HAVANA — November 2016 will be long remembered by Cubans. It will probably go into history as a period of major shock and emotion. The nine days of national mourning declared after the death of the leader of the Cuban Revolution, Fidel Castro, have just ended.
Earlier, other events had occurred, the most remarkable being the election of Donald Trump as president of the United States. It seems that we Cubans are destined to live through extraordinary events with considerable regularity.
On the domestic scene, the pace of reforms has slowed down. It’s hard to recall a major initiative in the past 12 months. In some sectors, such as agriculture, one could argue that movement has been backwards. The increase in prices (a legitimate concern) resulted in a return to the same formulas that didn’t work in the past and led to undertake the transformations in that sector as early as 2007.
It is most regrettable that the response was essentially administrative, whereas the affair is one of a basic economy.
After almost seven years of reforms, tangible economic results are few. The dynamics of the GNP did not improve, and neither did the essential bases of accumulation, or the vulnerability of international insertion.
The disastrous performance of exports has had major repercussions. There was no consensus — much less implementation — about structural measures to unfetter the productive system.
We are puzzled by the low ability to implement initiatives with an indisputable transformational potential, such as the attraction of foreign investment.
The documents approved during the Party Congress and later discussed in various sectors of the Cuban society will have to be blessed by the National Assembly and turned into policies of state — the most difficult part. Practical aspects need to be resolved in the National Development Plan, with a view toward 2030, such as the establishment of quantitative goals.
The current economic outlook and the reform’s own weaknesses imply that the very ambitious development objectives outlined by the reform seem distant today. To this should be added the political challenge implied by the succession of Raúl Castro as head of the Cuban government in 2018. As if this weren’t enough, the foreign environment has become a lot more complex.
The political landscape in Latin America has changed remarkably. Countries with great weight in the continent, such as Brazil and Argentina, now have right-wing governments. That’s the case in Brazil, following the ouster of former President Dilma Rousseff. Impeachment also looms as the most likely option in Chile and Mexico.
In Ecuador and Bolivia, two countries that are politically very close to Cuba, two presidents with a broad popular base will not continue to lead the government for different reasons. It is still too early to guarantee that their respective parties will have a secure permanence in the Executive Branch.
With regard to Venezuela, the political situation remains explosive and the current dialogue has not brought more stability. Some days ago, the country was removed from membership in Mercosur, pending new decisions on its definitive status. Not even the political sign of the government that will emerge from the next presidential elections can be defined at this moment.
As if that weren’t enough, economic problems also beset the region. We can point out that the performance shows great variations between different states and subregions, but the slowdown in economic activity is appreciable.
A combination of the effects of the international economic crisis, the pervasive uncertainty after events such as Brexit and Trump’s election, the poor public management in some economies of the continent, and the upholding of a model of growth based on the exportation of raw materials have negatively affected the chances of short-term progress.
Three major economies — Brazil, Argentina and Venezuela — have contracted for at least two consecutive years (the Venezuelan decline could reach four years). The future is dark for Mexico, which already is suffering the worst devaluation of the peso in decades. Almost all of these countries are important commercial partners for Cuba. Venezuela and Brazil have signed long-term commercial and cooperation accords involving the most important sector of Cuban exports — medical services.
The effects on the Cuban economy could be substantial. The emergency of governments with a different political sign does not presuppose a belligerent attitude by them toward Cuba on the international stage, but it does foretell reduced activism in favor of Cuba and makes it less likely that advances will be made in preferential economic agreements. All the more so, when this happens amid a complicated domestic agenda for those governments.
The problems besetting several of our key partners will necessarily weaken the economic benefits of cooperation, as is already visible in the case of Venezuela.
Likewise, the world’s economy is definitely not in its best moment. The hangover from the 2008 crisis continues to affect the performance of a great number of countries, both underdeveloped and advanced. The slowdown in the Chinese economy and the generalized economic weakness have impacted negatively on world trade, once the preferred source of expansion for the underdeveloped world.
Latin American exports have been declining for three years and the forecast is that, during some periods, trade will expand at rates lower than the growth of the global GNP. To make things worse, not knowing what practical measures the incoming U.S. administration will take, Donald Trump’s rise to the presidency of the United States means that, for the first time in decades, the leader of a great power speaks out openly against globalization.
At least three major multilateral initiatives for the facilitation of trade are in great danger, at least in their current format: The North American Free Trade Agreement (NAFTA), the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).
This would increase the decline in trade, which is bad news for small developing countries with open economies that depend on international trade and finance — such as Cuba.
In the case of Europe, the European Union (EU) project is going through one of its worst periods. Several government must concentrate on controlling anti-European trends at home, amid a continuing economic weakness, a migratory crisis and Yihadist activism.
This presupposes a reduced relative priority for issues on the international agenda with scant practical relevance. As a positive note, the EU has just lifted its Common Position on Cuba with the signing of a Cooperation Agreement.
The most relevant developments for Cuba come again from its Neighbor to the North. The victory of the Republican presidential candidate surprised and worried many on the island and outside. After the initial surprise, some worrisome signals have been noticed. The selection of hard-line Cuban-Americans to the presidential transition team, along with some messages on Twitter, rang alarms in broad segments in Cuba and the U.S. that see with concern the return of a Cold War rhetoric and an imminent danger to the accomplishments made in the past two years.
The damage could be felt in sectors such as tourism or remittances. And it would also confirm the warnings of groups reluctant to U.S.-Cuba rapprochement in the sense that the U.S. is not a trustworthy partner. Washington would again turn its back on Cuba, precisely when the island needs more integration and relations with the world, so as to lay down the foundation for the new Cuban model.
Because of this, the present stage requires more concentration than ever before. The challenges are huge and the future looms like an uphill struggle. The development efforts will have to be greater and more effective from now on.
Fidel’s physical disappearance should not be a pretext for us to cling to stale formulas that have proved to be ineffective. On the contrary, there has been a renewed call to “change everything that needs to be changed,” even though — incredibly — that translates to many as continuing to do the same or, worse, doing nothing.
Ricardo Torres is a professor of economics and Cuban economy with the Center for the Study of the Cuban Economy at the University of Havana.