State Resistance to Globalisation in Cuba

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State Resistance to Globalisation in Cuba Antonio Carmona Báez

Pluto

P

Press

LONDON • STERLING, VIRGINIA

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First published 2004 by Pluto Press 345 Archway Road, London N6 5AA and 22883 Quicksilver Drive, Sterling, VA 20166–2012, USA www.plutobooks.com Copyright © Antonio Carmona Báez 2004 The right of Antonio Carmona Báez to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN ISBN

0 7453 2146 1 hardback 0 7453 2145 3 paperback

Library of Congress Cataloging in Publication Data applied for Carmona Báez, Antonio, 1972– State resistance to globalisation in Cuba / Antonio Carmona Báez. p. cm. Includes bibliographical references (p. ). ISBN 0–7453–2146–1 (hbk) –– ISBN 0–7453–2145–3 (pbk) 1. Socialism––Cuba. 2. Cuba––Economic policy. 3. Cuba––Foreign relations––1959– 4. Cuba––Politics and government––1959– 5. Cuba–– Economic conditions––1959–1990. 6. Cuba––Economic conditions––1990– 7. Anti-globalization movement––Cuba. 8. Globalization. I. Title. HX158.5.C313 2004 337.7291––dc22 2003025964

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Designed and produced for Pluto Press by Chase Publishing Services, Fortescue, Sidmouth, EX10 9QG, England Typeset from disk by Stanford DTP Services, Northampton, England Printed and bound in the European Union by Antony Rowe Ltd, Chippenham and Eastbourne, England

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Contents Preface 1. Introduction Cuba as an Exception Neo-liberal Globalisation, Socialism and Anti-Imperialist State Resistance Implications for the State Social Consequences of the Global Trends Socialism in a Sea of Capitalism Marxist Socialism State Capitalism Implications for Studying Cuba The Party/State Apparatus 2. Conceptualising Cuban Socialism: The Pillars of the Revolution The Causes of a Tardy Independence Roots of Nation-state Formation US Intervention and Neo-colonialism The First Labour Movement A Workers’ Revolutionary Attempt An Alternative to the Workers’ Movement ‘Cuba Socialista’ Economic Integration into the Soviet Bloc Unity, Continuity, State Supremacy and Popular Participation 3. The Causes and Impact of Cuba’s Crisis in the 1990s The Background to the Crisis The Effects of Integration The Campaign to Rectify Errors and Negative Tendencies The Demise of the CMEA Cuba and the Fall of the Soviet Union The US Economic Embargo The State’s Response and the Impact upon Cuba’s Political System Foreign Direct Investment Signs of Slow Recovery

vii 1 2 5 13 14 16 17 21 24 34 41 42 43 48 50 52 60 69 79 81 86 89 90 92 94 97 109 117 133 139

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State Resistance to Globalisation in Cuba

4. Structural Adjustments and Social Forces in Cuba: How Cuba’s Economic Model was Shaped by Global Trends Demonstrated Economic Growth Causes for Economic Growth Social Growth World Bank Development Reports and Other International Sources Cuba’s Most Radical Change – Sistema de Perfeccionamiento Empresarial Cuentapropismo: The New Self-employment in Cuba New Structures New Structures and Social Bloc Formations Structural Changes and the Revolution’s Identity

164 184 195 206 216

5. Conclusions and Considerations Shaky Pillars? Possible Future Scenarios A Disintegration of the Party/State Apparatus? Maintaining Cuban Socialism

223 226 231 233 235

Bibliography Index

240 257

152 153 155 158 162

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Preface This book examines Cuba’s unique position in the current global political economy, the alternatives that this country stands for against the backdrop of capitalism and the possibilities and limitations of state resistance to neo-liberal globalisation. It is essentially the product of my critical academic preparation in international relations during the first decade of the post-Cold War era, when the world appeared to be moving into a singular neo-liberal trajectory. My encounters with scholars in the field of international political economy, both in Europe and Cuba as well as back home in Puerto Rico, heightened my curiosity in exceptions and counter-norm tendencies at the nationstate level. Those who most inspired me to investigate the case of Cuba during the process of political and economic restructuring in the 1990s, were the friends I met on the island while conducting postgraduate research. Mostly workers and artists, but also students and scholars of the social sciences, their post-Cold War experience shaped my thinking about the search for alternative strategies in resistance to global changes. Although these compañeros were busy surviving the hardships that the so-called Special Period (1991–98) brought into their daily lives, they somehow found the time to share with me their Weltanschauung. More recently, during the past couple of years, a number of events have brought international attention to the Republic of Cuba. First was the appearance of President Fidel Castro at the United Nations’ First World Conference Against Racism in Durban, South Africa. In the midst of diplomats and representatives from non-governmental organisations, Fidel Castro was one of the few state leaders who bothered attending. He made a strong intervention in support of the initiative to bring all nations together in the effort of recognising the need for a declaration against racism and all forms of discrimination rooted in slavery and colonialism. At the same time, he identified the process of neo-liberal globalisation as the perpetuator of modernday poverty and inequality. Second, on 11 September 2001, when two hijacked planes crashed into the World Trade Center and one into the Pentagon, Cuba offered humanitarian aid and medical expertise to the victims of New York. Despite this kind gesture, President George Bush, in launching his ‘new war against terrorism’, vii

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placed Cuba on the list of states that possibly harbour terrorists. Last, in October 2001, Hurricane Michelle passed through Havana with floods that resulted in major damage to crops and the wreckage of many homes. After the tropical storms had passed, the United States offered humanitarian aid to their enemy state on the condition that none of the aid would be used or dispersed by the Cuban government. The Cuban Parliament responded to the US Congress, stating that the country did not need the aid or medical assistance. Instead, Cuba demanded the right to purchase medicines and food products that are sold by US monopolies and an end to the 42-year-old economic embargo. On Friday 14 November 2001, a ship containing US$30 million in corn and frozen chicken left Louisiana for the ports of Havana, Cuba for purchase. This was the first direct shipment of US merchandise to the island in over 40 years. The Cuban government’s responses to all four of these international events reveal some of its most essential characteristics: its opposition to neo-liberal globalisation and therefore its steadfast belief in alternatives, national independence and a sense of dignity in the face of isolation. It is often the case that the Cuban government stands alone in opposition to current global structures and uncontested financial, political and economic policies. Throughout the world today, millions of individuals and thousands of groups also concerned with bringing down neo-liberal globalisation have been mobilised to challenge the same structures, the ‘Empire’ that burdens the people of Cuba. This global justice movement is growing, as a new generation of activists wearing Che Guevara T-shirts is taking to the streets from Seattle to Genoa, from Jakarta to Porto Alegre. But the question is: What options do revolutionaries and anti-capitalists have when they are in government? The following chapters do not pretend to use Cuba as a model for a postneo-liberal order. Rather, this book intends to discover the possibilities and limitations of state resistance to neo-liberal globalisation and emphasise the continuing need for alternatives.

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1 Introduction Throughout the past decade, the idea of establishing or maintaining what was understood as revolutionary or state socialism has been somewhat lost to historical discourse. The collapse of the socialist bloc in Eastern Europe, the demise of its international trading system (the Council of Mutual Economic Assistance) and the disintegration of the central state socialist stronghold (the USSR), all played an essential role in reducing communist and socialist movements to ghostly levels of existence. The economic, political and ideological breakdown that occurred towards the end of the 1980s and the start of the 1990s affected not only those living in Eastern Europe during the popular uprisings against state leadership. The fall of political and economic structures dominated by communist parties also created a crisis of theory; left-wing radicals and broader movements searching for alternatives to Western capitalism became paralysed throughout the entire globe. Guerrilla movements, communist and socialist parties of the West and non-industrialised, post-colonial countries of the Southern Hemisphere – all formerly aligned on a real, international alternative force in the face of capitalist expansion – were thrown into disarray. In Western Europe, political parties of the social democratic tradition abandoned their allegiance to the interests of the working class and clearly began a process of recanting their demands for increasing social spending. Meanwhile, those forces historically antagonistic towards socialism and national liberation movements and in favour of free-market capitalism, stepped up their efforts to consolidate a global system based on free trade favourable only to a small minority of transnational entrepreneurs and political leaders that protected their expansionist interests. Out of this condition arose what would become known as the process of neoliberal globalisation. In this era, governments in most countries experience a shift of power in their traditional spheres of influence. The essential result is a move from public, national dominance of the means of production and social activity towards the hegemony of multinational corporations supported by an elite community of technologically 1

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advanced countries and global financial institutions that adhere to the principles set out by the aforementioned conservative forces. Among the most important of these principles have been the privatisation of national enterprises and a reduction by the state in social spending. Although in recent years there has been demonstrated grassroots resistance to the post-Cold War ‘new world order’, few state leaders have actually contested the status quo and in many cases they have found themselves forced to accept a world without alternatives. Alongside this reality there is the idea that develops into a rule: that those resistant to the current state of affairs and longing for socialism or any other alternative, will fail, dissolve or pass into history. But for every rule there is an exception. CUBA AS AN EXCEPTION When it comes to conforming to the status quo, employing fashionable trends in ‘neo-liberal globalisation’, ‘structural adjustment programmes’, ‘market orthodoxy’, ‘transitional’ or ‘post-Socialist’ regimes, Cuba and its state leaders are often considered to be the exception to the rule. Despite the countless efforts of extra-national forces to destabilise the 43-year-old regime headed by Fidel Castro and the Communist Party of Cuba (PCC), the Cuban leadership remains firm in adhering to the principles that distinguish it from those that have accepted the structures currently dominating the global political economy. More surprisingly, while actually contradicting neo-liberal theories and practices, Cuban state enterprises have been able to experience economic growth and acquire new technologies that are used to generate capital. At the same time, the institution of the Communist Party, as the motor of so-called socialist society in Cuba, has ensured that even during the worst years of economic turmoil, investment in social welfare continued to grow. Recognising that the process of neo-liberal globalisation replaces the influence of domestic political and economic structures with trends and ideas fostered by transnational corporations, financial institutions and the will of economically advanced countries, Cuban government propaganda often focuses on the imperialist character of the new world order. In this light, in Castro’s lengthy speeches and in PCC documents, Cuban socialism is depicted as being more than just an option of political and economic structure within one country. Today, the Revolution – as the state is often referred to in Cuba – is also, and essentially, a counter-imperialist structure that defends the

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sovereignty and independence of the Cuban government and maintains public ownership of most of the means of production and social–economic activity. Along with this anti-imperialist character, Cuban political discourse is often centred on making a critical analysis of the leading role played by the US government in the era of neoliberal globalisation. This can be explained firstly by pointing out that since the socialist bloc ceased to exist, the United States has gone unchallenged as the world’s military, economic and political statehegemonic power; and secondly, because the United States – only 90 miles away from Cuban shores and possessing a military base on Cuban national territory – continues to impose a very unpopular economic trade embargo against the Republic of Cuba. After the Soviet Union ceased to exist, this embargo was only enhanced in 1992 and 1996 to punish other countries and non-American companies for conducting trade with Cuban state corporations. For a period of five years, between 1990 and 1995, many scholars who specialised in Cuban studies dedicated the bulk of their work to contemplating a ‘post-socialist’ Cuban society based on the deconstruction of revolutionary politics or the imminent death of the commander-in-chief of the Revolution, Fidel Castro. Evidently these writers based their predictions on the idea that socialist Cuba was dependent on the socialist bloc in Europe and particularly on Russia’s geopolitical interests. Dependent, in this context, meant economically, militarily and ideologically. To their surprise and that of other observers, Fidel Castro was not overthrown, nor was the hegemony of the PCC over Cuban society ever seriously challenged. To the dismay of counter-revolutionaries, although Fidel Castro must inevitably die sooner or later, opinion studies and political analysis indicate that he will most probably pass away as a popular historical hero for the people of his country and much of the world (August, 1999; Kapcia, 2000). Other studies that considered the eventual death of socialism in Cuba concentrated on the economic hardships that the Cuban people have had to endure after the country lost over 70 per cent of its purchasing power due to the fall of the subsidised trading system within the Council for Mutual Economic Assistance (CMEA). Since this breakdown did not result in the expected total economic collapse, other analysts, between 1995 and 2000, focused upon the new measures that were implemented – by Cuban state leaders – to help the economy recuperate and to adjust to the new global economic conditions. It was thought that just as the so-called socialist states

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in Eastern Europe had implemented economic reforms that led to a disintegration of productive forces within each national case study, Cuba too would experience a similar process of deterioration in state control of economic and production relations. These tendencies to link the experience of two distinct cases (one being the Soviet Union and Eastern Europe, the other being Cuba) into a uniform, historical trajectory were based on economic theories developed by Eastern European economists and North American scholars. Those that held these theories were convinced that Fidel Castro and the PCC were on their way out, forced by the ‘natural’ economic processes that take place after socialist systems begin to adjust their economies to new global market structures (Oppenheimer, 1992). All social formations change dialectically. A prolonged disintegration of the social, economic and political forces that currently lead the Cuban Revolution may very well happen. But for now, neither political revolt nor economic disintegration has caused a change in the anti-imperialist and socialist Cuban leadership. Nevertheless, the leadership’s success in surviving global pressures to privatise state corporations did not happen without real structural changes in Cuban society and the production system. Although Fidel Castro and the PCC leadership contend that the structural changes experienced in Cuba’s political economy during the last decade have nothing to do with neo-liberalism, scant attention has been given to the striking similarities between the outcome of market-like reforms on the island and the typical trends and ‘modes of production’ found elsewhere. The central question that this book aims to address is two-fold: Firstly, why, after such a radical change in the global political economy and the triumph of the process of neo-liberal globalisation among states, does the Cuban Communist Party/state apparatus continue to exist? Secondly, to what extent is the process of social, political and productive restructuring in Cuba shaped by global trends and pressures? In order to accomplish the tasks that the central question entails, it is necessary to outline some basic thoughts generated by research. At the top of the priority list, there is the need to lay out the structures and ideas dominating the current global political economy. This entails delineating the parameters and implications that define the process of neo-liberal globalisation and the most important characteristics or trends in national economies. Secondly, there is the need to define the project of creating or maintaining the revolutionary dream of what has been called by some Marxists ‘state socialism’ and evaluate its existence in a world that is hostile to it. The uncontested

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Communist Party dominance of the state in Cuba, the discourse that is often deemed as Marxist and the combination of nationalist or anti-imperialist tendencies is what motivates analysts to marvel at the peculiarity of Cuban socialism today. NEO-LIBERAL GLOBALISATION, SOCIALISM AND ANTI-IMPERIALIST STATE RESISTANCE No estamos en contra de la globalización, no se puede estar, es una ley de historia; estamos contra la globalización neoliberal, la quieren imponer al mundo y que será insostenible, se derrumbará, y hay que ayudar a derrumbarla, y para ayudar hace falta conciencia que se ha llevado a cabo de la Revolución. (Fidel Castro, 20 July 1998) There appears to be a number of ‘truths’ or ideas that dominate contemporary political and economic thinking. One of them is that socialism is dead. This is often sustained by the experience of the demise of the Soviet bloc in Eastern Europe and the collapse of other so-called socialist states during the early 1990s. The other ‘truth’ is that neo-liberalism, the tendency of states to reduce their intervention in economic, financial and social planning, is the uncontested and most widely accepted and practised economic ideology for bringing the world towards economic prosperity. Finally, a synthesis of the last two, that because Western capitalism rose triumphant over state socialism, there are no alternatives to the process of neo-liberal globalisation, and thus it is inevitable. While these ‘truths’ or ideas have been widely challenged by a variety of global social movements stemming from grassroots organisations in civil society and nonmainstream political activists, few states or state leaders have contested the hegemony of neo-liberal ideology in the current phase of globalisation.1 Here Cuba is at the crux of the matter. 1. Throughout the 1990s, grassroots movements have evolved into greater struggles for democratic rights of indigenous peoples, economic equality through fair trade, peace, the elimination of poverty, concern for the environment and alternatives to capitalist development. Though pluralistic in the issues they tackle, year by year, these tendencies have drawn closer together and appear to be forming one global movement for socio-economic justice, or, in short, the global justice movement. Some scholar–activists have dedicated the bulk of their work to analysing and supporting these movements, among them Susan George, Alex Callinicos, Mike Gonzalez, Ronnie Hall and Barry Coates. In a publication entitled Anti-Capitalism:

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Neo-liberalism as a hegemonic ideology According to the political economist Arthur MacEwan: ‘The essence of the neo-liberal position on international commerce is the proposition that economic growth will be most rapid when the movement of goods, services and capital is unimpeded by government regulations’ (MacEwan, 1999:31). Its name comes from the experience of nineteenth-century liberalism, which was thought to have brought wealth and power to English and other northern European societies, and the suffix neo, meaning new or revised by contemporary condition. To elaborate, neo-liberalism is a political and economic ideology that represents the interests of market leaders (i.e., big business and finance) in their tendency to expand globally. Governmental rules and practices that prevent or hinder expanding markets are thought to be the enemy. The term neo-liberalism can be misleading in that the suffix neo is often interpreted as meaning something new. However, the only thing new about this ideology and political, economic practice is the dominance it seems to have had throughout the last decade. Some point to the Reagan–Thatcher era (early 1980s) as the beginning of neo-liberalism and the fall of the Berlin Wall (1989) as the start of its global consolidation among states and international financial institutions. The truth is that, in the words of Susan George: ‘The victory of neo-liberalism is the result of 50 years of intellectual work, now widely reflected in the media, politics, and the programmes of international organisations’ (George, 1997). George points to the A Guide to the Movement (2001), these writers together with other analysts argue for an alternative to neo-liberal globalisation. They also highlight those areas where the global movements have demonstrated their willingness to form common agendas. References are often made to Seattle, Washington 1999 where 70,000 demonstrators took to the streets to protest against the World Trade Organisation (WTO) and Genoa, Italy in July 2001, when 300,000 people demonstrated against the G8 Summit. In recent times, the media have erroneously tended to classify the struggles of those that challenge the present world order as belonging to the ‘antiglobalist’ movement. Contrarily, analysts like those mentioned above have emphasised that those who manifest their disenchantment with current global structures are not against globalisation. Rather, they are against neo-liberal or corporate-led globalisation and are attempting to construct a globalisation of justice from below. Interestingly enough, Fidel Castro has been the only state leader worldwide to openly support this movement of socio-economic justice and express his solidarity with those that struggle for an alternative form of globalisation (Castro, 1999a).

