Mesa-Lago: 2 years to break the Cuba-U.S. impasse

By Gerardo Arreola

From the Mexican newspaper La Jornada

HAVANA – What if Sarah Palin wins? Carmelo Mesa-Lago, a world authority in social security and an expert in Cuba’s economy, asks the question to illustrate in an instant the possible triumph of the radical right in the United States in 2012 and conclude that the administrations of Barack Obama and Raúl Castro have “a window of opportunity of less than two years to solve the impasse” between the two countries.

His advice is heeded by the United Nations; he is sought by governments and universities. In Cuba in 1959, he worked on the Revolution’s first pension plan. He emigrated to the U.S. two years later, but already in 1967 Mesa-Lago had come out against the economic blockade against the island. Later, he promoted economic exchange between the two nations.

He had not come to Cuba in 20 years. During that time, he tried twice but Havana denied him a visa. Now he participates in the Tenth Catholic Social Week, even knowing that he will be criticized by anti-Castro émigrés, same as they censured him when he came in 1978 for the dialogue between diaspora and government.

“I would accept that cost again, knowing the results of that dialogue,” the liberation of 3,600 imprisoned opponents,” says this prolific author, “a mad collector of statistics,” a tireless worker at age 76, and professor emeritus at the University of Pittsburgh. “I hope that my decision to come here is useful, that it contributes to accelerate this process of mediation begun by the Church, which so far has had positive results.”

Deeper reforms

Mesa-Lago thinks that both in the U.S. and Cuba “there are sectors that would like the confrontation to continue, because that way they can continue the way they are. What I say is tough but true. We need to break this vicious circle of stagnation.” He believes that the economic reforms launched by Raúl Castro are positive but “should be deepened and accelerated” and stresses that his opinion enjoys “a high level of consensus with the economists” on the island.

Arreola: The Cuban economy had been on the decline two years ago, when the hurricanes, the world crisis and the lack of liquidity occurred in 2008. How do you see the situation today?

Mesa-Lago: A Cuban economist, Pavel Vidal, had predicted before the crisis that a slowdown was coming. I believe there is a systemic problem, and it was acknowledged by Raúl Castro in his famous phrase about the need for structural reforms [in July 2007].

Later came the most profound, intense and all-encompassing debate that ever took place under the Revolution. It cannot be compared with the debate of the 1960s or the 1990s. It discussed how certain elements of capitalist property could be accepted by a Marxist. There was a great expectation that this might happen, because the system has not worked.

Despite climate problems, an agricultural country cannot import 80 percent of its food at a cost of US$1.5 billion. The deficit in the balance of goods has been compensated by services, basically by the money paid by Venezuela for Cuban professionals. Then comes the preferential price of [Venezuelan] oil and direct investment. All that is difficult to estimate, but I believe it amounts to about US$8 billion.

That creates a dangerous dependency that is acknowledged here, although the government has tried to diversify. What’s needed is to decentralize, to create more forms of property. The distribution of land in usufruct is positive but insufficient, with many limitations and uncertainties. If open-ended contracts are made – as was done in China and Vietnam – Cuba will be self-sufficient in food within three years.

Arreola: How about the experiences of making service cooperatives, delivering milk directly to the retailer, suburban farming?

Mesa-Lago: I consider that to be very positive, but it’s being done through an eye dropper, while the magnitude of the crisis is huge. One wonders why it’s not done faster. One explanation is that the hurricanes and the world crisis made the situation more difficult. I respect that opinion, of course, but I don’t share it, because, in the history of Cuba under socialism, whenever a crisis has occurred a reform has followed.

When the cane harvest failed in 1970, central planning had been abandoned. The emphasis was on moral incentives, the leveling of salaries, and all that changed in the following years. When the socialist world disappeared, came the legalization of the dollar, tourism, farmers’ markets were reopened and some decentralization occurred.

I have a statistical study that shows that whenever reforms were instituted (I call them “pragmatic cycles”) growth has followed. Whenever ideology has predominated, production has fallen. Those cycles of growth correspond to the 1970s and the second half of the 1980s.

In 1986, the year of the “rectification of errors and negative tendencies,” production fell. The reform of the 1990s pulled the economy out of the disaster in which it had fallen. In 2004, a recentralization began, which I think may have influenced the slowdown.

Arreola: What strengths do you see in the Cuban economy?

Mesa-Lago: The people. There is official recognition that education has notably deteriorated, a relatively recent decay, but in spite of that there is an extremely valuable human capital. The problem is that this human capital is wasted, because a doctor finds himself driving a taxi or waiting tables at a hotel or wants to move abroad. Incentive is the key.

Arreola: In any case, “the United States factor” needs to be considered. Do you think that Obama can do more to improve relations with Cuba?

Mesa-Lago: Obama has urgencies and priorities. Cuba interests him, but there are other issues with even more pressure. He has to face a polarized Congress and the Helms-Burton Act ties down his hands. Raúl said something very positive: he was still willing to talk about everything. Afterward, things stagnated, although migration talks are continuing.

I don’t want to sound immodest, but I had said that Obama would do certain things and then fail to follow up, because he needs something to justify himself before Congress. I may be naive, but let’s imagine an optimistic scenario where the Church’s mediation is more fruitful and the prisoners who have been relocated in other jails are freed, and the process continues. That would extraordinarily help to energize things.

What’s needed is for everything to move. We don’t know what’s going to happen in the November elections [in the U.S.] and later in the presidential election, what with the rise of the Tea Party and all that fundamentalist hysteria.