards a new Cuba?

Five years ago, Cubans could not afford to stay in hotels, buy appliances for private use, own a personal computer or even have a mobile phone. Today they can do all that and, in addition, the private initiative has been gaining more and more margin and is underway an unprecedented distribution among the peasants of the idle lands of the State.

In addition, the US blockade , which remains a serious obstacle to the economic development of the island, has softened a bit, and, depending on the political changes that may come in the future, could be lightened further. In 2009, the newly inaugurated government lifted the existing restrictions so that US citizens with relatives in Cuba traveled freely to the island and sent them money or gifts, and allowed the US telephone companies and the media operate in the Cuban market and provide network coverage to the island.

They are small changes, but they are happening, and the reforms approved now, that the opposition to the regime and many economic analysts have described as mere patches, could, nevertheless, open political doors in the medium or long term that the Cuban Government may not have known to calculate.

The challenges, starting with respect for human rights and following an evolution from current totalitarianism towards a democracy that can integrate the achievements of the revolution, are many, but at the same time, the generational change necessary to face them is inevitably , closer and closer.

What if Bankia is not helped?

What if Bankia is not helped?

  • The experts agree that, if it were really necessary, Bankia would have to be rescued, since bankruptcy of the entity would have worse consequences.
  • In the worst case, that of bankruptcy, savers would only recover up to 100,000 euros from their deposits, on account of the bank guarantee fund.
  • Bankia will receive an injection of public money (up to 10,000 million).

One of the emblematic buildings of Bankia. GTRES

The Spanish Government and the Bank of Spain finalize a plan to clean up Bankia’s accounts by injecting public funds. For this, the entity could receive public money, in an amount of between 7,000 and 10,000 million euros , on account of the Fund for Orderly Bank Restructuring (FROB), a body dependent on the Bank of Spain.

After knowing this news a good part of the citizenship was outraged by the fact that it is again public money that is used to “help” a financial institution . More, when the previous day it was learned that Bankia intended to propose to the general meeting of shareholders the distribution of a dividend of 152 million euros charged to the results of the year 2011, which showed an attributable profit of 304 million euros. So, why do we have to rescue Bankia? And if you do not inject money, what happens?

In the first place, it is worth asking how this situation has been reached. For Javier Morillas, professor of Applied Economics at the University of San Pablo-CEU, is a problem that comes from far: “There is a root wrong and is that they have not let fail other small banks , because if that had been done, there would be served as an example and illustration for the behavior of the managers of other boxes “.


It is a very popular box and its fall could create panic And is that much of the controversy produced by the alleged rescue comes from the bad image that citizens have of banking. “We have seen how embarrassingly they have been continuing (bank managers) with salaries outside the market and little in accordance with the situation of their entities, with agreed outputs , etc,” says the professor.

Regarding whether Bankia needs to be cleaned up, the experts seem to agree that it would be necessary to prove that it is really necessary. “If you had acted before, you could have softened the problem,” says Morillas, but “now Bankia is one of the most important entities in Spain and its fall would be a very negative knock , not only in the country, but abroad” .

In that line, Luis Puch, professor of Economic Analysis at the Universidad Complutense, thinks. “In the short term, the collapse of an institution as important as Bankia has an impact on credit and how the financial life of huge people is managed, not only in Bankia, but in other entities, ” says Puch, who adds that “in any case time is gained, which is also fundamental”.

By reorganizing the entity would avoid “uncertainty for depositors (savers.) It is a very popular box and create a panic that could involve the movement of money to other branches.” But above all the negative would be the image that would be given in the banking sector and abroad, “says Morillas.

What if Bankia goes bankrupt?

What if Bankia goes bankrupt?

“That does not arise, in the sense in which people understand a bankruptcy, it is unthinkable,” says Luis Puch. “You have to juggle and if you have to lose money, you would have to make a ranking , the shareholders would lose a little, the taxpayers a little bit, the investors in enough assets and the small depositors in principle nothing,” the professor notes.

However, in the worst case, in the case of the final bankruptcy, depositors (savers or customers) who had more than 100,000 euros deposited in the entity would lose all the money they had above that amount and depositors less than 100,000 euros would be charged from the bank guarantee fund . In 2008, under the Government of the PSOE, rose from 20,000 euros to 100,000 euros per owner and entity that deposit guarantee.

The most affected would be the shareholders: “Those who have bought shares thinking that Bankia could be a business, would not have benefits,” says Javier Morillas.

It is not a matter of yes or no, it is a question of numbers Mortgages and loans are among the assets of an entity, so that if Bankia broke the Bank of Spain would intervene these loans , although “it is normal to go to auction and it is another entity that assumes them, but this is difficult in the current situation, “explains Morillas.

What is unclear is whether taxpayers earn anything by using public money to bail out an entity like Bankia. “If what is done is sensible, the state becomes a shareholder and in the medium term maybe that would have some use”, Puch ventures, recalling that “it is not a matter of yes or no, it is a question of numbers: how much money Can it be put? Is it worth putting it on? ” The professor believes that “someone will have to endure losses, we will see how many and if a part of that loss should be everyone’s money”.

Does the Government have control over the money that will be lent to Bankia to avoid situations of the past such as commissions for profits or millionaire compensation to the directors? The answer is hopeless. In Puch’s opinion, “any step in that direction makes sense, but the possibilities that the administration has to control those things are limited, it’s difficult to intervene in those things.” Of course, “contracts should be very clear, that there will be people who take the little money that remains,” sentence.