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establishment of think-tanks in the United States and the United Kingdom during the 1940s, when liberalism was a marginal ideology in politics. Through the institutions, wealthy conservatives poured millions of dollars into research and materials for the development of anti-New Deal plans geared towards political leaders of the right. In turn, these politicians and capitalists formed an alliance to dismantle the ‘transformation’ that Polanyi wrote about (Polanyi, 1944). The intellectual roots of neo-liberal economics can be found during the same period with individuals like Richard Weaver and Friedrich von Hayek, who both studied economy and business at the University of Chicago and started a trend of producing literature that discredited the ‘transformation’ from free-market capitalism to statecontrolled economy (George, 1997). The production of literature and ideology that fortified conservative forces eventually laid the basis for the ‘conservative revolution’ against Keynesian economics. Today, neo-liberal ideology, as a doctrine, is reflected in the practices and formulas that are often promoted by international financial institutions when dealing with the question of development in the countries of the South (George and Sabelli, 1994). The eventual global acceptance of this ideology by state leaders and international organisations is what makes neo-liberalism a hegemonic ideology in the process of globalisation. Hegemony, coming from the Greek word hegemon meaning leader, is a concept that was developed early last century by the Italian Marxist Antonio Gramsci. While most Marxists during the 1920s explained global as well as state-centred phenomena by using a strictly economic interpretation of history, Gramsci added an intellectual/ cultural element, which concluded that social classes could establish domination over others through promoting their ideology and culture at social and political levels (Gramsci, 1971). If there is any truth in this, the experience of the ‘conservative revolution’, which relied upon the production of liberal, economic literature, makes it evident. Susan George goes so far as to say that because the progressive forces did not promote intellectual production, were complacent and did not mobilise a front based on substantial professional thinking, the conservative forces were able to step in and make their project hegemonic. But most social scientists, including George, would agree that ideological hegemony does not amount to permanency, far less does it mean there are no alternatives. Even though most countries, both in the technologically advanced North and the developing South, and global structures fall under the

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umbrella of neo-liberal ideology today, there are always political moments when social forces gather enough strength to resist and counter the dominating mind frame. Robert Cox calls this counterhegemony (Cox, 1987). In short, counter-hegemony can be thought of as a successful movement of resistance against the dominating structures of reality. Throughout the twentieth century, resistance can be found in states or alliances but also in grassroots movements that are currently taking shape. What is important to emphasise here is that the framework of this study is dependent on the notion that the Cuban government and people are now at a political moment where they are found to have been developing on a domestic scale counter-hegemonic tendencies that contradict the neo-liberal practice. Cuban discourse, as will be demonstrated in the chapters to come, is often centred on criticising the globalisation of neo-liberal ideas and placing the market and profits before the interests of people. Fidel Castro and the PCC promote an alternative form of globalisation, one that is based on the cooperation of states in material development and fair trade among the nations instead of competition (Castro, 1999a). Whether or not they are successful is a question to be dealt with later. Neo-liberal practice But what exactly does neo-liberalism consist of in practice? As its ideology dictates, neo-liberal practice is comprised of the implementation of a number of tactics or policies that result in diminishing the authority of the state or public sector in society, especially in the market, and placing large, private corporations at the top of organised society. This implies, firstly, that corporate leaders make a pact with certain political figures and/or organisations in governmental and international bodies, in order to lay the legal basis for this movement or transition. Therefore neo-liberalism can only be applied to societies in which legal frameworks allow room for private corporations to take on a leadership role in public affairs. Secondly, the practice must be undemocratic in that public dominance over a productive or service sector is usually rendered to those who have the capital to develop markets from this sphere of influence, instead of those functionaries of public institutions who serve elected officials or governmental offices. The most effective way to render power to corporations is to privatise publicly owned enterprises and services. A service like transportation, for instance, will go from being a public and local patrimony

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funded by taxes to being a private business that will profit from the consumers of the provided service. In a democratic setting, a political party, usually funded by leading entrepreneurs, would encourage voters and legislative bodies to support the project of privatisation in return for a number of advantages. Often these have included the reduction of income tax for common workers. Other neo-liberal politicians might argue that a service or public industry would become more efficient if it were free from governmental bureaucracy. These myths have been widely contested by people who have actually experienced the privatisation of industry or services, as efficiency issues after privatisation are often neglected. But the essential problem with privatisation is that, in most cases, decisions to privatise companies are not made democratically; in most cases they are made from above without a public-based consensus. In this sense, the opponents of neo-liberalism argue, privatisation equals thievery from the wealth of society in order to subsidise private capitalists in their mission to expand (Petras and Veltmeyer, 2001). This is not to say that all public ownership of production and services is necessarily democratic. However, the privatisation of publicly owned enterprises does exclude the chance of democratic governance. Privatisation might be attractive to politicians who are in the position of solving state indebtedness or government bankruptcy. By selling off national industries or public services, governmental bodies are believed to be relieved from debt and responsibility over social concerns. Those politicians interested in making governmental bodies smaller will use privatisation as a means of doing so in addition to fundraising for the government. The problem comes to the fore when non-governmental groups lobby for state monitoring over the transition to privatisation, either in defence of the environment, in the interests of workers or to deter corruption. Furthermore, fundraising arguments fall by the wayside when one realises that privatisation is not a sustainable means of government income; companies can only be privatised once. The practice of privatisation becomes even more anti-democratic and much more controversial when international governing bodies and institutions pressurise poorer countries to privatise production domestically. From the business point of view, neo-liberal practice entails freeing the market from rules that hinder economic growth and profit. For instance, politicians that represent the interests of private capital might campaign against a hike in the minimum wage for workers, in order to keep profits rising. Another example can be found when

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private companies are given the right to ignore the demands of labour unions, hire and fire as they want, and move from one region where legal wages are high to places that offer a surplus of workers willing to produce for a lower and less secure income. But privatisation is but one of the many practices. Neo-liberalists might also pressure local or national governments to relax environmental laws in order to allow private companies to produce more cheaply rather than under ‘eco-friendly’ frameworks, which often require businesses to employ ‘costly’ production methods that crunch profits. Like-minded politicians argue that unemployment rates will automatically drop when these policies are adopted, because the private company, after profit rates increase and wages decrease, will be able to employ more workers. The result of these ideas when they are put into practice is that more workers are employed either on a part-time or temporary basis, and with less job security. When it comes to environmental quality, the risks of air and water pollution become more pronounced. The examples mentioned above are best demonstrated in real national case studies. However, neo-liberalism, an international project, goes beyond state structures and specific instances and is applied globally. That is, not only are neo-liberal practices implemented by domestic politicians but also by international financial institutions that often pretend to aid countries in need of development. After the demise of the so-called socialist regimes in Eastern Europe and the fall of authoritarian political structures in Latin America during the late 1980s, neo-liberal policies were followed by new governments in reaction to years of state dominance in the economy. Critical political economists have noted that international financial institutions, in the hands of neo-liberal thinkers, actually forced many of the state-dominated economies to be dismantled (Bello et al., 1994). This was done by denying international bank loans and credits to countries that refused to privatise or to cut state subsidies in domestic agricultural, industrial or service sectors. Evidently, the purpose was to allow large transnational corporations (TNCs) to compete successfully against or buy up small domestic businesses – whether private or public. The result has been the selling out or disintegration of national economies and, in their place, allowing the TNCs to dominate almost every aspect of life. This is seen more clearly when state companies and public services – from telecommunications to water and energy sectors – in small underdeveloped countries are sold to large corporations, usually based in the technologically advanced North. The international institutions that

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are most known to promote these policies of privatisation are the International Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO). For some time now, the World Bank has been the architect of the liberalisation of developing economies by overseeing privatisation programmes and implementing what are called Structural Adjustment Programmes (SAPs). SAPs are packages that are offered to heavily indebted countries that either have experienced a sharp transition from state-dominated to private corporate-led economies, or to those very poor nation-states that were or are in the condition of economic and political bankruptcy. In offering these troubled countries loans, the World Bank demands that recipient countries meet certain conditions. The conditions for receiving loans for infrastructure or any other kind of development are set by Structural Adjustment Programmes. Looking at the political aspect, once again, the government then responds to foreign lenders and investors and not to its citizens. This pushes the neo-liberal project to its global extreme. In 1999 and 2000, member states of the WTO held a number of negotiation summits that laid the basis for implementing agreements on trade in services; this was called the General Agreement on Trade in Services, or, GATS2000. The negotiations are focused on liberalising trade that affects all service sectors, from investment banking to the energy sectors, and reducing domestic subsidies for national services. Once again, the political – if not the moral – issue comes to the fore when looking at the anti-democratic practices that are employed in these negotiations and agreements. Rich and powerful TNCs are known to lobby successfully during the negotiation rounds, whereas groups from civil society, like labour organisations, are not invited to give their input and represent their interests (Wesselius, 2001). What happens in this process of neo-liberal globalisation is the forming of alliances between top government officials and big businesses, and the alienation of public interests in the organisation of present day society. Neo-liberal politicians and political organisations, which promise their constituents in poorer countries more development by employing free-trade policies and SAPs, are concerned with making their country attractive to foreign investors and technology. They argue that privatisation, the relaxation of environmental and labour laws and the reduction in state subsidies to domestic producers and service sectors are all necessary for efficiency, in the interest of the common good and the advancement of their societies.

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Consequently, local or domestic governments in developing countries render up most of their power to foreign private corporations. From the discussion above and the reading of works on the topic of neo-liberal globalisation, neo-liberal practice worldwide can be summarised by highlighting what the global trends are among states today: 1. Privatisation of state corporations to eliminate inefficiency and government expenditure. But privatisation is also known as a fundraiser for the state during the process of restructuring and repayment of debts. 2. Fiscal reform for reducing budget deficits. This reduces the chance that the state will intervene with subsidiaries to supply industries and social programmes. It is also geared towards creating independent national banks. The purpose is to reduce governmental costs and increase government income. 3. Flexible labour markets, providing more autonomy for employers in deciding wages and benefits, with trade unions stripped of their powers to negotiate. This is flexibility with the purpose of reducing social security contributions that employers have to make. The lower wage earners are subject to more elusive hiring and firing policies. 4. Trade reform, making the private sector of the national economies more competitive internationally and more orientated towards the export market, with updated technologies in production. Certainly this has reduced tariffs on imports; but it encourages that production be geared to foreign markets. 5. The opening of financial markets, reducing government intervention and aiming for the operation of free markets, in which national enterprises and the economies as a whole become heavily influenced by international or foreign financial institutions. The advantage of this is an increase in the flow of capital and the modernisation of industries. These five global trends will be considered, especially in Chapter 4, when the influence that neo-liberal globalisation has had upon the Cuban model will be assessed. From the Cuban experience, there emanates an alternative in development and economic practice, especially on the topic of privatisation. Cuba, which is not a recipient of IMF/World Bank loans, is seemingly exempt from the pressures to privatise. In this light, neo-liberal globalisation is not seen as an

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inevitable process. Rather, neo-liberal globalisation can be understood as the implementation of global trends. However, and in parallel to this, it will be demonstrated that though the Cuban leadership has made an enormous and unprecedented effort in challenging global trends that are widely accepted by most states, especially in the area of privatisation, some policies that have recently been implemented in Cuba do resemble the outcomes of neo-liberalism in practice. For instance, in Chapter 4, the Cuban party/state apparatus is found to employ some policies that appear to make labour more flexible. This should indicate that the process of neo-liberal globalisation really does have an affect on countries, even when the intention is to resist it. IMPLICATIONS FOR THE STATE One of the major contemporary debates in global political economy concerns the power of leaders in developing countries to choose neoliberal ideology and practice or reject it (Palan et al., 2000). Does the state still have the sovereignty to decide whether or not neo-liberal development should be practised? Or is neo-liberal practice imposed upon weak states? Many (social) scientists will agree that neo-liberal policies are not implemented uniformly across the globe (Gwynne and Kay, 2000). Therefore the issue is not so much one of choosing neo-liberalism or deciding to reject it. The question is: To what degree are neo-liberal practices implemented? Whatever the case, it suffices to say that countries that are dependent on foreign aid and the workings of international financial institutions have little choice in the matter. But what do the experiences of neo-liberal globalisation imply about the pressures that global structures and fashionable measures exert upon states? What implications does the process of neo-liberal globalisation have upon the state? Some speak of the retreat of the state, the collapse of states; some even go so far as to claim that the state is no longer relevant. Though many will argue that the role of the state has changed, few would argue that the state in the era of neo-liberal globalisation has ceased to exist. Susan Strange points out that there are fundamental changes: The shift away from states and towards markets is probably the biggest change in the international political economy to take place in the last half of the twentieth century. It is most marked in matters of production, trade, investment and finance – in what I would

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call the production and financial structures. These are the ones which have most impact on people’s daily lives. I … argue that one of the major shifts resulting from structural change has been the increased power and influence of the multinationals – more properly called Transnational Corporations (TNCs) – and the networks they set up and operate. (Strange, 1996:40) Strange makes the argument not that the state is disappearing, rather, that due to the integration of the global economy – through international production – the balance of power has shifted away from states and towards the market. Additionally, this shift is seen as causing a transfer of power from territorial states to non-territorial TNCs and the creation of gaps of power where authority of any kind is seemingly absent, i.e., the informal economy and underground markets like drugs, prostitution and the Mafia. TNCs are seen as political actors, having political relations in civil society, determining the role of employers, and the employed, they are producers as well as sellers, and they are also consumers of goods and services. The technical innovations and where research funding is allocated are often determined by the TNCs. Strange comes to the conclusion that power was handed over to the TNCs ‘on a plate’, and that it was not accidental. This coincides with the idea that, as Susan George has revealed, conservative forces were preparing for this change some time ago. SOCIAL CONSEQUENCES OF THE GLOBAL TRENDS For the past decade, many critical social scientists have dedicated a large portion of their work to analysing the social implications of the current global trends. While some have been apologetic to certain aspects of neo-liberal globalisation and the opening of markets, most have concluded that neo-liberal practice is destructive and not sustainable. The same can be said of the neo-liberal experience in Latin America: • Companies which find it difficult to compete in the new and vulnerable international market, have started laying off workers more easily and there has been little resistance on behalf of the weakened labour movements; the term, introduced from the US corporate world, is ‘downsizing’. Additionally, the government, in trying to reduce spending, has also done a

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considerable amount of downsizing of its army of civil servants. A more recent trend is to keep a reserve of civil servants and private sector workers temporarily employed by creating shortterm contracts through temporary employment agencies. Workers and civil servants are now hired to produce or serve on production or planning projects, rather than as permanent functionaries in the service of the public. • Real wages have decreased. While the top two deciles of income earners experience a substantial increase in their salaries, most income earners have experienced a decreased or stagnant rate. • Additionally, there has occurred an increase in what is known as the informal sectors; i.e. an increase in the number of urban workers dedicating their workday to unwritten contracts, illegal activity (such as the sale of drugs, prostitution and theft), and other unregulated trade creating low levels of income. • Nevertheless, with the state reduction in funding social services and investment in public infrastructure, it is the poor that suffer the most. Latin America’s 30–50 per cent poor suffer from poor health and high infant morality rates. There seems to exist, generally in the minds of intellectuals, artists, and the overwhelming majority of members of civil society, including the Church, a core concern with the poor in the region. While public foreign debt has been paid, the public debt to the working poor has not. The result has been outbreaks of epidemics and an increase in violent crimes. Even international financial institutions are recognising this, as did the Inter-American Development Bank in 1996. Hence, social inequality has become a serious problem, creating contradictions between the neoliberal idea and reality. (Gwynne and Kay, 2000) Resistance Historically, especially in Latin America, the popularisation of neoliberal ideology was accompanied by the transition of dictatorial regimes in the region, like Pinochet’s Chile, towards multi-party democracies. During the dictatorships, the tradition of movements resisting certain economic practices had been lost, as was the faith in the existence of real alternatives. The weakened political movements of the left were pushed further away from the path of resistance, when it became clear that the countries under the former socialist bloc were also moving in the same direction. The political leaders of the traditional left in Latin America seemingly rested satisfied with

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the new democratic laws that were given to the general population and saw their historical mission as being completed after the dictatorships were abolished. The exceptions to this would be left-wing factions of the Workers’ Party (PT) in Brazil and the Zapatista liberation movement in southern Mexico. These movements, linked to other progressive forces, like those concerned with human rights and the environment, started to challenge many of the myths surrounding the new global trends. The resistance to neo-liberalism was primarily based on the unfavourable social consequences that resulted from its practice. During the second half of the 1990s it became more and more evident that these neo-liberal policies were not wholly acceptable. In Venezuela, popular resistance and disenchantment with corruption and a deteriorating infrastructure led to a political slide to the left to control or reduce neo-liberal policies; this resulted in the election of nationalist leader Hugo Chavez in 1999, who vowed to reduce liberalisation and resist external pressures to privatise. Throughout Latin America as a whole, between 2000 and 2001, there have been at least ten demonstrations or general strikes with more than 10,000 participants. These actions were centred on challenging the trends of neo-liberal globalisation, especially privatisation, but also unfair trade and currency devaluation (Charlton and Bircham, 2001:341). More and more intellectuals and social activists have been arguing for alternative forms of globalisation. Inspired by the works of historical authors like Polanyi, social scientists of the left reject marketcentred or corporate-led globalisation and instead consider the globalisation of participatory democracy, human rights and fair trade (George, 1997; MacEwan, 1999; Coates, 2001). Again, these ideas have often been generated by new social movements or intellectuals, but not by state leaders. As exceptions, Fidel Castro and the PCC have been arguing for alternative forms of globalisation ever since the term took off in popular discourse during the early 1990s (Castro, 1999a; 1999b). But what does resistance to neo-liberal globalisation in the state form entail? SOCIALISM IN A SEA OF CAPITALISM The existence of ‘socialist’ states in a world of capitalism continues to pose a dilemma of interpretation for the study of the global political economy as well as for the many contributors to the broad and rich Marxist tradition. By the end of the Cold War, the theme of revolu-

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tionary socialism was seemingly abandoned, neglected or ignored; then, it was often considered a failed project, especially after the demise of the so-called ‘socialist bloc’ in Eastern Europe and the dismemberment of the Union of Soviet Socialist Republics. An exception might be considered in the work of James Petras and Henry Veltmeyer in their book Globalisation Unmasked: Imperialism in the Twenty-First Century (2001), where they argue for the possibility of socialism as an overthrow project against modern-day structures, more specifically against neo-liberal globalisation. Nevertheless, the socialist project was never clearly defined and to this day scholars as well as politicians continue to disagree over a number of questions concerning the possibility of socialism. MARXIST SOCIALISM Traditionally, political Marxism views socialism as a real transition from capitalist society to communism. This is a society of material abundance, in which the needs of the population are met through consensual, self-rule planning and where the production of goods and services is based on need and not profit. It is a system of worker and popular councils, the original meaning of the word ‘soviet’ under the later defeated Bolshevik Revolution of 1917 (Mandel, 1978). This most revolutionary – yet often abandoned – idea is based on Marxist–Leninist principles whereby a vanguard of disciplined revolutionaries would lead the working class into acquiring state power and creating this society of abundance. In socialism, centralised workers’ councils make decisions about the allocation of resources, money incomes and pricing policies, the quantity of production, the priorities of production, etc. ‘Self-managed production units’ would scientifically calculate the ‘technical average’ according to the highest prevailing level of technology. Less efficient units of production would be dismantled as new and innovative, indeed more efficient, ways of producing for the needs of workers would be provided. Alternative employment for those displaced workers would be found and, of course, the workload of each individual would be lessened. Conferences from representatives elected directly from the consumers (workers) would signal the type of improvements needed in products and services, indicating how much more of what and when. Public services for the population, like transportation, the media and education would be run in a similar fashion and be accessible to all. Self-rule of workers, autonomy or emancipation of workers, would

