The 6th Congress of the Communist party of Cuba and efforts to update Cuban economic model

A corner of Havana capital, Cuba

The process of analysis, discussion and approval of the above guidelines was conducted in the context when Cuban economy was in extreme difficulty and complicated situations. It was subjected to the very negative impacts from the world economic crisis that began in 2008, especially from early 2009, because of the following reasons:

- The plummet of the price of nickel (from USD 21,100/ton to USD11,200 /ton, even on worst days, below USD 9,000 /ton); income from tourism decreased (due to the depreciation of the Euro and U.S. dollar).

- Decrease of foreign credits

- Decrease of world demand for non-essential exports (rum, cigars, etc.)

The year 2009 marked the start of Cuba’s payment for a wide range of due credits. This led to the very difficult and complicated financial situation in Cuba, forcing it to cut 30% of its imports and to introduce a series of economic measures and policies in order to cope with the negative impacts of the world complex economic situation.

The external negative effects have become exacerbated while Cuba’s economic situation is facing many problems, such as: low efficiency, reduced investments in production facilities and the infrastructure system, population growth leveling off and aging.

The internal weaknesses make it difficult for Cuba’s economy to ward itself off the external impacts, more clearly revealing its limitations in dealing with immediate issues such as the deficit balance of payments.

An overall analysis of such situations shows that what should be done promptly is to find a solution to the macroeconomic imbalances and economic in efficiency, for the economy to resume its development course. Following Raul Castro’s idea that “economic battle today, more than ever, is becoming a key task of the ideological work among our officials as the sustainable development and firm protection of our socio-political system depend on this battle“, the Communist Party of Cuba decided that its Sixth Congress would only focus on the building and adoption of social and economic guidelines and policies of the Party and the revolution.

Before being approved, the guidelines had been discussed extensively by the National Assembly members, as well as delegates and guests to the Congress. Over 8,900,000 people participated in this effort, showing Party’s capacity to conduct a serious and transparent dialogue with its people about any problems.

After the extensive discussions, 68% of the issues were amended, and revised, and the original draft with 291 points was adjusted up to 313 points, including two points added right at the Congress.

The above guidelines set out the following objectives:

- Introduce the concept of the process of updating the Cuban economic model under the leadership of the Communist Party of Cuba.

- They should be strategic and not temporary solutions to the current crisis.

- Reaffirm the irreversibility of socialism in Cuba, the only condition to ensure national sovereignty and promote the moral values ​​of socialism.

- Promote economic and social development on the basis of an efficient economy and emphasize the need for development of the productive forces, increase food and foodstuff production, and income for the country, especially in strategic economic sectors such as tourism and biotechnology, etc.

- Improve people’s living standards and protect the achievements of the revolution, on the basis of equality of opportunity rather than egalitarianism, while securing social policies and that no one is left asicle.

Updating the Cuban economic model

In the process of updating the economic model, that is defined in the guidelines of the 6th Congress of the Communist Party of Cuba, it is necessary for Cuba to highlight some of the following features:

- Cuba’s economic system will continue to be based on the principles of socialist people’s ownership over the major means of production, and the principle of socialist distribution: “from each, according to his capacity, and to each, according to his labors“.

- The revolution will not leave any Cuban people aside and will never apply “shock therapy” that goes against the interests of laborers.

- The State shall continue to ensure the health and education services free of charge for the entire population.

- The State will continue to promote physical education and sports as well as the protection and preservation of the cultural values, art, science and history of the nation.

- Labor is both the right and obligation of all citizens and will be paid according to its quantity and quality.

- Planning will still be given priority, but the development trend of the market shall be taken into account; the state will exert impact on the market while taking into account the specific characteristics of the market.

Major capital goods will still be owned by the entire people and socialist State - owne enterprises will still be the fundamental form of management in the national economy. In addition, the management model also acknowledges and promotes other forms of business such as foreign investment, cooperatives, individual farmers, tenants, employers, self-employed businesspeople and other forms.

The development of the non-state economic sector will make it easier for the building of socialism because, if so, the State will do not have to care about non-strategic economic activities for the country, and the sectors where the State cannot manage effectively and qualitatively as expected.

