Report: US Needs to Encourage Economic Reforms in Cuba

Miami – A new report says the United States needs to do more to encourage market reforms and restructuring in Cuba as it tries to bolster its crumbling economy.

Although Cuba's economy is still largely state-controlled, under President Raul Castro it has allowed Cuban citizens to operate their own small businesses and form cooperatives, and has ended some state subsidies and begun phasing out others.

Other market-oriented changed, such as allowing Cubans to buy and sell homes and cars, were enacted this fall.

But the report by the Center for Democracy in the Americas, a Washington-based nonprofit that advocates changes in U.S. policy on Cuba, notes that the layoff of more than 1 million workers, about a fifth of the state payroll – was “halted before it ever really got underway.”

The report, “Cuba's New Resolve: Economic Reform and its Implications for U.S. Policy,” was funded by the Ford Foundation. It is based on repeated trips to the island and interviews with government officials, economists and other experts, and everyday Cubans.

“After fifty years of sanctions, and a generation after the demise of the Cold War, it is incumbent upon U.S. policymakers to understand the changes taking place in Cuba today and respond accordingly,” the report said. It acknowledged that “the success or failure of the reform process will largely be determined in Havana, not Washington.”

Cuba's problems, it said, “stem from the limited ways in which its economy produces wealth, its heavy reliance on imports to feed its population, growing domestic economic inequality, and the lack of opportunities for citizens to productively use knowledge acquired through advanced education.”

This year, the Cuba government is expecting economic growth of 2.9 percent, compared with 2.1 percent lat year.

The report notes that many in the United States question the sincerity of Cuba's reform efforts and whether they are permanent.

Cuba experimented with economic liberalization in the 1990s after the collapse of the Soviet bloc sent its economy into a downward spiral. It allowed self-employment in 160 occupations, and by 1996 more than 200,000 Cubans had licenses to work for themselves. But as Cuba emerged from the post-Soviet crisis in the late 1990s, it began to roll back the reforms.

“Despite doubts on both sides of the Florida Straits, the evidence leads us to conclude that Cuba's reform process is here to stay,” the report said, and it recommended that U.S. policymakers acknowledge that Cuba's reforms are real.

For more than 50 years, the centerpiece of U.S. policy on Cuba has been the embargo against the island in an effort to choke off the government economically. “In the final analysis, ending the embargo and normalizing relations with Cuba ought to be a foreign policy priority of the United States,” the report said. Lifting the embargo would require an act of Congress.

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The report made several other recommendations that it said would send a “message of encouragement” to advocates of reform in Cuba:

• The president, by executive decision, should take measures to “ease the flow of financing to Cuba and to spur demand” for goods and services provided by the emerging private sector. It said, for example, that President Barack Obama could use his executive authority to further expand the categories of Americans allowed to visit Cuba.
  
• The executive branch should clarify remittance rules because regulations are vague and there is currently no mechanism for Americans without family ties who want to send money to Cubans.
  
• Cuba should be removed from the list of state sponsors of terrorism, which subjects it to economic sanctions.
  
• The United States should stop funding USAID Cuba programs to bring about economic and political transition in Cuba. The report said such programs are a waste of money and increase distrust between the two countries.

Most analysts say that any change in U.S. Cuba policy is unlikely before the 2012 elections, and Reps. Mario Diaz-Balart, R-Fla., and David Rivera, R-Fla., are both trying to reverse more liberal rules on travel policy instituted by the Obama administration.

Obama has said his administration decided to allow more remittances and travel earlier this year “to create an economic space for people to prosper” in Cuba.

He said recently that the United States would be open to a new relationship but only “if the Cuban government starts taking the proper steps to open up its own country and . . . provide the space and respect for human rights that would allow the Cuban people to determine their own destiny.”

©2011 The Miami Herald
© 2011 McClatchy-Tribune Information Services
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