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actually be the transitional stage to the highest attainable level for human emancipation, not much different from what Marx envisioned, only technically detailed. Small businesses would be based on voluntary consensus or co-operatives; whereas no one would be forced to join private enterprise because all the needs of the population would be satisfied due to guaranteed consumption. Labour would certainly be free and the term ‘free contract’ would have a new meaning. Indeed, socialism was meant to entail a new mode of production (Mandel, 1977; 1978). Since the first Marxists, including Marx himself, understood that capitalism was an ever-expanding world system, the original concept of socialist revolution was also to be implemented internationally. Hence the purpose was to move from one mode of production that was growing internationally to another form, from one stage of human development to another. Global capitalism enlisted all ethnic, linguistic, cultural, racial, and national groups, to the war of class struggle on a transnational scale. The achievement of a new order is completely dependent on the invariable that socialism, taking off from capitalism, must be international. In his (Lenin’s) eyes the Russian Revolution was a mere preliminary to a greater revolution which would establish international socialism … Lenin did not invent the iron curtain. On the contrary, it was invented against him by the anti-revolutionary Powers of Europe. Then it was called the cordon sanitaire … Trotsky said on 8 November 1917: ‘Either the Russian Revolution will create a revolutionary movement in Europe, or the European powers will crush the Russian Revolution’. Neither happened. Lenin, like all other Bolsheviks, including at that time Stalin, believed that socialism was impossible in a single country. (Taylor, 1964) This is sustained by Marx himself when, in the preface to the 1882 Russian edition of The Communist Manifesto, he said that a revolution in Russia could serve only as a signal or complement to a proletarian revolution in Germany or England. Luke gives a brief description of the backwardness of Russian agricultural–feudal society and the minuteness of industry inherited from Tsarist rule, in which he recognises that only 2 per cent of the population could be considered ‘urban proletarians’ (Luke 1985:162–75). This group often had contradicting interests with the majority of peasants and hence led the entire country to a civil war that lasted from 1917 until 1921. The

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Bolshevik party sought to create hegemony within the state; in other words, they attempted to seize control of production and all power. It promoted the ideas of international socialism while at the same time it defended their experiment against belligerent capitalist states that surrounded Russia. But, the Bolshevik Revolution did not spread and therefore the priorities of the new government were altered. Lenin’s New Economic Policy allowed capitalist measures to be taken up in order to permit the growth of capital accumulation and thus to restore and even further Russia’s industrial capacity. The need for industrialisation was spurred on by the fact that the Soviet state was increasingly isolated from the world system. Among the many characteristics of the New Economic Policy was the opening to foreign investment by Western capitalists in the form of joint ventures (Mommen, 1993). After Stalin took over in the late 1920s, the leadership sought to industrialise the country even further in the name of raising the workers’ standard of living. Through five-year plans, the objective of industrialising the country and improving the life of urbanites was successful, but at a very high human cost. Millions of peasants were starved through the process of primitive accumulation, whereby the state exploited the rural agricultural workers in order to sell domestically and abroad for profit; this also ended up in the programmes of forced collectivisation of farms. During this time, Stalin pursued his own interests in obtaining hegemony over the Communist Party in the Soviet Union and the workers’ movement around the world. This resulted in systematic purges of the Party and the execution of the original Bolsheviks who criticised many of the policies that Stalin put forth. However, the Stalinist model of economic development was not autarkic, or detached from the rest of the world. The Soviet Union depended on foreign technology and the developments of Western sciences. After the Second World War, when the Soviet Union had allied itself with the United States in order to crush Nazi Germany, Russia acquired industrial plants from parts of Germany and also Manchuria, which had been captured from the Japanese (Luke, 1985:340–3). Additionally, after the war, the Red Army took over much of Eastern Europe, which supplied Russia with more natural and industrial resources. This outcome created a scenario for the Soviet Union, whereby it became a leading superpower dominating by military force a considerable amount of the world’s resources. Politically, this meant that while the United States was fostering so-

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called democratic models in West Germany, Italy and Japan, Stalin set up Communist Party-led regimes in Eastern Europe that were heavily dependent on Moscow. It is at this point that Marxists differ on their view of the Soviet Union and the collective of Communist Party-dominated states. They were thought of as either a real alternative world system with a different mode of production than that of the United States and the West, or as just another military superpower (alliance) participating in the inter-state game of economic competition, i.e. still part of the singular capitalist world system (Gill and Law, 1988:302–31). This discussion is relevant to the Cuban case for two reasons. First, it has set the framework for understanding ‘socialism in one country’ as the Cuban leadership continues to view itself, its characteristics and how they differ from the original idea of Marxist socialism. Second, because throughout this book, especially in Chapter 3, the Cuban economic model(s) is seen as one previously pertaining to an alternative market system, i.e., the Soviet-inspired COMECON or CMEA. This belonging shaped Cuba’s economic, social and political development for two decades of the Revolution’s existence as well as partially explaining Cuba’s economic crisis during the 1990s. Some scholars and social scientists have dedicated a large part of their research to understanding the concept of ‘socialism in one country’. I agree with many of the specialists, who concur on two fundamental points. Firstly, the Stalinist mode of production cannot be considered socialist and secondly, Soviet capital accumulation is essentially the same as those in (other capitalist) societies. The term given to describe modes of production during the 1930s and thereafter is state capitalism. The study of state capitalism became increasingly important when social scientists from around the world recognised that the production, distribution and financial power in the most industrialised countries experienced a real transformation from competitive private capitalism to monopoly or state organised capitalism (Horkheimer, 1940:95–117). Each country developed its own model but all had many characteristics in common. The theory of state capitalism became just as important for those states that demonstrated an interest in industrialising their economies or ‘catching up’ with economically advanced countries, especially after the Second World War, when a large number of colonised regions in the South sought independence.

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STATE CAPITALISM State capitalism is a concept that for many years was conceived as the highest form of capitalist development. The term is not new and has been used and discussed in various schools of thought, both academic and political, in relation to the state management of the market. State capitalism theory has been used both by the writers of the Frankfurt Institute of Social Research (Frankfurt School), as well as by revolutionary socialists who opposed the Soviet model during its existence; among these, the Trotskyites and the International Socialist Tendency founded by Tony Cliff (Cliff, 1948; Arato and Gebhart, 1997). Friedrich Pollock declared that: ‘terms like “state organised privateproperty”, “monopoly capitalism”, “managerial society”, “administrative capitalism”, “bureaucratic collectivism”, “totalitarian state economy”, “status capitalism”, “neo-mercantilism”, “economy of force”, and “state socialism” are a very incomplete set of labels used to identify the same phenomenon’ (1941:71). He concluded that state capitalism is the successor of private and then monopoly capitalism and that it was a mode of production in which profit interests still played an important role. In state capitalism there is no longer self-managing or the private control of production and distribution. The system would have become controlled by planning and direct, conscientious command by the state, whatever the nature or origins of the state; where enterprise and labour as two separate entities are fused under governmental control, where there is a partial negation of ‘free’ economic laws. Full employment of all resources, including labour, is claimed to be the main achievement or goal in the economic field, where pseudo-markets can be created in order to expand production and increase profits. State capitalism in the Frankfurt School was conceived as a result of the decline of the market system, which had become inadequate for using all available resources. The decline of free-market private capitalism could be attributed to a crisis in the liberal era where private monopoly succeeded competitive capitalism and where government had to interfere in the economic crisis due to monopolistic structures and the destructive consequences and disruptive conflicts which emanated from them. This was especially true for the most developed countries of Western Europe and then the United States. ‘The symptoms of declining market economies,’ says Pollock, ‘was what became characteristic of all industrial countries after the First World

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War’, as exemplified in the New Deal, and continued after the Second World War (Pollock, 1941:72). There was concentration of businesses into gigantic enterprises, which thereby created a system of rigid prices, self-financing and concentration, government control of the banking systems, the monopolistic character of trade unions, largescale unemployment and enormous governmental spending on the poor. State capitalism gives direction for production, consumption, savings and reinvestment. As a planned economy, what is produced, how and how much is not left to the crazy, indeed anarchical and wasteful, dictates of the economy; rather, is controlled directly and intentionally by the government. This was the transformation that Polanyi described. Not much was changed, says Pollock: Prices and goods are paid for in money, single prices may rise and fall. But the relation between supply and demand on one side and prices and the cost of production on the other becomes somewhat disconnected in those where they tend to interfere with general societal planning. (Pollock, 1941) The market becomes a closely controlled tool in material development and the state is considered to be the repository of the means of production. However, Pollock envisioned only two forms of state capitalism: authoritarian and democratic. According to this train of thought, he observed state capitalist history in the most important historical examples: Nazi Germany and Stalin’s Russia. In totalitarian state capitalism or monopoly state capitalism the state under the control of an alliance among the most powerful vested interest groups in industry and technology, the higher classes of society including ruling elites and especially the military, the party bureaucracy and everyone who is not included in this group is then dominated by the prior. Under democratic state capitalism, the state has the same function but is thence controlled by the masses. It is based on institutions which prevent bureaucracy from transforming administration into a mere instrument of power whereby leaving room for trans-shaping democracy into totalitarianism. (Pollock, 1941: 84) Pollock saw democratic state capitalism, therefore, not as a form of socialism but as a transition period whereby workers, or the majority

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of the people, could participate directly in governing the state that controls the means of production. Bureaucratic state capitalism But Tony Cliff (1948: 162), and before him Lenin and Bukharin, explained state capitalism as a form different to that of the workers’ state or what is generally identified as socialism, the ‘dictatorship of the proletariat’. Thinkers from the Frankfurt School, especially Pollock, described state capitalism as an emerging form and inevitable descendant of private or monopoly capitalism. Cliff saw Nazi Germany and Stalin’s Russia as forms of state capitalism, but defined them differently; respectively, one was monopoly state capitalism in a wartime economy and the other was considered to be bureaucratic state capitalism where the leaders of the bureaucracies are conceived to be those who run or own the means of production. Both definitions of state capitalism agree that it is not socialism, but that it is a move towards it. Both schools of thought think of socialism – or workers’ control – as an international phenomenon that is the ultimate expression of human emancipation and democracy. State capitalism and how it is distinguished from socialism can be understood from Marx’s law of value, which explained the relations of production in capitalism. More specifically, it was the process of appropriation of surplus value from one group to another. In Stalinist Russia, the appropriation of surplus value meant the extraction of profits from the workers by bureaucracy. Wage labour continued its antagonism to capital, surplus value continued to be produced, and continued to be reconverted into capital. Cliff saw the Soviet bureaucracy as rising above the workers and playing the role of the private capitalist. Taking a so-called socialist economy in a vacuum, appropriation of surplus value is thought of as suppressed since most production is held under state control. But the picture is entirely different when the ‘socialist state’ is viewed as a competitor with other countries and capitalist enterprises that act internationally. It is precisely this illumination that led radicals like Cliff to defend Lenin’s and Marx’s requisite that socialism needs to be a global system. Even Marxist economists recognise that in a world system where every state is dependent on international trade and is itself a competing and capital accumulating entity, the law of value is not abolished but only partially suppressed (Dumont, 1974). Outside of the state capitalist theory, other social scientists place emphasis on the fact that in a so-called socialist society, private

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property is abolished and that market mechanisms are controlled by state planning. In this sense, they might understand production relations to be distinct from capitalist economies. Nevertheless, economic planning can be found in large private corporations since a certain amount of products must be available to supply markets within a certain time-frame. Furthermore, even though private property is abolished, workers still cannot control what is produced, for whom and how much. Whether state or private, centralised or not, state-capitalist production relations do not differ that much from that which is found in capitalist societies. In this sense, Polanyi’s ‘great transformation’ was not so great after all. Cliff based his theory of state capitalism on the real experience of Stalin’s Russia, i.e. the defeat of the original Bolshevik project to make socialism international. According to Cliff, the Stalinist bureaucracy that evolved out of the New Economic Policy fulfilled the task of the capitalist class, and by doing so the bureaucracy transformed itself into a class. Although different from the capitalist class, it is at the same time the nearest to its historical essence. Stalinist bureaucracy, in Cliff’s view, was an alternative to the traditional capitalist class; at the same time it was the truest personification of the ‘historical mission’ of this class (Cliff 1948: 162). Accordingly, to call it a bureaucratic/state class, known as the Party, and stop at that is to circumvent the cardinal issue, which is the appropriation of surplus value from one class by another. Hence, to say that Stalinist political economy was state capitalist is correct, but not sufficient for Cliff; it was also necessary to point out the differences in the juridical relations between the ruling class under Stalinism and that in a state capitalism that evolved gradually from monopoly capitalism. From here, Cliff created a formula for describing Stalin’s Russia and calls it bureaucratic state capitalism. This can be justified by looking at appropriation of capital and accumulation by top-ranking leaders in the Communist Party. So-called socialist countries can be seen, thus, as one big factory or business that competes with other international corporations. But what does this tell us about socialist Cuba? IMPLICATIONS FOR STUDYING CUBA The followers of the International Socialist Tendency continue to use Cliff’s theory of bureaucratic state capitalism as a means of understanding all states that claim(ed) to be socialist, including Cuba. I would argue that though Cliff’s and the Frankfurt School’s discussion

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of state capitalism offers insight into the importance of the law of value and production relations as the determining difference between socialism and state capitalism, their historical analysis does not hold when taking the Cuban experience into consideration. For Cliff and also for the Frankfurt School writers, (bureaucratic) state capitalism was essentially an economic model that was centralised by government authority. Few Marxists anticipated the decentralisation of national industries under still state-controlled economies. The experience that will be delivered in the following chapters, especially Chapter 3 concerning Cuba’s new enterprise system, totally negates the notion that the economy is centralised under the auspices of a central bureaucracy. There is a new development that emanated from the economic crisis that Cuba experienced during the early 1990s. Going even further than that, I will demonstrate that state-run economies are capable of surviving global pressures to return or transit to private competitive capitalism by adjusting their own lines of production in order for them to resemble those of private companies, thereby making themselves more competitive. This includes making labour slightly more flexible and linking wages and incentives with productivity in the global market. Finally, Cuban leaders continue to apply anti-capitalist and anti-imperialist language in their discourse with firm credence in searching for alternatives. Though they often shy away from critiquing their own production relations, most Party documents and initiatives are dedicated to understanding the international division of labour and the condition of the capitalist world system. To find a suitable name for the Cuban economic model, as Cliff did for Stalinist Russia, is in my opinion difficult. If one insists that every country’s political economy should be categorised under a certain economic form, then I would accept Cliff’s argument that since production relations are essentially the same and the law of value continues to exist, Cuba’s mode of production in many aspects resembles bureaucratic state capitalism; possibly it is a decentralised bureaucratic state capitalism. Still, this imagined category does not sufficiently describe what is going on in Cuba; but names never do. For more than two decades Cuba has had changing state policies determining the permitted level of foreign investments – from laws on joint ventures dating back to 1982 (Economic Intelligence Unit (hereafter EIU), 1990:19) to the legalisation of foreign direct investment in 1995. Foreign investment, especially in the tourist industry, now plays an important role in the Cuban economy by

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building infrastructure, providing jobs, inserting new technology and pumping foreign spending into the country. To say that the Cuban state bureaucracy replaces the private capitalist class found in other countries, and to leave it at that, is to ignore the importance of foreign capitalists and their dealings with public (state) institutions. Sornarajanah, an economist, wrote extensively on the opening up to foreign investment in state-led economies and called it the ‘middle path’; whereas both extreme nationalism and protectionism, and a ‘free market’ with an indiscriminate welcome to foreign enterprises, were tendencies that were neglected by developing and newly industrialised countries during the second half of the last century (Sornarajanah, 1994). Likewise, other legislative acts that were passed during Cuba’s economic crisis after the fall of the Soviet bloc in Eastern Europe allowed for other market activity to take place. For instance, social relations among Cuban citizens have changed as income disparity increased after the legalisation of the possession of hard currency. Another example is the opening up to self-employment services as a legitimate means for certain individuals to generate income. Finally, Cuba’s economy has increasingly been geared towards the tourist service sector as opposed to manufacture and the export of raw materials. This will all be analysed in Chapter 3. What is important to understand from what has been reviewed so far is that production relations and modes of production should not be thought of as very different in countries that claim to be socialist or capitalist. For this reason, I would follow the framework that was developed by Immanuel Wallerstein in his world system theory (Wallerstein, 1974). There were never two separate worlds or systems. Due to the external relations with ‘non-socialist’ economies and also to its own capitalist mode of production, the Soviet bloc was just another hegemonic realm that took part in the global, competitive capitalist market. The differences must be discovered outside the realm of mode of production. National development and imperialism There are other aspects of ‘socialism in one country’ that should be considered. Among them, and more pertinent to this study, are the causes for states to adopt a certain ideology in their discourse; another is the construction of national political economies. Continuing with Wallerstein, dependency or world system theory, both national development and the choices for economic models, have been essentially shaped by the history of the world system

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during the twentieth century. In After Liberalism, Wallerstein wrote an Elegy and Requiem to the Concept of National Development, covering the theme from a global perspective in the time-frame 1917–89. Of course coming from his own world-system theory, the theme of national development starts off from European thinkers like Lenin and Woodrow Wilson (not European but indeed Western) though he claims that it was since the sixteenth century that ‘European thinkers have been discussing how to augment the wealth of the realm …’ Adam Smith wrote The Wealth of Nations in 1776; in this Bible for liberals, Wallerstein points out, ‘he [Adam Smith] ... preached the notion that maximising the ability of individual entrepreneurs to act as they deemed wisest in the world market would in fact result in an optimal enhancement of the wealth of nations’ (Wallerstein et al., 1996:108). But the central theme of this historical work was that every state could reach the maximum in development and wealth by adopting certain policies. By the turn of the nineteenth century it became clear that a group of countries had indeed become wealthy, or at least ‘developed’, through liberal capitalism. However, the boat that left for the sea never picked up any more passengers and development through liberal capitalism ceased to exist. Wallerstein points to 1917 as a turning point in history, when the foundations of capitalism at the core of the world economy were shaken. The world economic leaders turned to war and led their nations into battle in order to preserve their interests and to maintain stability in the world system that was continually developing. But Wallerstein does not stop there. He argues that the ideas brought to the international stage, like Lenin’s call to world revolution by the proletariat and Wilson’s bourgeois ‘world safe for democracy’ in his famous 14 Points, were not the underlying themes of the First World War and the resulting push for decolonisation. Rather, it was an effort to integrate what Wallerstein calls the periphery – referring to the underdeveloped parts of the globe – into the world system in order to create new stable markets. Now, whether or not we agree that Lenin’s intention was to include the poorer regions of the Earth on the ‘development’ bandwagon, it remains clear that Lenin did envision an international socialism. And whether or not we agree that Stalin was Lenin’s rightful successor, it also remains clear that the USSR did depend on other countries for its own development in the form of import/export and industrialisation. That is, industrialisation in the former Soviet Union would have been slower without some connection to the world market. Both great powers (the United States