The non-state form of management does not allow centralized ownership for legal entities and individuals.

The clear definition of the role of state agencies and enterprises in the economy is also the definition of the functions of the State and those of the enterprises.

The implementation of the adopted measures should go along with a regulatory framework, which clearly defines the functions and authority of each level of leadership, at the same time it ensures thorough preparation of measures of intervention into the implementation of the adopted decisions.

The updating process will be implemented in a “not hasty and not slow“ manner; Its speed depends on Cuba’s capabilities so that the country will be able to gradually create conditions for the overall carrying out of this process under the motto “order, discipline and responsibility.”

- To translate the guideline of its 6th Congress into practice, the Party

decided to set up a Standing Committee for Implementation and Development headed by a Member of the Politburo and Deputy Chairman of the Council of Ministers; this Committee has the following main functions:

- Organize, guide and monitor the implementation of the above guidelines.

Organize and monitor the preparations of personnel and leadership apparatus and undertake the implementation of these guidelines.

Instruct each agency or unit in the process of checking that they must conduct for the measures to be implemented.

- Guide the communication in line with the progress of implementation.

The Committee shall be responsible for reporting twice to the Party Central Committee and the National Assembly on the progress of implementation at each Plenum and each National Assembly session.

The Committee will be composed of a number of working groups. In more than one year since its establishment, the Committee has carried out many important tasks, including developing of a strategic plan to implement the above guidelines in an appropriate and effective way following an overall progress chart as well as step-by-step process as well as inspecting and supervising the implementation.

It is impossible to make every detail plan to implement each of the 313 points of the guidelines, so the Committee decided to group the points into 55 objectives and 188 activities for the evaluation of the performance, in which the following objectives are highlighted:

- Introducing concepts of social and economic development model.

- Giving a long term socio-economic development program.

- Macroeconomic policies.  

- Completing the system of enterprises.

- Completing the trading system

- Completing the system of salaries, retirement bonus and retirement pensions.

- Gradually removing the absurd subsidies and too big subsidies.

- Perfecting the tax system.

- Perfecting the Law on Foreign Investment and Cooperation.

- Planning the State budget.

- Paying attention to the harmonious population growth.

- Updating the Labor Code.

- Perfecting the investment procedures.

- Science, technology and innovation.

- Perfecting the management of land.

- Perfecting the environment system.

The above objectives and activities were designed with the involvement of central administrative agencies of the State and many other agencies across the country based on the dominant idea approved by the Congress that the Committee will inspect, supervise and coordinate this process without bothering the functions of all those agencies.

The pilot implementation of the updated economic model in a number of places allows us to study and assess the results of the updating process on a small scale and this is an effective working instrument which the country is using to evaluate and make necessary adjustments before deciding to apply the model on a mass scale.

On the other hand, with the view of applying science and technology to the search for solutions to problems to be encountered during the process of implementing the guidelines, the Council of Science and Technology has been established as an advisory body to the Committee. This Council is responsible for researching, analyzing, evaluating, drafting and making recommendations on issues related to the implementation of the guidelines.

Initial results

1. The initial ideas of the conception of a model for socio-economic development have been approved.

2. The fundamental for a long term socio-economic development program is being drafted.

3. The macroeconomic policies and regulations on principles and actions intended for reestablishing the macro-economic order have been adopted. These include policies on: money, credit, wholesale pricing, retail pricing (in the process of approval), agriculture and tax (Tax Law). They will serve as the basis for conducting the qualitative transformations in the country’s economic system.

4. The model is also being piloted in a number of selected state-owned enterprises, aimed at giving them the necessary autonomy and more extended powers in economic and financial management, creating a new system of relationship between enterprises and the State. This is a very complicated task which goal is to remove the current obstacles in order to strongly develop the productive forces in the State sector, and to work toward drafting and later approval of a Law on socialist enterprises.

5. The policy on piloting the establishment of cooperatives in non-agricultural activities has been approved. This will be one of the main forms of non-state management, if it proves suitable for such activities.