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and the USSR) naturally sought the expansion of their economic power and enhancement of development by integrating what is now called the Third World, countries of the South or the periphery, into the world system. Wilson sought to spread the ‘good news’ of liberal ideology, that the natural expression of each individual was rational self-interest. In this light, reformist policies and rational, peaceful and legal means to accomplish development and human progress were called to order. Lenin had his own idea of self-determination and started from the premise of the rise of proletarian internationalism and the end of imposing certain national structures upon other groups of people – anti-imperialism – in order to move the whole of humanity into a singular working class (Lenin, 1939). In accordance with Marxian principles, the concept of nations and peoples would be a temporary passing in the history of humanity; but in the meantime the struggle for national liberation became an essential part of the struggle for world revolution. This was manifested in the early part of forming the Soviet Union and the voluntary federation of Soviet Republics – in the end the Union of Soviet Socialist Republics. The idea in Lenin’s mind was that the revolution would spread to the West. He expected German workers to revolt against their masters and eventually join in on this newly founded order. The expected worldwide workers’ revolution did not come to pass, socialism country by country (one by one) was established; so then the central theme was changed. Writes Wallerstein: Marxism-Leninism in effect was moving from its origins as a theory of proletariat insurrection against the bourgeoisie to a new role as a theory of anti-imperialism. This shift of emphasis would only grow with time. In the decades to come, it is probable that more people read Lenin’s Imperialism: The Last Stage of Capitalism than the Manifesto. (Wallerstein et al., 1996:110) But the link between the two doctrines of self-determination/antiimperialism and national development has not yet been sufficiently analysed. Wallerstein points out the similarities between the two doctrines, from the list of countries and peoples that urgently needed to be decolonised to the manner in which the nations should establish independence, to who should be the leaders of these countries. He warns that the differences should not be exaggerated. Under the Wilsonian paradigm, the natural leaders of the newly independent

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nation should be the educated bourgeoisie, who conveniently had links to their core-based counterparts; whereas the Leninists looked for leadership in a singular movement modelled after the Bolshevik Party – later the Communist Party of the Soviet Union (CPSU) – even if the communists or self-proclaimed socialists were not the majority in those countries, or even if the leaders of the party were not necessarily working class. In most cases, the party leaders had their origins in the petit-bourgeoisie/intellectual class, more commonly the children of the bourgeoisie and petit-bourgeoisie. This theme will be developed in Chapter 2, concerning the history of the revolutionary forces in Cuba. But Wallerstein goes so far as to say that these leaders were the same people under two different camps, at least relatives or cousins. In the case of the countries that opted for violent insurrection against colonial masters, combining the singular Communist Party with the state and creating the party/state political structure, the policies did not always emanate identically to that of the Soviet Union. Rather, the primary concern was the incorporation of these newly founded states into the world system of capitalist production. After the Second World War, the scramble for allies and markets became fiercer. The globe was divided into a bipolar system, as the newly independent states in Eastern and Central Europe leaned politically towards either the USSR or the United States. This was seen as the essence of the Cold War. Of course there were exceptions, such as the Non-Aligned Movement. But when push came to shove, both camps prompted propaganda in order to gain more ground, especially in the United Nations General Assembly. In the end, most of these newly founded states were not much different from one another. They were, almost always, one-party states or military dictatorships. Even when a multi-party system was implemented it was always one party that dominated domestic politics. Additionally, the economic policies did not differ much. Economic development was led, again almost always, by state enterprises. Foreign investment of course was a must, and many theories concerning this flourished throughout the century. But economic development in the case of foreign investment was not conducted solely by private corporations. Rather, it was through joint ventures between foreign private companies and the state. When foreign investment through joint ventures was not enough, newly independent states sought aid in the form of grants or loans. This is true for both ‘pro-Western’ developing countries as well as some newly founded ‘socialist

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countries’, or countries that participated in the worldwide Soviet-led progressive movement. Aid from the OECD countries and especially the Northern countries was used to fortify military dictatorships and foster ‘national economic development’: that is, building up infrastructure in the cities, constructing highways, buying and implementing technology from the core countries; in one word, ‘catching up’, or acquiring the major achievements that advanced capitalism has bought humanity in the core. Wallerstein emphasises that an illusion in the minds of the leaders was born, that development was possible given that the right economic policies were implemented. The options for developmental politics were various, and so institutions were built and theoretical schools formed around the globe. Regionalism sprouted up and the United Nations sponsored institutional projects like the Economic Council on Latin America (ECLA). Development theories like dependency theory and modernisation theory – and a bunch of other theories in between – flourished throughout academia for the purpose of persuading governments to follow up with state plans. What all programmes had in common, however, was the objective of creating wealth for the community: development. Wallerstein restates the obvious point that it was common to believe that any kind of development was more easily done by further integration into the world market system; countries that were excluded or isolated from the world market struggled hard to regain entrance into the community of wealth-seeking nations. This was the essence of the push for self-determination under the Wilsonian/Leninist paradigm. The USSR was where this idea of development was first tested outside the core. Wallerstein explains: When Lenin launched the slogan ‘Communism equals the Soviets plus electricity’, he was putting forward national (economic) development as the prime objective of state policy. And when Khrushchev, decades later, said that the Soviet Union would ‘bury’ the United States by the year 2000, he was venting supreme optimism about ‘catching up’. (Wallerstein et al., 1996:115) It was after the Second World War, following the rapid reconstruction of Japan and Western Europe, that ideas on the possibility of development were emphasised. Third World countries and even underdeveloped regions of the core like southern Italy, Spain and southern parts of the United States went on rampages searching for

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the best model of development. At the top of the agenda of all politicians and political programmes had been, and to a certain extent remains today in the minds of many, economic development. What Wallerstein’s study leaves us with is a sense of how contemporary national liberation movements came to order and how economic development has been a major theme, for both the promoters of self-determination and the receivers of the same (Wallerstein, 1984). Furthermore, detailing the road that many countries took for development from the time of independence brings us to realise that beyond socialism or liberalism, beyond the proletariat or the citizen, a party/state paradigm of state-controlled enterprises is what most peripheral countries had in common. This was even true of the newly industrialised countries of East Asia after the Second World War. Sornarajanah states: Developing countries generally view the success of the newly industrialized states of Hong Kong, Singapore and South Korea as models to follow. Though the Classical economists may believe that these achieved success by following free market economics and permitting full-scope for non-indigenous capital and technology, this does not present an accurate picture. There was considerable state regulation and intervention which accompanies the process of industrialisation of these states. (Sornarajanah, 1994:56) Cuban state-led economy The theoretical illusion of further economic or national development by opening up to the uncertain forces of the world market with little or no state intervention seemed to phase out after a number of studies were conducted on the newly industrialised countries (Broad and Cavanagh, 1998). In its place came state-led industrialisation and actual state corporations. The idea of setting up state enterprises for the purpose of generating capital to develop the underdeveloped country is better understood through the idea of state capitalism in its different forms and the project of Keynsian economics. In this sense, Cuba, as having a one-party/state apparatus, a socialist name in its discourse and a state-led economic model, was not all that unique among countries of the developing world. In many regards, the Cuban government can be conceived of as having been typical of all states in the periphery of the world system that searched for development. What makes this case different is that since the Cuban Revolution’s existence, state leaders in Cuba never recognised classical

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liberal policies as those that result in national development; this has remained true even during the time that neo-liberalism has returned to fashion. If anything, Fidel Castro and the Cuban Communist Party reject (neo-)liberal economic policies to this very day. It was, as I will expose in Chapter 4, precisely the call to anti-imperialism and the opposition to interventionism by foreign entities and global financial institutions that was thought of as – and is still believed to be – the key to national development in Cuba. If there is a slight clue as to what Cuban socialism entails, it would certainly – and possibly solely – be found in the leadership’s active resistance to state reductionism in order to maintain national or democratic sovereignty. I have found that Wallerstein’s – or the world-system – approach is good but not sufficient when trying to understand the character of Cuba’s state-led economic model. The first clue to flaws or weak points was found in the logic that followed in the section concerning the issue of using anti-imperialism as the driving force to state-led economic development. Wallerstein traces the concept of antiimperialism to Lenin’s call to worldwide revolution and Wilson’s 14 Points when, in fact, Cuban government discourse against imperialism and foreign intervention does not base itself on either of these sources. In Cuba, the call for cleansing the island of external impinging forces has its origins prior to the Cuban, Spanish and American War of 1898. By that time, many Cuban intellectuals had read the Communist Manifesto, but Lenin’s Imperialism: The Last Stage of Capitalism did not exist. Rather, Cuban discourse depended on the country’s own intellectuals, most notably José Martí, to shape the ideology which produced both anti-foreign intervention and a state-led economic model (August, 1999). It was neither the Soviet-controlled PSP (Cuba’s Communist Party prior to the 1959 Revolution) nor the CIA that inspired or even contributed to the Cuban Revolution. On the contrary, the movement of social change and the disposal of the Batista dictatorship was essentially an autochthonous struggle that was hindered by Stalinist politics. Therefore, world system theory has a problem of interpretation when regarding national liberation movements. Wallerstein’s contribution can be accused of carrying with it two particular faults. First is that of being Eurocentric. This should come as no surprise as Wallerstein chose to develop his study of the modern world system by basing it on studies of agricultural capitalism in fifteenth-century Europe, and how that structure spread through colonialism and the practice of mercantilism and primitive

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accumulation within European empires. An alternative approach would rely not so much on the need for capital to expand outside of Europe but on the weaknesses of peripheral societies that allowed European colonial powers to penetrate all the regions of the Earth. Though this theory has yet to be developed in all the social sciences, the history, possibilities and limitations of world capitalism are not as yet fully explored. The consequence of Eurocentric models is the overlooking of important developments within the periphery. Petras and Veltmeyer have noted: ‘the initiation and success of all 20th century revolutions had less to do with the presence of the Soviet bloc and more to do with the development of class and anti-imperialist struggle and international solidarity within the country’ (Petras and Veltmeyer, 2001:160–1). But this can be found even before the twentieth century; the prime example was provided above when considering the link between national development and antiimperialism in Cuba prior to the ascent of the Soviet Union. Another flaw in the world system theory is that which reflects its general vision of the inter-state system. Though Wallerstein finally agrees that within the core there are peripheral areas, and vice versa, his point of departure in explaining national liberation movements is the state, the ‘state’ that was given liberty to practise self-determination. Though I agree with the conclusion that newly independent states in the twentieth century actually served the interests of rising or potential hegemonies and their economies by providing new markets, I disagree or am dissatisfied with the way the state on the periphery is portrayed. In some sense, Wallerstein’s views on the peripheral state and its behaviour resemble what is called the realist perspective in international relations. Though world system theory, through its origin in Latin American dependency theories, tries to define the global political economy as one whole structure that employs capitalism (an economic system that penetrates beyond national boundaries), it still does not get away from the idea that the leaders of states are independently looking for economic models that promote development. I would argue that when it comes to the treatment of the state, world system theory is not dependentista enough; it does not look to the structures that are global and penetrate or shape national movements. National liberation movements are not led by ‘socialists’ or ‘liberals’ because their leaders randomly chose one ideology over another. These movements and eventual independent states evolved from a long history and struggle of social and intellectual forces that can be found internal to the state as well

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as globally. These forces, which in each country developed differently, cannot be considered independently of each other but as related and interacting. The same can be said of state strategies and policies in the choice of whether to comply with global trends of neo-liberal ideology or to reject them. THE PARTY/STATE APPARATUS Both global (external) historical forces and domestic (internal) historical forces create state strategies. On another note, one can conclude that external factors set the limits to the options available to a country but – in the words of Susan Eva Eckstein – ‘Third World Governments, if skilful, can mediate the impact of global political and economic forces’ (Eckstein, 1994:6). In other words, not only do world market and political forces impinge certain structures upon the state but domestic actors, when forming alliances inside the state, can create new structures impinging upon outcomes as well. This negates the position taken up by many political scientists that fall into either the ‘realist’ or ‘superstructuralist’ categories that ignore historical and structural conditioning in the first instance and domestic alliances or social forces in the latter. I agree with Nico Poulantzas who, in 1978, made the argument that policies are moulded by interests within a domestic entity and also by the struggles among the interests. So the unit of analysis is shifted from the hardly defined animal called the ‘state’ to the strategies taken up by the social construction – which I identify in Cuba as the party/state apparatus – in response to the global environment. In this discussion the state is not ignored but it is conceived in a relational manner, related to the domestic forces and historical basis upon which it was built (see also Cerny, 1989). The state, according to this line of thinking, can no longer be viewed as a concrete entity; it must be viewed as a social relationship. For this reason I prefer to use the term ‘party/state apparatus’ when referring to Cuba, because the one-party, anti-imperialist state-led economy that exists in Cuba is better served by describing it according to the most important actors in that entity – the Cuban Communist Party (PCC), the collective of institutions and productive sources are all embodied in an apparatus which constitutes national power. Furthermore, this view also deters social scientists from thinking of a state as ‘socialist’, ‘capitalist’ or ‘neo-liberal’. This makes it difficult to categorise the countries according to the ideologies and forces the

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social scientist, as s/he should be doing, to look for state strategies that imply the (im-)mobility of social forces that influence policymaking. In other words, and once again, there are no ‘socialist states’, there are only state-led economies run by socialists that might opt for certain market measures, depending on which way the domestic social forces are mobilised and how they are manipulated by global restrictions. Some of these market measures might entail dismantling the entire party/state apparatus, as experienced in Eastern Europe. Though this last experience was seemingly the most popular option during the late 1980s, it was, as demonstrated in other cases, such as Cuba, not the only one. What happened in Eastern Europe is a perfect example of the internal struggle of interests that was implied by Poulantzas’ work. The culmination of conflicting interests was, nonetheless, inspired by an economic crisis that slowed Soviet production and technological innovation during the 1970s, but it was not until the 1980s that Eastern European economists were allowed to open publicly the debates on the causes of economic stagnation. Some, like Aganbegyan (1988), pointed mostly to the general structural problems that a centrally planned economy entailed. Others, like the Hungarian Janus Kornai, made specific claims about the causes of the decline of Soviet bloc economies. His main theses were: (a) that a shift in world market price proportions changed the terms of trade to the disadvantage of Eastern Europe; (b) that a recession in Western capitalist countries coupled with new protectionist measures made export more difficult for these countries; finally, (c) that during the decades when economic growth seemed constant, infrastructure was ignored by following investment-intensive as opposed to extensive programmes (Kornai, 1980). The countries of the CMEA in Eastern Europe were integrating their economies further into the West and because of their dependency became vulnerable to shocks in prices and products (Lawniczak, 1992:99–106). Some pointed out that the series of reforms that Gorbachev introduced in his perestroika and glasnost just accelerated the process of integration of Eastern European markets with the countries of the West (Kornai, 1992). The conclusions were that once the process of so-called democratisation and market liberalisation began rolling, popular forces antagonistic towards state leaders would gain momentum and eventually bring down the bureaucracy that appeared to impede progress. But the movement towards resistance was not new, nor had it developed in the late 1980s. Since hardline Stalinist

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models of socialist states had been imposed upon the countries of Eastern Europe after the Second World War, the popular base of legitimacy was never present in those countries. This caused a large political vacuum between elites in the Communist Parties’ leadership and the ordinary Eastern European citizen. Additionally, due to the market openings to international financial institutions other than those provided by the Soviet Union, infiltration of antagonistic forces towards Stalinist models of development started to rise within Party bureaucratic circles. These ‘anti-statists’ and agents of Western capitalism formed interest groups that came into conflict with the so-called ‘hardliners’, while at the same time filling the political gap that had been exposed between the leaderships and the people. This was not the case in Cuba for a number of reasons. One of the underlying tenets of the Cuban Revolution – what I call pillars – is that of popular participation (see Chapter 2). This at first might seem as an apology for Communist Party propaganda. But what it entails is a connection between Cuba’s party/state apparatus and the popular masses. Whether the vehicles of expression can be considered democratic or not, or whether the relation with the leadership is imposed or simply justified, is another question. Nevertheless, there is a revealed, strong link between leaders in government and businesses and the popular masses that was somehow absent in Eastern Europe and the USSR. There was never a gap between popular forces, like the Federation of Cuban Women and the united Cuban Trade Union, and the members of the PCC. In Cuba, bureaucratic despotism was rarely an important factor in the political life of its citizens. Furthermore, since Fidel Castro’s ascension to power, at no time did any country – including the Soviet Union – impose its military might against the popularly supported regime. Cuba was never a Soviet satellite in the Americas. As historical reference will demonstrate, Cuban and Soviet foreign policies often clashed. There are other factors that should be considered when asking why the Soviet bloc disappeared; however, since this is not a comparative study, there is no room for them here. Concentrating on the Cuban case, it is necessary to look more deeply into the theoretical foundations that allow for what I identify as the party/state apparatus to adopt certain positions, strategies and measures that may be consistent with the global political economy or, possibly, quite the opposite of what most state leaders employ. At this point it is necessary to move beyond the state and look at the general environment in which the Cuban party/state apparatus has

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existed and exists today. Analysing Cuba’s domestic political economy entails taking into consideration the domestic and global forces and changes that impinge upon it. Chapter 2 of this book will provide a historical framework for understanding the party/state apparatus in Cuba, i.e., what is known as the Revolution. Though the events that led up to the 1959 Revolution and the social consequences that followed have been written about time and time again, few analysts look at the social forces that evolved in Cuban history and shaped or consolidated the project of national liberation and emancipation of the country’s working class. It is my contention that without careful consideration of Cuba’s political and economic history, the present day leadership of the party/state apparatus cannot be understood. This is partly because some of the current key leaders are products of the struggle for national liberation during the Batista dictatorship; namely Fidel Castro and his brother Raul. Additionally, it was the fusion of various revolutionary tendencies prior to 1959 that made the PCC what it is today. In this historical review, I suggest that the Cuban Revolution rests upon certain pillars and foundations that have allowed the party/state apparatus to persevere through this recent era of neoliberal globalisation. A brief look at how the values of unity, continuity, state supremacy and popular participation were transmitted to the minds of the Cuban people will conclude this part. Chapter 3 is dedicated to understanding the recent global changes that forced Cuban society to restructure many of the economic, political and social policies that were thought of as traditional or even essential to the Revolution. It reflects upon the causes and consequences of the economic crisis that the Cuban people and party/state apparatus endured between 1991 and 1996. As Chapter 3 will show, the Revolution was transformed from a social system that concentrated on reproducing itself to a mutated social, political and economic project that is struggling to survive. The economic crisis, caused not by a sudden disappearance of a sponsoring superpower but by the slow disintegration of a real working parallel market system based on moderately fair trade (CMEA), should never be underestimated. The paralysis of over 70 per cent of Cuba’s purchasing power and the consequences that this caused for production and capital accumulation on the island led the country’s leaders to embark upon new formulas for maintaining state control. In this experience, often referred to as the Special Period, new ideas emerged that would have been unimaginable only a couple of years

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prior to 1991. Among these ideas and policies are: the legalisation of citizens’ use of hard currency for the purchase of import products; the building of a tourism industry as the country’s main source of income; the opening up to foreign direct investment and up to 100 per cent foreign ownership in new fields of economic exploitation, and the formalisation of a self-employment system (cuentapropismo) that in many ways relieved the state’s responsibility for a percentage of Cuban workers. Nevertheless, all of these measures were taken in the name of safeguarding what is often referred to as the ‘triumphs of the Revolution’. As will be demonstrated, the reforms were not inspired by global financial institutions like the World Bank or the International Monetary Fund. Rather, the economic restructuring that took place in Cuba during the 1990s proved to be the collective work of Cuban political economists and the implementation of ideas that are autochthonous to the island. However, none of the changes happened in an international vacuum. The Cuban leadership foresaw the global opportunities that were open to the party/state apparatus. Foreign investors were willing to contribute to Cuba’s alternative model and create partnerships with state enterprises in ventures such as petroleum explorations. Other countries and corporations avoided the twice-enhanced economic embargo. All of these factors will be given brief consideration. Chapter 4 will deal with the period 1996–2000, when social and economic indicators revealed that Cuba was on its way to a slow, stable economic recovery. The aim of this chapter is not only to emphasise the Revolution’s success in resisting global pressures to fall to neo-liberal practices and the will of counter-revolutionaries in the United States. Rather, the purpose is to discover how global pressures, together with domestic policies, shaped Cuba’s current political economy. At this point the similarities between new policies in production and capital accumulation and some of the trends most typical of neo-liberal globalisation will be revealed. Attention will be given to the self-employed sector (cuentapropismo), the number of participants, which has steadily decreased throughout the last five years, and the restructuring process of state enterprises – called el sistema de perfeccionamiento empresarial – endorsed by documents produced in the fifth PCC Congress (1997). Lastly, the implications of these recent changes for Cuban society will be highlighted, whereby internal economic structures and shifts in productive power will be clearly explained. Throughout Chapter 4 I will argue that specific social forces have been repositioned in order to accommodate Cuba

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into the global political economy, while preserving the foundations and pillars of the Revolution. The fifth and final chapter of this study will reassess the central questions and restate their relevance to the subject of global political economy and alternatives to neo-liberal globalisation. It will outline theoretical as well as practical consequences for considering the Cuban Revolution and the historical relevance of revolutionary resistance to the ‘new world order’. Brief consideration will be given to the possible future scenarios that the Cuban party/state apparatus might encounter. Besides secondary sources and findings, much of the work in this book is based on my five trips to Cuba between 1996 and 2000. Interviews were held with Communist Party members, leaders of socialist civil society groups like the Federación de Mujeres Cubanas (FMC), the national trade federation (CTC), students, political economists, anonymous opponents of the Revolution, participants in the ‘black market’ and the self-employed. In February 1998, I interviewed 179 self-employed/informal workers, using a questionnaire found in the dissertation version of this document; I also interviewed state inspectors, tax collectors, and individuals participating in illicit activities like prostitution. The purpose was to find evidence of an emerging social or economic class – viewed differently from state workers – among the self-employed, and to identify the ideas carried by this group of people. This project was not intended to be a scientific survey that pulls out numbers for the mere purpose of categorising those interviewed. Rather, it is a sampling to provide some insight into dividing lines that are being developed or possibly revealed during this time of social restructuring in Cuba. The topics of self-employment and the informal sector were chosen because of their recent development in Cuban society and their implication for labour relations in the country. Additionally, very little research has been dedicated to this field. The services and small products that are sold by the cuentapropistas supplement the daily needs of the majority of the population. Cuentapropismo was a potential force that was in the hands of the population and was unleashed by government leaders during the economic crisis of the 1990s. The government uses the term cuentapropistas to describe those self-employed individuals who pay their monthly taxes and adhere to the terms set in Decree-Law No. 141. Decree-Law No. 141 does not consider workers in the black market or those conducting illegal activities.

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Thanks to Cuba’s excellent health-care system and the country’s general care for the elderly, I was fortunate enough to interview many senior citizens during the advent of the Revolution’s 40th anniversary (1997–99); these individuals were able to offer a comprehensive and long-term testimony concerning the social trajectory of the Revolution. In 1999 and 2000, over 100 Cuban workers in the tourism industry and the health and education sectors were interviewed randomly on their views about recent economic and political developments on the island. These interviews and testimonies are documented in my Ph.D. dissertation.

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2 Conceptualising Cuban Socialism: The Pillars of the Revolution Socialist Cuba’s present-day existence rests upon a combination of elements that I have chosen to call ‘pillars’. In this sense, party/state governance can be seen more as a consolidation of social and economic conditioning that reflects the combination of global trends and local forces. Among them: a popular rebellion, in the name of social justice, against a dictatorship that was defunct as a legitimate regime; and a social revolution that was framed by the Cold War, which pushed the leadership to opt for Cuba’s anti-imperialist stance against US hegemony in the region and her move into the socialist bloc. Later in this book the mass organisations and electoral system – linked to the PCC – will be depicted as those that ensured that Cuban society was highly politicised and that the PCC maintains legitimacy. Towards the end of this chapter and throughout the remainder of this book, I will defend my argument that the party/state apparatus at hand rests upon four main pillars, which define the character of Cuban socialism. These pillars are: continuity, in the tradition of revolutionary leadership against colonialism and later imperialism for the purpose of perfecting society; unity in a singular political party of the masses, which would seize state power and conduct change; state supremacy over all social forces including the market mechanisms; finally, popular participation or the convergence of domestic social forces that respond in electoral and informal processes to global trends and pressures. The pillars of the Revolution can be defined as the tendencies upon which the 1959 Revolution came to the fore and the ideas that are promoted by the vanguard and currently demanded by the general population. This is the formation of a nationally unified, counter-hegemonic bloc upon which the state was built, often contradicting the interests of US hegemony and global trends. In order to depict the pillars, by which we can identify the present regime in Cuba, it is necessary to discover first the historical 41

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foundations of revolution that led to the social transformations in 1959. Cuba’s revolutionary state can be understood from two aspects that are not separate but intertwined. They will be identified as ‘foundations’ to the state’s existence. On the one hand there is the struggle against imperialism, i.e., the coming to the fore of social movements that oppose foreign and especially US interventionism in domestic affairs. These movements have their roots in the struggle for independence from Spanish colonialism in the nineteenth century; leaders like José Martí and Antonio Maceo built political discourse based on ideas regarding sovereignty from both Spain and the US. These leaders were conscientiously opposed to Monroe Doctrine policies (Smith, 1987) and inspired those early twentieth-century revolutionaries who opposed the Platt Amendment in the Republic’s original constitution (see below). Together with the struggle for independence there developed an idea of social justice and the building of a society based on the concept of equality. José Martí was not only interested in fighting for an independent Cuba, as did the politically sovereign republics of Latin America. Martí was also interested in building a new society based on equality for all its citizens, a united nation that would form a oneparty state apparatus in the interests of the masses (Morales, 1975:27). This brings us to a second aspect. The other foundation by which we can understand Cuba’s revolutionary character is that its very existence with the present leadership is a conscientious front and challenge to the capitalist world system and all its social contradictions. This was true in a more radical manner during the 1960s, but has remained so throughout the duration of the Cold War in the form of a legitimate institutionalised state aligned with the socialist bloc, and even until today in opposition to the process of neo-liberal globalisation, which has not solved the issues of poverty and inequality among nation-states – this is at least so in the leadership’s discourse. Both anti-imperialism and social justice are aspects that must be studied critically, for these foundations of Cuba’s revolutionary existence did not develop in a vacuum, but within the limits of a historical context. THE CAUSES OF A TARDY INDEPENDENCE Cuba was late in achieving its independence. What made Cuba’s struggle for national liberation unique among her neighbouring Latin American countries was the lack of coherent middle-class interests

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that would normally lead towards political sovereignty. Where the middle class in other countries was unified in its interests to end colonialism, Cuba’s aristocracy or slave-holding classes were divided and thus never acted upon the desire to emancipate themselves from the Spanish crown. The white Creole elite in Cuba delayed their urge for independence because they were class dependent on the colonial structure, which protected their very livelihood: the production of sugar by the exploitation of black slaves. During the late 1700s, tens of thousands of acres of land were dedicated to sugar production. When Haiti won its independence from France and the colonial masters, Cuba became the world centre for sugar production. As the island became richer, more slaves were needed, not only to work the fields, but to build city infrastructure and to work as domestic servants for the rising middle class of the cities as well. According to one reading of demographics, by 1872 slaves made up 40 per cent of the population (Thomas, 1971:268). One cubanologo adds: ‘In no other Spanish colony was the local economy so totally dependent on slavery; in no other Spanish colony did the total population of colour constitute a majority’ (Pino Santos, 1964:13). Because there were many free people of colour as well, the white Creole class were a very small minority. Their economy depended on slavery and the suppression of other races. In no way were the Creoles ready to fight for independence, especially if it meant a detriment to the economic order. Throughout the 1800s the slave-dependent economy in Cuba was cursed with a susceptibility to break down, as this particular century produced conditions for the creation of an abolitionist or resistance movement. This seed of resistance gave birth to a tradition of struggle, which would not die but would flourish throughout the future wars of independence (August, 1999: 47). ROOTS OF NATION-STATE FORMATION In 1868, a movement for armed struggle against Spanish domination was organised in all the provinces of the island. The leaders of this movement were various, mostly from the frustrated Creole elite but also the children of African slaves, such as Antonio Maceo, general of the Eastern Liberation Army. The movement itself consisted of a melting pot of cultures, an array of people struggling for the idea of a new society. A constitution was created under which all people were recognised as equals and a representative form of democracy

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was to be established (articles 7, 24, 26 of the Guaimiro Constitution of the Republic of Cuba: see August, 1999). After ten years of bloody battles, this initial spark of revolution failed and ended up in the hands of compromising figures. In 1878, some of the Creole elite living in the centre of the island signed the Pact of Zanjón. The Pact was a peace treaty recognising Spanish colonial power but putting an end to slavery and providing some rights to the inhabitants of Cuba, including the rights of African peoples and Chinese contract workers. Here the Spanish colonial powers recognised that the fight for independence was linked to the social liberation of slaves and people of colour. But not everyone was satisfied. Antonio Maceo, the well-educated Black General of the East, did not recognise the Pact and so skirmishes and battles haunted Spanish military control in the provinces of Oriente right up until the very day the colonial power was defeated in 1898. Developing the emancipation idea But the historical value of the First War of Independence (1868–78) was the creation of a nation ready to seize state power by the implementation of political structures like the first constitution; a nation defined therein as consisting of people of various backgrounds, mostly non-aristocratic. The desire to create some sort of political structure had risen from the desire to accomplish the emancipation of a people. August puts it nicely: … as the Cuban nation developed its struggle for national and social emancipation and for its own state, the attribute of being part of the Cuban nationality in general, proudly took, and still takes, precedence over national origin ... The consolidation of nationality, the political struggle of the notion of an indigenous Constitution as part of the construction of a new state, all these elements together compose cubanía. The centerpiece of cubanía is the holding of political power by the majority at the head of the Cuban nation. (August, 1999:83) Since the failure of the First War of Independence, the ideas of the majority of the people had changed; individuals became self-conscious about their position in society and political discussions about emancipation were abundant on the city streets as well as in the countryside. Meanwhile, the Creole elite splintered again and lost unity. Among the many groups that formed were the annexationists

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(those who preferred to join the United States) and the Spanish loyalists. Their ideological state of confusion left the independence movement in the hands of grassroots and modest leaders such as José Martí. José Martí Just as today, when history is written focusing upon one man in the leadership of the Cuban revolution – that man being Fidel Castro – the history of Cuba’s anti-colonial movement during the late nineteenth century was written by highlighting the importance of José Martí. Though I discard many psychological approaches that interpret movements by the charisma of their leadership, it is necessary to point out the significance of a leader like José Martí, who was capable of expressing a clear idea of the type of society he envisioned. Because of Martí’s writing abilities, he was able to capture the attention of his generation and also that of many which followed up to the present day (Martí, 1931). However, it is appropriate to place more emphasis upon the material conditions of his time than on his view of society, which did not rest upon mythical ideas of a fatherland. José Martí was the son of modest Spanish immigrants who settled in Havana. As a journalist and a man who spent all his money on travelling, he was capable of taking a world view on the situation that had flared up in Cuba. Martí envisioned a new war of independence, waged by the vast majority of the people against the colonial masters and against the exploiting Creole elite who were labelled as traitors to the Cuban movement. The only way Cuba could be free, according to Martí, was through an organised collective rebellion against the social, political and economic structures governing the island. Martí spent a number of years in exile in the United States (Thomas, 1971:292–309). Initially, he was impressed by the workings of democracy in that country. However, the situation he was living in moved Martí to consider the faultiness of AngloSaxon democracy, i.e., the division of society into classes consisting of capitalists and the vast majority of the people, with political parties representing the same reality. During his expatriate residency, he came to know other exiled Cubans, many of whom were involved in struggles of their own, while looking for the betterment of material living. He also came to know Puerto Ricans in exile in New York who like him were interested in initiating a united front against Spanish colonialism. During this time, Martí became clear in his vision of a future society. Democracy, in his view should not have resembled the bipartisan system found in the United States, where both parties

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were ‘slaves to their capitalist owners’ (Martí, 1931). Martí understood that the struggles of all human history hitherto had been the struggle between oppressors and oppressed (August, 1999:94–8). He was by no means a Marxist. But many of the ideas Martí was famous for were congruent with an economic interpretation of history. Those surrounding Martí in his independence movement were certainly influenced by Marxists. Cuba’s first revolutionary movement: working-class movements and the PRC – first links In 1890, José Martí founded a popular and unconventional revolutionary movement called La Liga de Instrucción. In reality, it was a training school for revolutionaries in New York, the majority of whom were Cuban and Puerto Rican workers (mostly mulattos and blacks). Out of this school developed the clear idea that no other option than outright independence was viable for Cuba (Morales, 1975:27). The movement grew, as did Martí’s popularity, to the point where branches of La Liga were established around the East Coast of the United States. Among them was the section of tobacco workers in Tampa, Florida, where a union of mostly socialists (both Marxists and anarchists) was formed. Some accounts of these young movements and socialist groupings note that a theoretical 10 per cent of workers’ wages was spent on organising the independence movement (Baliño, 1964). Finally, in 1892, Martí founded the Cuban Revolutionary Party (PRC), which had the goal of independence for both Cuba and Puerto Rico and the establishment of a new social order. Viewing the Cuban people as a whole, the PRC was to become the vanguard party of the immense majority of the people. For Martí, it was important to distinguish the PRC from all other parties on the island, never allying itself with the loyalist conservatives or the Creole liberals because these parties did not have the interests of the masses at the forefront of their agenda. On various occasions, Martí noted that these parties were estranged from the Cuban people and had nothing to do with them (Martí, 1889:18). Additionally, Martí started placing emphasis on the need to maintain the agenda of Cuba’s independence as not only separate from but also in conflict with the United States’ expansionist tendencies (Martí, 1931:271–3). The second War of Independence On 24 February 1895 the Second War of Independence was launched from Oriente (the eastern provinces). It was called El Grito de Baires,

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Baires being a town where the rebellion began; a call to armed struggle for independence and democracy. For the first time in modern history, an entire nation, consisting mostly of working-class people from all kinds of ethnic backgrounds, enjoyed unity in a single political party that belonged to them and whose purpose was the establishment of a new social order, with total emancipation as the prime objective. José Martí died in battle shortly after the outbreak of the second War. But in September 1895, a Constituent Assembly gathered in the central province of Camaguey in order to create a new constitution. The constitution in this case would be in stark contrast to the first, composed by common people who only had the interests of the masses in mind (August, 1999:70). What needs to be emphasised though, and still remains clear in Cuban history, is that the struggle for independence from colonialism – and later imperialism – was organically linked to the formation of national identity, or what is called cubanía. The leaders and writers of the Cuban wars for independence were genuinely interested in building a new society. This view reappeared in the ideas Martí had on the concept of a single political party representing the most progressive ideas for the masses and presented by the experience of the masses. Certainly, one should not romanticise the idea of interracial unity. José Martí, like many other whites of his time, possibly including Marx, saw anti-racism not as a moral idea but as a political necessity. But this material need, to remain unified in order to attain progress, affected the population’s conscientiousness and defined the broad limits present in social change in Cuba. The consequences of a late independence During the time of the Cuban, Spanish and American War (1898), Cuba was already integrated into the ever-expanding world market system, which was dominated by England and the United States. Prior to this, the British Empire was already declining and as the US economy grew, so did the expansionist tendencies induced by market need. It was the Cuban, Spanish and American War that consolidated US hegemony over the Americas. Simply put, the United States saved Cuba from Spanish domination. But the struggle for independence started long before the United States intervened and the ideas of anticolonialism blossomed into the ideas of anti-imperialism and the cry for social justice. However, as stated before, the United States, as a political structure of vested interests in trade and commerce, always had its eye on the jewels of the Caribbean, especially Cuba. If Cuba

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were not to be integrated into the political structure of the United States, then certainly Cuba – both economically and politically – should at least have been subordinated to the interests of US capitalists. José Martí and other revolutionaries of his time recognised North American expansionist interests as a threat to sovereignty (Martí, 1889:271–3). Hence was born the Cuban revolt against a hegemonic order and a new movement that was later labelled anti-imperialism. US INTERVENTION AND NEO-COLONIALISM The Cuban, Spanish and American War ended with the Treaty of Paris in December 1898 whereby Spain sold all her overseas provinces in the Pacific and the Caribbean, including Cuba and Puerto Rico, to the United States. To the delight of the annexationists, US military occupation ensued. US martial law took control of the island with total disregard for the Cuban movement of independence. In fact, US intervention immediately quelled the already burning fire of revolution. Tomas Estrada Palma, president of the PRC since Martí’s death, liquidated the singular party and recognised US supremacy. A military proconsul (General John Rutter Brooke) appointed by the US president presided over the island and Cuba became a neo-colony of the United States (Thomas, 1971:436). From the very beginning, the Cuba that emerged during the half-century of struggle by the masses came into conflict with the government that would be put in place by the United States. The view of the US ruling elite circles was that the Cubans were incapable of governing their island. The attitude was essentially racist and additionally frustrated the project that José Martí had in mind when he founded the PRC (August, 1999:101). A liberal, neo-colonial constitution In 1901 the US government invited members of the Creole elite to participate in drafting a constitution, the first of the independentto-be Republic of Cuba. But the very structure and conditions upon which the constitution was fabricated indicates the level of independence the Republic actually had. The United States, now a neo-colonial power, had to figure out what kind of government they wanted to install. Foreshadowing problems to come and in fear that the spirit of revolution might resurrect the Cuban struggle for complete independence and rule by the masses, Secretary of State John Hay recommended that some clauses be included in the Constitution

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of the Republic of Cuba which would allow the US government (represented by the military) to intervene in the case of foreign aggression or domestic disorder. This was called the Platt Amendment, named after Senator Oliver Platt. It met much opposition, even from within the new ruling elite of property owners. But the United States did not budge from their position; on the contrary, independence would not be granted and a constitution would not be approved if the amendment were not included. The compromising nature of the elite led the future leaders of the Republic to vote in favour of the US-fabricated constitution. It was enacted in 1902 and the Republic of Cuba was inaugurated that same year. For this reason, in Cuban history books today, the period between 1898 and 1959 is referred to as the neo-colonial period (Ibarra Cuesta, 1995a). Sugar dependency During the neo-colonial period, the entire economy was structured around sugar, as it had been under Spain. The difference now was that slavery had been abolished and a newly born working class with a tradition of struggle was on the rise. While US companies started buying up most of the arable land for sugar production, new mills and ports sprouted up all over the island. New technological advances, such as the steam power mills and increased usage of railroads, allowed for a greater concentration of working-class people, in the cities as well as in the countryside. Three forces antagonistic towards each other summed up the conflict of social classes. First, the US capitalists, who practically governed the island and curtailed self-determination. Second, the domestic bourgeoisie, who had their time tied up between governing island politics in servitude of the US capitalists, on the one hand; and on the other, aspiring Cuban capitalists who usually became the middle men between smaller sugar-cane fields, tobacco and rum factories and the larger US corporations. Their primary preoccupation was the guarding of advantageous sugar trade deals in quotas and price arrangements. On few occasions were the elite happy with the US–Cuban sugar deals. Third, was the Cuban working class, who made up the majority of the Cuban people, standing in direct opposition to all other ruling classes and still carrying the tradition of resistance learnt during the struggle for independence. It is ultimately this third and last social force that requires particular attention, since the purpose of this chapter is to delineate the background or pillars of socialist Cuba.