6. We will continue to study the conditions for development of the self-employed business form as well as allow the introduction of some more industries so as to further perfect this form of non-state management. Currently, about 395,000 people are involved in this form of economic activity and the figure is predicted to go up.

7. Economic activity of renting houses to individuals for living or for providing services and technical operations has been introduced on a mass scale throughout the country.

8.  The Tax Law has been approved and will take effect from January 2013.

9. Adjustments have been made to the method of economic and budget planning in order to better respond to the upcoming situations, when the implementation of the guidelines is further boosted.

10. An overall strategy is being devised to deal with the aging of the population.

11. The new Labor Code has been drafted to regulate the provisions on the rights and obligations of employers and employees, with attention to the development of the productive forces of the non-state sector. This Draft Law will be widely introduced to employees and Trade Unions to discuss before being submitted to the National Assembly for approval.

12. Regarding cadre work, the first version of the Draft Ordinance on this issue has been worked out together with the accompanying regulations; at the same time, the Senior School for Government and State Officials has been published to provide graduate and postgraduate education on two basic subjects: corporate management and public administration. Graduates will work in all provinces and the Youth Islands District, as well as at 9 branches of OSACE. Postgraduate courses already started in October and are part of the National strategy on training and fostering State and Government officials, approved by the State Council in July 2010.

13. As part of policy of step-by-step eliminating extensive subsidies on all commodities towards limiting subsidies on those truly needy people, the Regulations on the subsidy regime applicable to individuals have come into effect, so that they can carry out housing construction and repair. In the first five months, 5,147 people were considered for the allowances, 3,821 of them have already received the subsidies totaling 110 million pesos.

14. A policy has been adapted to comprehensively deal with the issue of family cooking. The implementation of this policy aims at the main target of maintaining the strategy of use of electricity for cooking because at present this is the most energy-saving method in the economy.

15. Measures have been adopted to release operations and management of the basic units of cooperative production (in agriculture), under which all the current forms of ownership in rural Cuba work on an equal footing.

16. Production units are allowed to sell their agricultural products directly to tourism enterprises.

17. A policy has been adopted to strengthen the process of land allocation to farmers. From the drawn experience, the Government has passed a new ordinance in this regard, including the expansion of the quota of arable land given to farmers of up to 67.1 ha for those who have been working at state-owned farms, basic units of cooperative production or agricultural cooperatives; the policy allows farmers to build permanent houses on these lands and recognizes the right of inheritance of land use rights for households or those who are working on the related land. 

18. The perfection of state management agencies and other economic units is going on; priority is given to the overall coordinating agencies, weighty institutions in production activities, and the management boards of people’s government agencies and of the Government structures involved in the work of information and inspection.

The steps in implementation of the adopted decisions include:

- Creating conditions in terms of structure, composition and material facilities.

- Enriching knowledge for leaders and managers.

- Communicating on policies and measures, legal rules and procedures.

All the ongoing and following activities -  take place in the context in which all the difficulties that hinder economic development have not yet been thoroughly addressed. The most fundamental challenges include:

- Farmland has been left fallow, not entirely tapped; agricultural productivity is lower than expected.

- Export capacity remains weak and is still heavily dependent on imports.

- Financing cannot be yet ensured for investment in industrial development of development of the country‘s manufacturing infrastructure.

- The current trend in population growth is leading to the aging of population, which will become particularly severe in the medium term due to its impact on the population of working age, social and insurance allowance issues and to the entire economy and society in general.

- The need for raising labor productivity, raising sense of discipline, salaries and other incentives.

All the adopted decisions will be accompanied with measures of communication towards the people to maintain close connection ties with them and rectify errors and mistakes in their implementation; this aims at gradually strengthening the consensus and support of the people for the contents of the national socio-economic model.

Updating the Cuban economic model is a process that requires strict planning and close coordination and “Cuba ... has all the conditions to transform its economic model and get out of the crisis without causing any social disorder; since we are a patriotic and mighty nation characterized by its strength of unity, its cause of fighting for justice, and its heroic history and revolutionary roots“.