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THE FIRST LABOUR MOVEMENT As mentioned before, the working-class movement was strongly linked to the leaders of Cuba’s war against Spain and US intervention. Even prior to the Cuban, Spanish and American War, the first socialist groups started to take form. These included: the Club of Socialist Propaganda, founded by Carlos Baliño; the Karl Marx Club, founded by Augstín Martín Veloz; and the Worker’s League of Oriente, founded by Rafael Guiterras (Soler Martínez, 2000). The founders of these groups were the intellectuals linked to the PRC. Carlos Baliño, a friend of José Martí and member of the PRC, was originally an anarchist who eventually shifted in his political thinking towards organised working-class action. He later adopted Marxist ideology and founded a socialist party in 1905 and two decades later a communist party. The working class in the periphery In contrast to industrial Europe and the United States, where the working-class movement focused strictly on class struggle, their peripheral counterparts – those similar movements in the agricultural economies – additionally had the task of fighting imperialism. In Cuba this meant that the working class, which already had a tradition of political organisation against colonial Spain, had to form an alliance with other parties (including the nationalist middle-class elite) in order to fend off Yankee neo-colonialism. As a result, socialist organisations were led, not by the common worker, but by leaders from among the few who were literate (usually university-educated descendants of the Creole class), who did not always understand the interests of the class they so pretentiously represented. This produced a pattern of splintering and division of the revolutionary movement that was once unified under the PRC. Anarchist roots and the move towards socialism Due to the influence of Spanish immigrants, the revolutionary tendencies among the working-class movement of the time happened to be chiefly anarcho-syndicalist. In groups, workers of the anarchist movement read Spanish political literature, exchanged Spanish ideas and followed the tendency to form workers’ movements with Spanishstyle organisation. For instance, in 1905, Carlos Baliño founded the Partido Obrero Socialista, modelled after the Partido Socialista del Obrero Español (PSOE) in Spain; but its members were primarily

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anarchists (Thomas, 1971:575). This socialist party grew as more immigrants with revolutionary tendencies flooded the Cuban labour market. The move from the anarchist organisations to the socialist and communist parties can be attributed to two reasons: the triumph of the Bolshevik Revolution in 1917 and the disillusion of many workers with the collaborationists (those anarchist and socialist leaders who compromised with state figures and policies). A fragmented beginning The socialist groupings also splintered into varying tendencies and currents as a series of debates concerning ‘what is to be done’ dominated the left from its inception, especially after the revolution in Russia. This occurred not only in Spain, but also all over the world and in Russia itself. Most socialists took the path of collaboration, meaning that the revolution was not immediately possible. So it was necessary to ally the workers’ movement with other movements or political parties represented in the state apparatus in order to achieve economic benefits and to bring national interests closer to the masses, i.e., to build socialism by reform rather than revolution. The development of different Marxist theories caused further – often violent – divisions among the revolutionary forces. Stalinists persecuted Trotskyists and Trotskyists criticised reformists. Cuba was no exception. Additionally, there were those members of the Creole elite (of leftist leaning) who were frustrated with the neo-colonial experience and returned to martiano (meaning from Martí) national ideology. So while one tendency was geared towards making advancements in the workers’ movement through compromise with the powerful, the other concentrated on restoring national sovereignty and dealing with immediate contradictions in society. The former were the communists who eventually collaborated with the dictator Batista; the other tendency derived from student organisations that depended on ‘orthodox Cuban’ ideas, based on the writings of José Martí, which tended to be essentially relevant to the Cuban experience. This second group was non-international, and carried with it a sense of social justice and equality for all citizens. But they were not at all Marxists. From this second group came the heroes of Fidel Castro’s 26 July movement; this will be dealt with later. Nevertheless, due to the level of political involvement, Stalin’s worldwide communist movement remained dominant against imperialism in Cuba, and it did so with a strange bourgeois accent.

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The first Communist Party and Machado’s terror On 17 August 1925 the Communist Party of Cuba – called the Union Revolucionaria Comunista (URC) – was organised in Havana under the leadership of Carlos Baliño. This first communist party centred around the interests of the working class and worked within the various unions of their time; its members participated heavily in other social groupings and popular organisations: youth groups, women’s organisations, groups unifying blacks, and peasant unions. This first Cuban communist party was established during a very confusing time in history. It was established under the tyranny of the US-installed military dictator Gerardo Machado, who ruled between 1924 and 1933. He was put in place to control the masses and quell all strikes against the ruling classes. Machado himself was a member of the ruling class; he was the former director of the USowned company General Electric in Cuba (Beals, 1933:101). Gerardo Machado was known to run affairs with repression and terror, but mostly he was famous for his anti-labour-movement tendencies. He came to power, or rather was installed, because he promised New York businessmen not to let any strike last longer than 24 hours. He was responsible for the arrests, murders and deportations of union organisers and labour movement leaders. Talk of labour organising was to be squashed at its inception (Binns and Gonzalez, 1981:5–7). Most of its leaders were put in prison or sent to exile in Mexico or Spain. Since most of the original leaders were persecuted or even murdered, the remaining members of the party and the syndicalist groupings of those who adhered to the ideas of Marxism had to meet in the most repressive, occult conditions. Despite Machado’s reign of terror, the worker movement continued to grow in the underground. The spirit of resistance, struggle and revolution had not been lost and the tradition of fighting against the ruling classes had become much more acute. A WORKERS’ REVOLUTIONARY ATTEMPT At the beginning of 1933, sugar-cane workers had stepped up their striking patterns. Cane fields were set on fire, while some 20,000 mill workers struck for higher wages at 25 sugar factories (Marconi Braga, 1997). However, the government retained enough power to repress workers and force them to complete the harvest. In August, the recently united National Confederation of Cuban Workers, which was still

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illegal, sponsored a general strike initiated by Havana bus drivers and other urban workers. The entire economy came to a halt. What began as a strike of bus drivers in Havana escalated rapidly into a general national strike of workers and students against the government. Workers demanded higher wages and shorter workdays, improvement in living conditions, job security and recognition of labour unions by management. Management refused to meet these demands and depended on Machado’s leadership to squash the general strike. But the workers threatened the lives of managers; they helped themselves to food and supplies from company stores and warehouses. The URC initially played no role in the rising, but quickly moved to take control when a sort of anarchy ruled. They declared the establishment of ‘soviets’ or workers’ councils and often came into direct confrontation with US Marines who were in place to protect US property. Meanwhile nationalist and left-wing student organisations on the university campuses organised demonstrations against the dictator and against US intervention in domestic affairs. Among them: Ala Izquierda, Directorio Revolucionario Estudiantil and Joven Cuba. These groups were allied with the Partido Revolucionario Cubano Autentico, calling themselves the authentic representatives of Martí’s mission (Thomas, 1971:706). The URC, in their control of the workers’ movement, together with the Autenticos and revolutionary student organisations, led the revolt against the US-installed dictator. Nationalist tendencies and the lack of a united front The strike forced President Machado to flee the country, and an interim government under Carlos Manuel Cespedes was formed. But Cespedes had no strategy to pacify the radicalised workers and his government lasted barely three weeks before it was toppled by a military rebellion led by Sergeant Fulgencio Batista (Thomas, 1971:634–49). Batista collaborated with the students and eventually gave in to their elected leader Dr Grau San Martín. Belonging to the generation of radicalised students and revolutionaries who recognised US intervention as a threat to democracy, Grau intended to create a Platt Amendmentfree Cuba. Grau San Martín promised nationalisation of Cuban industries and improvement in living conditions for the masses. The workers remained in control of the mills throughout most of September 1933, forcing a change in legislation governing practically every aspect of sugar-cane production (Marconi Braga, 1997). For a very brief period there was an alliance between the communists and the nationalists, as Lenin had said there should be.

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The URC policy was that of backing the new president and creating a coalition government with the nationalists. But Grau San Martín’s cabinet lasted only a few months, as the United States would not tolerate a nationalised sugar industry in Cuba. Batista was summoned by the US Ambassador and told that Roosevelt would never recognise Grau’s presence (Philips, 1935:95). So when Batista toppled Grau San Martín’s government, the new generation of revolutionaries splintered and the workers’ movement fell apart. If there ever was a presence of a revolutionary vanguard in neo-colonial Cuba, it certainly was absent during this period of history. Batista and the communist movement The world usually remembers Fulgencio Batista as the cruel dictator who capitulated to Fidel and Che’s revolutionary movement in 1959. He was known as an irresponsible despot, a corrupt delegate of US interests on the island, and the violator of the 1940 constitution. But few remember or want to remember Batista as the first democratically elected Cuban president, who actually installed the first democratic constitution. It was the same Batista who was endorsed by the Communist Party URC, the friend of labour and the president who, as a friend of President Roosevelt, sparked the New Deal era in Latin America. As throughout most of Latin America, Cuba’s Communist Party followed the line of compromise with the liberal order; it was malleable, it was gullible, it was corrupt and it was bourgeois. The orders came from the Soviet Union and posed no real alternative for the Cuban working class. Under Secretary General Blas Roca, the Communist Party never sought to rule Cuba, it only supported the liberal regime in its move towards progressive social conditioning. During the Second World War, the Communist Party – in following Stalinist policy of alliance with liberal democracies against fascism – maintained a stance of unconditional support for the United States, the United Kingdom and the Soviet Union. This meant communist unconditional support for Batista’s government, especially when the US President declared war on the Axis powers. Joining the allied forces and actually participating in the war fortified Batista’s popularity; it consolidated and legitimised communist participation under the Batista regime. In pursuance of creating a new legitimate government, Batista invited the few remaining Communist Party members (who had all initially opposed the pursuance of national strikes) to join his cabinet

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and together draft the constitution of 1940. Batista in many ways was a nationalist and he was not always trusted by the United States; his interests lay in bringing stability and order to the Cuban economy, even if that meant a partial nationalisation of the Cuban sugar industry. He declared that his intended policy was that of giving the domestic capitalist class a larger share of the sugar industry. Batista sought to enlarge the state machine by incorporating various trade unions into it. In 1940, he recognised the Cuban Workers’ Central (CTC) and the communist leadership supported this move.2 Thus, the URC became a party whose principal interests were no longer working-class power and revolution. Rather, it stood for nationalist populism based solely on the idea that reforms through legislation would help implement a political programme that would move the government towards some sort of social democracy. The communists moved quickly and with the same velocity changed their political line. After the X Plenum of the Party, representatives went to Batista to share their support for a new constitutional assembly. In return, the Party would be legalised. This led Batista to recognise the Communist Party as a democratic institution whose guidelines fitted within the political workings of a future social-democratic constitution and the framework of the capitalist system. In September 1938, the Communist Party was inscribed into the electoral polls. The Comintern’s journal, World News and Views, commented: ‘Batista … no longer represents the centre of reaction … the people who are working for the overthrow of Batista are no longer acting in the interests of the Cuban people’ (World News and Views, 1938, No. 60). At no other time in Cuban history did the Communist Party attain as much power in the country’s political system as it did under Batista. The united front was finally dissolved and its members were incorporated into the Communist Party. A new national labour confederation was established and run by communists; this was the CTC (Central de Trabajadores Cubanos), with Lazaro Peña as its secretary general (Alexander, 1957:287). Batista seemed quite comfortable in power since his natural enemy – the labour movement – had turned into a partner. Batista’s populism was also nourished by his alliance 2. The CTC was founded in 1939 as a follow up to the attempted, united National Confederation of Cuban Workers. Since its official recognition by the Batista government in 1940, the CTC has been the only national organisation representing the labour movement in Cuba.

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with other popular leaders of Latin America, for instance with President Cardenas of Mexico. Only Grau and those revolutionaries who advocated a more independent Cuba represented a real oppositional threat to Batista. But there was no hope of tempting the communists into forming an alliance with Grau in his Autentico Party, as the URC was quickly co-opted into the neo-colonial structure. The 1940 constitution and the perverted alliance The constitution was social democratic in character; it imitated a post-New Deal system, which recognised the responsibility of the state to control unemployment, to exploit Cuba’s subsoil and to create a maximum holding of lands and property. Two years later, the CTC was given official status as the national labour organisation, and Juan Marinello – a communist – was appointed to Batista’s cabinet as a minister without portfolio. Batista even allowed members of his cabinet to participate in international labour conferences (Thomas, 1971:715). The alliance between Batista and the communists only grew stronger. Though running independently in the elections, his backing was essentially communist. The only candidate that the URC endorsed was Batista. This is not to say that Batista did not enjoy backing from other sectors; as a candidate who stood for economic stability and support for the national sugar industry, members of many classes upheld him. The strengthening of the ties can also be attributed to wartime politics. The more drastically the Second World War affected the American continent (e.g. by the presence of Nazi submarines in the Caribbean), the more the nation pulled together in order to combat the common enemy. Both Stalin and the US Communist Party endorsed this call to unity. Batista used this, his most glorious moment, to consolidate power and also to take advantage of world sugar prices which – as in the First World War – were advantageous to Cuba. Russia, as an ally in the war, set up its embassy in Havana, and Batista greeted the ambassador personally. Consequently, favourable sugar price arrangements were made between the two countries. It may be inconceivable to think that the United States had no problem with this, but the fact remains that, in 1944, Batista made the best sugar deal with the US corporations since 1924, with a fixed quota of 4.25 million tons at $330 million. Notably, sugar workers’ wages increased by 10 per cent (Thomas, 1971:735).

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By 1944 the communists had changed their organisation’s name from the Union Revolucionaria Comunista to the Partido Socialista Popular (PSP), still remaining under Secretary General Blas Roca. Their programme was progressive but not in the least radical. They called for racial equality, rights for women and nationalisation of large-scale industries, but not even for land reform. It would ‘no longer’ be a revolutionary movement, rather a democratic party that upheld the values and laws of the 1940 progressive constitution, while supporting the rights of the labour movement. But while the communists conducted themselves within the confines of a fairly progressive social and political framework, the workers’ movement from the base (and not the communists at the top) started to rearrange their alliances with other revolutionary forces; namely, those whose political platform centred around anti-imperialism and a fairer distribution of the nation’s wealth in a post-war economy. Additionally, opposition to the Communist Party grew among the university student body, which criticised the Moscow-mandated policy of compromise with the United States and corrupt, authoritarian regimes. The voting population shifted to the nationalist side. The authentic and the orthodox Although Batista was a popular leader, his personal politics alienated most of the intellectual circles. His priorities were to create political stability and promote economic progress. At the time, this was only possible by creating a coalition between capital (including international capital) and labour (which was controlled by the Communist Party); Batista’s politics were certainly opportunistic. Since the intellectuals and the revolutionary middle classes were not interested in forming an alliance with the working-class movement – because of the compromising tendencies of the communists – these in turn missed out on a chance to lead the country during economically prosperous times. Additionally, the intellectuals alienated themselves as they ignored or underestimated wartime politics. Throughout Batista’s presidency, the Autenticos maintained their independent line. They were never concerned with the anti-fascist and imperialist wars among other countries; nor were they ever keen on pleasing the United States or fearing the Platt Amendment. This was at least so in their discourse; their governmental experience told a different story. The workings of democracy in Cuba seemed quite real, as the Autenticos replaced Batista in the 1944 elections. Grau won on his party platform of furthering progress in Cuba and promoting more

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nationalisation. Though they backed Batista to the bitter end, in no time the PSP cuddled up to the new president; again, pretending to have always supported the interests of the working class. Under Grau, no communist ever became a cabinet member, yet their compromising manner did constitute an understanding with the new president. In the underground, some of Grau’s cabinet members were involved in dealing with Trotskyite groups and independent militias, which had no link to the popular classes. Corruption, gangsterism and assassinations plagued Grau’s government. The Autenticos eventually lost all their legitimacy; it was time for a new kind of politics. Eduardo Chibás, the wealthy student leader and radical antiimperialist, led the left-leaning student organisations and workers’ movement to realign them with President Grau when he returned to power in 1944. However, corruption within the Autentico party, along with police violence and dirty politics, later forced Chibás to break with Grau. Additionally, Grau was never successful in nationalising industry as he had promised. Chibás formed his own group called the Partido del Pueblo Cubano Ortodoxo. The name suggested that they were the real repositories of the revolutionary tradition ignited by Martí. Often found in bloody street fights and as the victims of anonymous bombings, the Ortodoxos suffered a stunted growth, limited to a small group of intellectuals. Their slogan was: ‘Cuba, free from the economic imperialism of Wall Street, and from the political imperialism of Rome, Berlin and Moscow’ (Thomas, 1971:752). The Ortodoxos were certainly nationalistic, but also socially progressive. Eddy Chibás was known to have hated the communists because of their inconsistencies and their corrupt alliance with the neo-colonial state. He was famous for quoting Marx and Lenin, as well as Martí, in his arguments against the communists. Unfortunately, his degenerating mental health led him to commit suicide (Conte Aguero, 1955:439). His organisation still lived on but never got far in a Cuba whose political system had rotted to death. Nonetheless, out of this small current was born the radical tendencies of Fidel Castro’s 26 July Movement. The end of liberal democracy Towards the end of his presidency, Grau turned his back on all his former comrades in the hope of maintaining stability and avoiding a US invasion or another coup led by Batista. He employed repressive tactics to control any let-loose radicals who might have caused a

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threat to the establishment. In violation of constitutional law, he curtailed political rights and shut down any newspaper that criticised him (Alexander, 1957:287). Furthermore his secret police was known to have attempted to cleanse the CTC of Communist Party leaders such as Lazaro Peña (Fundamentos, April 1947). The Party did grow in numbers, but by 1947 the government took control of the CTC and banned the PSP because it posed a threat to stability. The new union leaders were gangsters, similar to the ones found at the time in the United States. Grau was voted out during the following election. He was followed by Carlos Prío, a president who once again fooled the masses into believing that they could vote out US hegemony and vote in clean government. But this man, like those before him, proved to be made of empty promises. Due to the political violence that had spread throughout the country and pressure from the United States to clean out the communists, Prío’s ruling was just as autocratic as Grau’s before him. His inability to form any coherent alliance among the popular classes widened the gap between government and real political and economic power. The 1948 presidential race was the last multiparty election Cuba has ever seen. The corruption and violence that accompanied Prío stand as a reminder to post-revolutionary Cuba that the uselessness of electoral politics in a neo-colonial setting presents itself as an impasse for progress and independence. Batista returns Fulgencio Batista returned to Cuba in 1952 and ruled until 1959; he did so more viciously than ever before. All his energy was spent on eliminating the last vestiges of the constitutional democracy he himself had installed back in 1940. The culture of revolutionary – or even reform – politics hid underground. Some of the trade unions’ limited membership was relatively privileged economically, but any political opposition was violently crushed. The rural workers, on the other hand, remained poorly organised because they were unemployed for 5 or 6 months every year. During this period, Cuba became nothing more than a sugar plantation for her neo-colonial masters. The country was a playground for gangsters, gamblers and the seediest North American tourists. By the 1950s, 80 per cent of all Cuban imports came from the United States; $1 billion of US capital was invested in Cuba. The US had a virtual monopoly of foreign trade via the 1934 Reciprocal Trade Agreement. Agriculture, with 41.5 per cent of the labour force,

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dominated the economy and sugar dominated agriculture. Eightythree percent of available land was under sugar and it made up at least 80 per cent of exports, another 10 per cent being tobacco. Sugar constituted 36 per cent of the GNP. The rest of the economy was little developed and utilities remained in foreign hands. Hansen states that ‘services, including a large sector of the economy devoted to catering for US tourism, [...] employed 20.1% of the entire workforce. A vast state machine, riddled by graft and gangsterism, took an estimated 25% of the GNP’ (Draper, 1962:5–10). AN ALTERNATIVE TO THE WORKERS’ MOVEMENT So long as the entire economy remained dependent on the United States, the less powerful sectors of the urban middle class could not develop. Not only was there no talk of social mobility but their children were also forced into the working class (Ibarra Cuesta, 1995b:197). They, together with middle farmers, small peasants and university students, formed the backbone of the opposition to Batista’s dictatorship. With the support of the most radical remains of the organised working class, only the wealthy and well-educated militant students formed a viable alternative. The surviving members of the Partido Ortodoxo, in the tradition of Eddy Chibás, brought together various dissidents in 1953 to organise a violent attack against Batista’s military police. Their leader was a young lawyer named Fidel Castro. Their ideology was focused around independent national development, the betterment of living conditions for the poor and fair politics. The leaders were also influenced by the ideas of Martí, who had preached against dependency on colonial or imperialist powers. Their demands: the re-instalment of the 1940 constitution, the return of political freedom, nationalisation of the country’s largest industries and a radical redistribution of land to the peasantry (Castro, 1961b). It was the members of this movement who realised that the Cuban government was too heavily influenced by US economic interests and those of the domestic capitalist class who served their imperial masters. Compromise was not a possibility. Because of the sad history of the workers’ movement in Cuba, socialism was almost entirely discredited. The potential mass base for revolutionary organisation – the working class – was effectively insulated from political action, because their leaders had been killed off. The only way to bring Batista down, it was thought, was through the same

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means that were employed in 1933 against Machado, i.e., a long series of strikes directed by a conscientious and revolutionary intellectual leadership. The new revolutionaries, however, established a precedence in the history of neo-colonialism; that is, the tactic of guerrilla warfare. Fidel and the 26 July Movement It is often the case that when the history of the 1959 Revolution is written, the attack on Moncada becomes identified as the starting point. Firstly, because it was the initiation of the armed struggle against the previous regime of Fulgencio Batista. Secondly, because the world famous speech in his own defence was presented at the ensuing trial of the young lawyer Fidel Castro. Fidel Castro was the son of a wealthy sugar-cane grower; his family belonged to the middle class. After law school, Fidel joined the nonMarxist Ortodoxo Party and was a congressional candidate in an election that was annulled by Batista in 1952. As mentioned before, the Ortodoxo Party was called orthodox because it followed the line that government in Cuba should be geared towards national independence, democracy, and the welfare of the people; it was orthodox in Martí’s teachings. After Batista’s coup d’état in 1952, Fidel petitioned Cuba’s Supreme Court to declare that Batista’s government was unconstitutional, undemocratic and should be dismantled. But the petition was denied and Cuba’s national legislative body took no action. Frustrated with the absence of any kind of democracy, neither popular nor electoral, Fidel Castro and a number of Ortodoxo Party members organised an armed movement against the regime. Students, journalists, religious figures and the few poor who had the opportunity to hear Fidel’s arguments supported this movement. On 26 July 1953, Castro led approximately 200 armed citizens to attack the Moncada military barracks in Santiago de Cuba. Castro stated that his inspiration was José Martí, the year 1953 marking the centenary of Martí’s birth. If the attack on Moncada is seen simply as an attempt to seize state power, then it could be considered a failure. Most of the 200 rebels were captured and tortured, half were killed and the rest were imprisoned. Castro did not find support from the political parties; even the Moscow-linked PSP repudiated the act. Once again, the workers’ movement had failed. But if the 26 July attack on Moncada is portrayed as the spark of the national interest in overthrowing

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Batista and as a call to the nation for revolution, then it can be seen as the birth of a movement that years later would seize state power and become the biggest thorn in the side of US hegemony. History will absolve me: a platform Fidel Castro, at the age of 28, was brought to trial. Proud of being a well-read man, he was capable of conducting his own defence. He produced a five-hour-long speech, which is popularly called ‘History Will Absolve Me’. In this speech Fidel articulates the most popular demands against the Batista dictatorship. The occasion provided the platform for the Revolution, legally, politically and socially. The primary concern was that the dictatorship had violated – by its own existence – the constitution of the Republic. Castro demanded that the constitution be reinstated and that the democratic rights won under former presidents be safeguarded. The constitution itself gave the Cuban people the right to rebel against any government that violated democracy, even if this was the government that had created the document. As leader of the 26 July Movement, Fidel stated that it was his duty to act upon constitutional order in the name of the people of Cuba. In addition to supporting the constitution, Fidel Castro outlined Cuba’s principal problems. In a nutshell, Cuba’s main problems were described as: the distribution of land and the condition of the peasantry; the lack of industrial capital; education; rural as well as urban unemployment; and health. A serious problem that existed at the time was the large number of people who were seasonally employed and spent half the year languishing in rural or urban hell. Finally, there was the petit-bourgeoisie, small business owners who found themselves unable to grow economically. The speech was essentially in the interests of the nation as a whole. It expressed the thirst for development, which was common among the countries of the periphery and semi-periphery (Wallerstein et al., 1996). Fidel Castro’s eloquent words did not suffice to keep him out of prison. He was, however, released two years later on a pardon arranged by relatives and friends. Fidel’s popularity had grown during those two years and his name had become known all over the cities and throughout the countryside. Fidel’s intentions were to build a movement that was even stronger and incorporate a broader support base. Most of all, he wanted to drive the armed struggle movement towards rural Cuba, where the most desperate of Cuba’s workers were to be found. But upon his release, Fidel Castro took to exile in Mexico,

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where he met other aspiring young leaders and revolutionaries, such as the Argentine Ernesto ‘Che’ Guevara.3 The Rebel Army Castro, Guevara and a number of other rebels prepared themselves in Mexico, the ‘France of the Americas’, where revolutionary exiles often took refuge. In Mexico, Castro sought economic and political support from wealthy sympathisers (Thomas, 1971:877–86). In 1956, the rebels sailed on a boat – the Granma – back to Cuba to take on a second attempt at overthrowing Batista. On its arrival at the eastern part of the island, Batista’s army attacked the boat and killed off most of those who arrived with Castro. Only a few guerrilleros escaped. Among the survivors were Raul Castro (Fidel’s brother) and Che Guevara, who established the eastern base of operations. The group hid in the Sierra Maestra mountain range. While Fidel Castro and the rebels were preparing themselves in Mexico, the movement was being built in Cuba. A Rebel Army was established, centred on conscientious peasants, the disenfranchised young professionals, workers, and the hopes of a returning Fidel Castro. Thousands of men and women awaited the leader to initiate the seizure of state power. The motivation was less ideologically clear at the time and more based on the hopes of improving material conditions for the bulk of the population. Those actual members of the Rebel Army were not, however, the vast majority of the people. Nevertheless, most rural workers and peasants supported the three3. Che Guevara was a young man trained in medicine. Upon graduating from the School of Medicine in Buenos Aires, he set out to explore Latin America on his motorcycle. Through his journeys, Che became familiar with the social and economic conditions of the region, recognising the need for change (Bayo, 1960: 66–7). His humanistic views developed into a spirit of repugnance against the United States – a country that has played an enormous role in dictating the economic policies of Latin American governments. It was the United States that often intervened, militarily, when liberal democratic elections were not going the way US businessmen desired. At the same time, Che read a lot of Marxist literature and became very critical about social movements that countered actual existing economic and political structures (Dalmau, in Granma, 29 October 1967). Upon witnessing a coup d’état in Guatemala in 1954 after a communist party government was installed through liberal democratic elections, Guevara favoured the idea of an armed movement of workers and peasants against the state. Guevara, through the Argentine embassy, escaped the Guatemala massacre and ended up in Mexico where he met up with Fidel Castro.

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year struggle. The urban workers’ movement also joined in supporting Fidel Castro and the Rebel Army. Activities in city centres, demonstrations, and student strikes all aided in gaining support for a revolution. Castro also benefited from the fact that large sections of Batista’s military had defected and joined in armed struggle against the very unpopular dictator. The political parties that placed their faith in a restored liberal democracy, on the other hand, did not applaud the Rebel Army’s efforts until perhaps a couple of months before the Revolution triumphed in 1959. Castro’s leadership in military planning was keen. Not only did Fidel use historical symbolic measures in mustering strength, but his military tactics were very similar to those used by Antonio Maceo and other leaders of armed resistance during the fight for independence from Spain a century beforehand. He used columns, starting from Oriente, the east, and moving towards Havana, the capital, sweeping the island and cornering Batista’s power base. Finally, after nearly three years of struggle against the tyrant, Fidel Castro and the Rebel Army marched triumphantly into the city of Santiago de Cuba on New Year’s Day, 1959. The 500-mile Central Highway became one of the largest rebel-parades known to man, welcoming Fidel Castro’s rise to power. The population of disenfranchised peasants and workers participated in squashing the illegitimate structures reminiscent of a falling dictatorship that did not even enjoy support from the US embassy. As many Cuban senior citizens can recall to this day, Che Guevara was sent ahead of Fidel to La Habana where the armed, revolutionary movement congregated days later to declare the triumph of the Revolution. A united front and material conditions The triumph of the 26 July Movement cannot be attributed to guerrilla warfare alone. There were other material conditions that were also responsible for the possibility of revolution in Cuba. These essential elements cannot be underestimated. The desire for a revolution received major support from those segments of society that were victims of seasonal unemployment. Without any kind of social security to back them up, the landless peasants who worked on the fields only during the winter months were subject to hunger and disease. The high rate of unemployment on a seasonal basis is directly attributable to monoculture dependency. Rural workers and their families organised themselves into squatter movements that took over lands that were primarily owned by absent landlords. Additionally, on their side were

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the university graduates who could not find employment. Few professionals were practising. Lawyers had no courts, physicians had no hospitals, and journalists had no newspapers. Some of these conditions could be found in other countries of Latin America and the Caribbean, but what made Cuba the land of revolution was the movement’s willingness to confront the country with these problems. In turn, this eagerness stemmed from student solidarity with the peasantry, the tradition of popular rebellion, which was fresh in the minds of the revolutionary leaders, and the arrogant presence of large foreign corporations. Furthermore, and possibly a cornerstone to popular rebellion, there was Cuba’s proximity to the United States, both geographically and technologically. During the 1950s, Cuba enjoyed one of the highest levels of income and standard of living in Latin America. In terms of consumer goods, Cuba ranked first in Latin America in the number of televisions, radios, telephones, and automobiles per capita. The figures surpassed even those of Spain and most of southern Europe (Thomas, 1971:1093–107). These advances were due to consumer habits originating from the United States. The desire to revolt was only exasperated by the inequalities between those who had access to the consumer goods and those who had not. The shaping of the Revolution The Revolution did not happen within one day. The social forces and organisations that would come to the fore during the first years of Castro’s rule were already formed while the rebels hid in the Sierra Maestra. Among them were the Institute of Agrarian Reform (INRA), which later became the ANAP (National Small Peasants Association), and the Worker’s Front for National Unity (FONU), which organised the strikes and demonstrations against Batista. Many communists who abandoned party politics took part in these organisations. Meanwhile, some of the leaders of the PSP, the Autenticos and the Ortodoxos were rejected when attempting to partake in the realignment of the social forces. This was primarily due to the mistrust between the leaders of the 26 July Movement and the aforementioned groups. Additionally, on the university campuses there was the Directorio Universitario, which adhered to the 26 July Movement from the time that the Granma landed. Radical transformations After Fidel’s appearance in Havana, the Revolution started to permeate all sectors of society. Batista’s police authorities were brought to public

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trial and the homes of the bourgeoisie were looted. Moralistic revolutionaries closed down gambling halls, and brothels were converted into trade union halls. Certain freedoms were immediately enacted. Hoy, the communist newspaper, was permitted publishing rights once again. Although rule by decree put a bar on all political party activity, revolutionary movements were allowed to associate freely. Within a number of days, the Rebel Army installed an acting president and a prime minister as a mask for international observers. Their duty was to support all the actions of the revolutionary forces. Additionally, they were to oversee the replacement of high-ranking officials by those who were loyal to the revolutionary movement. All personnel during Batista’s rule were welcomed in reorganising the military. But these gentlemen only lasted a month before the 26 July Movement named Fidel Castro prime minister – without a president – and Raul (Fidel’s brother) commander of the armed forces. One of Fidel’s first decree-statements was: ‘The Platt Amendment is finished’ (Castro, in Revolucion, 10 January 1959). Later, Fidel continued to encourage labour strikes and the occupation of factories. The contradictions between the US and its private corporations on the one hand and the interests of the masses on the other were manifested immediately. The idea of reinstalling the 1940 constitution had been lost, as a period of state transformation was in the making. Seizing the state Immediately following the overthrow of Batista, Fidel and his cronies had to come to terms with Cuba’s unique position in the world market under US regional hegemony. The country, principally dependent on sugar as the main source of income, now had to use this typical monoculture in order to survive. In other words, in order for the Revolution to be successful and in order to carry out proposed projects, it had to seize the culture of sugar and utilise the available economic apparatus in order to benefit the Revolution. Originally, Fidel set out to accomplish this. But the dream to industrialise never coalesced. Taking over the government in 1959, neither Castro nor the 26 July Movement had a blueprint for economic development. However, the social forces on the island took on an autonomous, dynamic strategy influenced by pre-revolutionary, domestic and international political and economic structures. Castro’s primary concern was to diversify the island’s sugar-dependent economy. He promoted import substitution, a fashionable experiment throughout Latin America, as the leadership recognised that underdevelopment was due to the

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dependency on sugar, which in turn was subject to price fluctuations on the world market. Where Castro differed from other import substitution attempts was his emphasis on the peasant, the common worker, and their emancipation. The social groups that supported Castro in taking power were many. Among them were the peasants, blacks, women, the poor, the revolutionary student front (Directorio Universitario), the CTC and a number of clandestine trade unions. In addition, and in contrast to attempted revolutions seen elsewhere during that time, the popular revolution depended heavily on moral and a religious (Christian) cry for justice for the marginal sectors of society (Betto, 1985). But the movement was essentially that belonging to a generation of disenfranchised youth that admired Fidel’s heroism. In order to organise these social forces, the rebels had to depend on some of the prerevolutionary movements. Among these was the PSP, whose membership was then 17,000 (Thomas, 1971:745). Fidel used this cadre army to disseminate information and revolutionary ideas in the workplace and in intellectual circles. The most well-known academics were communists, and so were the poets and artists. Socialism: a tailor-made ideology To this day, the question of whether Castro had always intended to adopt Marxist state ideology, or whether he was framed by Cold War circumstances, remains to be answered. Proving himself to be a keen statesman, Castro did not limit himself initially to the two options of the bipolar system, i.e. US capitalism and the neo-colonial context (which did not work) and the socialist bloc led by the Soviet Union. Instead he kept himself open to all options that would help sponsor the revolutionary state of affairs within the context of national liberation. Fidel Castro declared: Our Revolution is neither capitalist nor communist!!! … Capitalism sacrifices the human being, communism with its totalitarian conceptions sacrifices human rights. We agree neither with one nor the other … Our revolution is not red, but olive green. It bears the color of the rebel army from the Sierra Maestra. (Castro, 1959b) Nevertheless, the 26 July Movement set out to search for an ideology, not to mention an economically viable system, which would fit the character of the Revolution. Liberal democracy under US hegemony was not an option: the United States would not

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recognise the attempts of nationalisation. So the only counterhegemonic bloc that was available to the Cuban condition was that which the Soviet Union represented. In their attempt to build the state, the young leaders also sought trade deals that were beneficial to the Cuban economy. Some of the revolutionary leadership visited Peking and Moscow; they were warmly welcomed and returned with outstanding trade deals. In 1961, China bought 1 million tons of sugar at 4 cents per pound and granted $60 million in credit for equipment and technical aid. For the same price during the same year, Russia purchased 2.7 million tons of sugar, but additionally offered military assistance and arms to prevent a counter-revolutionary attack (New China News Agency, 18 November 1960). It was the latter to which Castro cuddled up, as Soviet internationalists like Khrushchev were convinced that a communist Cuba would serve as a military leverage against the United States. But Castro, Che and the economic planners of the Revolution did not restrict themselves to the East only. Canada – not a member of the Organisation of American States, which had already condemned the Revolution – refused to impose any kind of embargo. In turn, the leadership decided to compensate Canadian banks after the process of nationalisation had occurred. It opened trade deals with Egypt (rice for sugar) and also Japan (Thomas, 1971:1317). Cuba dropped out of the World Bank but remained a member of the International Sugar Council and, of course, the United Nations. Eventually, the United States began to disapprove of the economic measures that were being taken in order to meet the requirements of the Revolution. What Eisenhower and Kennedy did not understand was that the Revolution was taking a shape of its own. Meanwhile, during 1961, more mass organisations, especially the trade union organisation – which re-adopted its original name (CTC) – started to call themselves socialists or communists. The youth movement of the 26 July Movement merged with the Communist Youth (UJC). Without declaring the Revolution to be a communist regime, Castro instigated or approved this social consolidation. Hughes astutely pointed out that Castro’s intentions, at first sight, were to use the communists in order to control labour, as did Batista during his presidency (Thomas, 1971:1483–94). But Castro was not merely interested in bringing in labour to the revolutionary process. He was also keen on creating a scenario in which the Revolution would be permanent and considered the ultimate stage of Cuba’s historical class struggle. In propaganda, Castro’s Revolution was to be the final fulfilment of Cuba’s pursuit

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of freedom. In presenting the Revolution as such, Fidel Castro set up Schools of Revolutionary Instruction, as did the national hero José Martí during his own time in the United States. There, communists would train cadres for a united, revolutionary party. The canons for this school were the selected writings of José Martí, the Communist Manifesto and, most surprisingly, Blas Roca’s Fundamentos del Socialismo en Cuba (Cuba Socialista, February 1963). ‘CUBA SOCIALISTA’ It was not until 1961 that Castro announced to the world that he was a Marxist (Bohemia, 10 December 1961). This fact caused an almost immediate mass migration of small and large business owners to the United States. The exodus created the first layer of Castro’s enemies, the group of people known today as the gusanos – the worms. These were those who left immediately, seeking refuge in the US military and counter-revolutionary attempts. The neo-colonial forces together with the domestic capitalist class, which at the time ended up in Miami, tried to subvert the Revolution. The biggest incident was the invasion of national territory through the Bay of Pigs, where Washington-financed, counter-revolutionary forces mistakenly thought that their efforts would be supported by the majority of the Cuban people. The contrary was true. Castro’s army received almost unanimous backing from el pueblo. This invasion brought Cuba closer to the Soviet Union. It became clear that the character of the Revolution was essentially socialist in terms of social organisation, and nationalist with regard to the economy. In Castro’s own words, the Cuban communists were: The only party that has always clearly proclaimed the necessity of a radical change in the structure of social relationships. It is true that at first the Communists distrusted me and us rebels. It was a justified distrust, an absolutely correct position ... because we of the Sierra … were still full of petit bourgeois prejudices and defects, despite Marxist reading … Then we came together, we understood each other and began to collaborate. (L’Unita, 1 February 1961) Whether this was an apology or a defence for conversion to Marxism–Leninism, Fidel’s political alliance set the tone for the rest of Cuban revolutionary history. This position somehow ignores the communist leadership’s political irresponsibility during the Batista

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era. Hence, it is not clear to which party Fidel was referring. His words reflected his future vision of a new political party; a party composed of the most progressive Cuban forces; whether their tendencies derived from nationalism, Stalinism or Trotskyist tendencies seemed to be irrelevant. The emphasis was on Marxian–Martiano principles that led to unity. As a self-proclaimed Marxist, Fidel Castro saw communism as the highest stage of human development, following feudalism, capitalism and socialism. In his mind, Cuba, being born of fifteenth-century European colonial expansion, had passed through all these stages. Drawing on Leninist principles, Castro declared that a Marxist political party should be the sole vanguard of the people, which would facilitate the transition from struggling socialism to communism. A unified party formula also fitted within the programme Martí put forth during the Second War of Independence and the anti-imperialist movement. Moving leftwards, the revolutionary forces under Fidel’s direction consolidated into what became the United Party of Socialist Revolution (PURS). Radical and utopian ideas After 1965, the PURS changed its name to the Cuban Communist Party (PCC). The visionary transition set forth by the party included state ownership of the means of production and nationalisation of all industries, agriculture, and retail trade in addition to a radical change of societal relations. The egalitarian emphasis was accented by Ernesto ‘Che’ Guevara’s vision of the ‘New Man’ (Guevara, 1968). Workers were to labour for the new society instead of individual material gain. Over time, work was geared towards collective benefit. Competition was transformed into a push for non-material reward. The government extended free social services and programmes in education, health care and social security, day care for children, and housing. Today these are considered to be the triumphs of the Revolution. In his speeches, Castro drew on Marx as well as Martí to break down the barriers between manual and non-manual labour, and urban workers were exhorted to volunteer for occasional agricultural activity. These initiatives resulted in making Cuba the most egalitarian society in Latin America. This is what is known as the Revolutionary Offensive, which was accompanied by literacy campaigns, the building of schools, the organisation of neighbourhood watch committees and the consolidation of the labour movement into a united CTC.

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The state proceeded to create new institutions in order to push forth revolutionary planning. This was true even in the remaining private sectors. For example, the Vanguard Peasant and Worker Movement was organised by private landowners who conformed to state rules and projects. However, such institutions fell apart as worker and peasant interests differed. Urban workers demanded more land expropriation, whereas peasants demanded only the repartition of giant land masses under the control of foreign enterprises and wealthy owners. The effects on the province of Matanzas can be used as an example. There, peasant–worker strife resulted in the destruction of property, sabotage of agricultural capital and riots. Eventually, the government sided with the workers and violence stagnated the Revolution for a short period of time (Huberman and Sweezy, 1969: 113). Meanwhile, worker–management relations changed radically. Grassroots level workers were allowed to elect their own union leadership. By 1966 they re-elected 26 per cent of the incumbent and selected leaders who were party and non-party members (Domínguez, 1978a). However, Castro and the top leadership of the PCC appointed top union officials who would represent the workers in government. Eckstein notes that in due time ‘the labour movement became little more than a transmission belt between the revolutionary leadership and rank and file workers’ (Eckstein, 1994:40). The unions transformed into labour councils, which conformed to government-set norms and regulations. The councils eventually consolidated themselves under the auspices of the state and reformulated the party-dominated CTC which – just as it had been under Batista’s rule – became the only recognised institution that represented labour interests within the state. From this point on, the Revolution became synonymous with the state and all revolutionary intentions were executed from the top down. Consequences of the radical years The ‘push for communism’ had varying effects. The radical transformation embraced the idea that private property was the essential ill of the capitalist system. Private property in production and private land were to be eliminated. The official line was that the ‘law of value’ had to be diminished and market forces suppressed (Gonzáles Gutierrez, 1994:10). Nationalisation meant state ownership of the means of production, whether the companies happened to be formally in the hands of foreign enterprises or were small local businesses. In

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1963 a land reform placed more than three-quarters of all land into the hands of the state; this offered material as well as ideological incentives. Those peasants who received their parcels of land became very comfortable in producing what was lucrative for the independent producer, a profitable domestic-oriented agricultural sale as opposed to a less profitable sale to the state for export. There existed the danger of the peasantry, now small landowners, becoming a class independent of the government and the rest of Cuban society. More importantly, maximising state monopoly over agricultural production benefited the state, which then was in dire need of accumulating for its own reproduction in order for it to carry out the social projects it set out to accomplish. The two interests clashed, but state supremacy became the triumphant priority. The ‘push to communism’ was also particularly against the petitbourgeoisie. The small shop owners in the cities, and those with their offices in Havana, charged very high prices for their services and output. The idea was to dismantle this ‘parasitical’ class. By closing down excess shops and nationalising the service of food distribution, the government indirectly made these once-distanced city dwellers available for sugar/agricultural production on government plots. Eckstein notes that approximately ‘one-fourth of the persons in Havana province, whose businesses were appropriated in conjunction with the Revolutionary Offensive, went into agriculture’ (Eckstein, 1994:37). Sugar production rose indeed, from 1963 when 4 million metric tons were produced until 1970 when 8.5 million tons made the alltime high. By this time, 40–57 per cent of the labour force worked part-time cutting sugar cane (Silverman, 1973:21). This resulted in an increasing export contribution to the national product, from 16 per cent in 1963 to 25 per cent in 1970 (Roca, 1976). However, the policies set forth by Castro and the PCC were meant to reach the goal of 10 million tons of sugar. The rest of the agricultural sector suffered. In 1970, national productivity dropped to the level of 1965. In the end, the country benefited socially from this stage of development but economically Fidel’s predictions and expectations were never completed. Additionally, the hopes of becoming independent from the monoculture economy were never realised. A step back from radical revolution During the 1960s the Soviet Union purchased only 56 per cent of Cuba’s sugar (Leo Grande, in Estudios cubanos, July, 1979:1–28). Cuba

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had to search for other markets that would supplement its export capacity. In 1968, the world market price for sugar fell drastically to fewer than 2 cents per pound. Because the Revolution raised and guaranteed workers’ salaries, the cost of production superseded the world price. Once again, Cuba became the victim of its own dependency on its primary export product. However, this time the Cuban government was responsible for the welfare of the population it represented. Shortages in goods and supplies in connection with a tightening ration system discouraged large segments of the population. Workers responded to the economic crisis by foot-dragging and absenteeism at the factories and sugar mills. The rate for absenteeism got as high as 52 per cent in some regions of the country (Domínguez, 1982: 272). The result was a major slowdown in production. Foot-dragging became a popular form of resistance to government policies (Eckstein, 1994:10). Additionally, black-market activity began, as a means to meet the material needs of the population, usually in food. This hurt government profits and prevented any plan for redistribution from being completed. Legitimacy started to be questioned. Eckstein notes that in his annual speech commemorating the 26 July attack on Moncada, in 1970, Fidel recognised the failures of the ‘push to communism’ (Eckstein, 1994: 41). He stated that since the Revolution belonged to the people, it was the people who failed – but he more than anyone else. He offered to resign but the crowds yelled ‘No!’ Fidel and the PCC decided that the biggest mistake had been the irresponsible ‘push for communism’ without ever having passed through socialism. What this meant in the minds of the leadership remains unclear. But in policy action, it meant the decentralisation of state-owned enterprises, a search for more access to Western markets and a closer move into the Soviet economic sphere. It was in 1975 that the first PCC Congress took place on a national/official scale. At this congress, the System of Economic Management and Planning (SDPE) was outlined; it was implemented by 1976. This system closely followed the economic framework of Soviet reforms of 1965. Local authorities of this innovative system allowed for the usage of small plots of land for private agricultural development; it also encouraged collective subsistence farming and rendered the right of management to hire and fire labour. Hence began a process of decentralisation. The government continued its responsibility to the poorer sectors of society by maintaining a rationbook system (la libreta) that guaranteed basic household needs and

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staple food products. But the most interesting aspect of this period was the implementation of incentives for workers. Jeffries (1993:181) explains that this ‘sovietised’ SDPE acknowledged the importance of real economic levers like interest rates and prices, and management powers on manpower and investment; that profitability became more important as an indicator; and that portions of surplus could be put to personal bonuses, investments and social projects. According to Zimbalist and Brundenius (1989:77), prior to the SDPE material reward did not exist. Later however, the implementation of bonuses and material incentives caused problems that will be discussed in Chapter 3, in the section concerning the ‘Campaign to Rectify Errors and Negative Tendencies’. Labour steps up In terms of the organisation of labour and participation, some concessions needed to be made in order to appease the masses. Local CTC elections were reinstated in 1970 by the Ministry of Labour. Seventy-three per cent of the worker representatives were replaced in the elections (Domínguez, 1982:126). The people demanded more consistency in the democratic procedures of the country. As a result, local elections and workers’ assemblies were to be conducted on a regular basis. But the reforms did not stop here. In 1973, the CTC came out with a new programme that was thought to improve workers’ material conditions. If salaries immediately after the Revolution were based on utopian models of equal pay for all citizens (a system that had failed), the answer was to collectively link worker salary to national productivity, although still on an equal basis. Additionally, there were individual material rewards for those who worked overtime. At work centres, household appliances, such as televisions and refrigerators, were distributed, linked to the economic contributions that work units produced (Zimbalist and Brundenius, 1989:219). Cane-cutters who were replaced by the combine were sent off as mini-brigades to build housing. These ‘volunteers’ in turn were rewarded with property rights over flats in the newly built districts. This labour model could be thought of as Soviet-inspired, but all these changes originated in the ideas of the workers that were expressed in the workplace assemblies. The result was that government expenditure would increase according to the level of productivity the workers achieved. However, offering welfare goodies to workers and their families was not enough to solve the problems of state economic management

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in the face of a revolutionised people. The leadership sought new ways of organising the national economy and pleasing the population by implementing more democratic rights at the workplace. A onetime reform could not be sufficient if the revolutionary government was to be permanent. A new Central Board of Economic Planning (JUCEPLAN) was created in order to oversee state-run projects. These, in turn, were supported by the Organs of Popular Power (OPP), which worked on municipal, provincial and national levels. In the municipalities, the OPP would choose economic projects that the workers thought would be achievable and in turn benefit their community. The constitution and political normalisation The largest evidence of the Revolution’s institutionalisation came with the drive to normalise all state institutions and the Cuban democratic model. In 1976 the Cuban government codified the principles and laws of the Revolution in what is now the Constitution of the Republic of Cuba. This became the base law of the land that provided for a formal parliament, declared the republic to be a sovereign workers’ state with the PCC as the ideological motor of the Revolution, institutionalised the military, contained clear explanations of revolutionary intentions and expressed the emancipation project as it pertained to and was understood by the leaders of the PCC. This included the elimination of institutional racism, the protection of the rights of women and children, the family code and the intention of destroying class structure. These egalitarian measures increased the number of workers gaining equal pay, and provided incentives for women to become more active in production. Central planning was de-bureaucratised by the new constitution with the creation of the Organs of Popular Power (OPP), which were made up of provincial administrative committees. Delegates were chosen by the population at large in multi-candidate but non-party elections. The state, then, was based on the configuration of revolutionary forces which were represented in the OPP, among them: the PCC, the Federation of Cuban Women (FMC), the Revolutionary Armed Forces (FAR), the Union of Young Communists (UJC), the National Worker’s Central (CTC) and the Committees for Defence of the Revolution (CDR). These recognised organisations created a link between the state leadership’s official ideology and the general population. All citizens residing in Cuba became members of at least one of these organisations. The constitution was written by the law experts of the Communist Party and put to popular referendum a year prior to its implementa-

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tions. Ninety-eight per cent of the voting-age population participated in the referendum; of these, over 97 per cent voted in favour of the national document and 1 per cent against. The rest were spoiled or blank ballots (August, 1999:220). The constitution outlined the framework of the new socialist society in Cuba. It defined the terms of property and provided a legal base (or explanation) for the nationalisation of all or most of the means of production. In stating that the state/revolution was the maximum expression of el pueblo cubano, the constitution at the same time emphasised national unity under one political party and state supremacy over all economic and social activity. The mass organisations of popular participation were also mentioned. It was most certainly a Soviet-inspired constitution. The Communist Party of Cuba and the mass organisations According to the Constitution of the Republic of Cuba (1976), the Cuban Communist Party (PCC) is the ideological motor of the state and of Cuban society as a whole; it is a party of disciples of Martí and Marxist–Leninist orthodoxy. Indeed the party permeates all facets of government and socialist civil society. PCC members are found in every workplace: schools, factories, hospitals, hotels, coffee houses, government agencies, stores, etc. The official role of the PCC is to lead Cuban society to communism after socialism and safeguard the triumphs of the Revolution. But in reality, PCC militants are more than just political moralists; they are mostly white-collar workers, managers, and appointed elite directing the political economy of the nation. They are responsible for making company policy in line with the national project. They are also the transmission belt for the ideas of the Central Committee of the party to reach the workplace. In order to be a party member one must be elected by co-workers and have high moral character (generally free of vices), be well disciplined and read in the classics of Marxism, be loyal to Fidel Castro as defender of the Revolution and the triumphs of the Revolution, and have an ability to hold leadership in the workplace. The PCC is topped by a Political Bureau and Secretariat which really set the tone for Marxist interpretation in Cuba’s institutional political ideology. The Central Committee is comprised of a large group of industrial managers, economists, the directors of research centres, scientists and people who hold important positions in the military. Upon consolidating power after 1959, the leaders of the Revolution incorporated some of the popular organisations that were involved in the struggle for democracy, workers’ rights and anti-imperialism

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into the new party/state apparatus and created new mass organisations that group and represent the specific interests of the population. This was done to complement progressive forces in Cuba’s civil society that already existed prior to the Revolution. These forces in civil society include workers’ interests, peasant interests, women’s interests, nationalist tendencies and intellectual forces. Membership in these civil society groups, in contrast to the PCC, is not selective, with the exception of the Union of Young Communists (UJC). Every Cuban citizen belongs to one or more of these organisations, even though membership overlaps. The purpose of these mass organisations is to extend a participatory outlet for the entire population, where the interests and concerns of the masses can be expressed and outlined. Leadership in the mass organisations was previously elected by the PCC and sometimes appointed directly by Fidel Castro. This ensured that the mass organisations and the population as a whole would adhere to the precepts of PCC ideology. Today, many leaders are still PCC members, but they are elected directly by the organisation’s members. The revolutionary leadership was interested in forming a new type of democracy that allowed for popular participation while maintaining national unity. The Committees for Defence of the Revolution (CDR) was instituted initially to suppress counter-revolutionary activities in local areas, including the 1961 Bay of Pigs invasion. Those who criticised the Revolution portrayed this grouping as a spy organisation, because on the local level the community elected leaders who would be responsible for reporting any anti-state activity, including theft, the dissemination of counter-revolutionary propaganda, and anti-social behaviour. Most Cuban citizens residing on the island are members of this mass organisation. Today, the CDR is responsible for community safety, enrolling children into schools, immunisation and vaccination, the deliverance of municipal information, organising community events, recycling refuse, insect fumigation and keeping track of housing and utility maintenance. Almost every city block and every couple of adjacent streets in towns and villages have regular meetings where elections are held for representation on the municipal, provincial and national levels. These meetings are held in the streets and parks of neighbourhoods. In 1961, there were only 798,703 CDR members; by 1972, membership reached over 4,236,000, or approximately 70 per cent of the adult population. The Federation of Cuban Women (FMC) was initially established to provide women with the opportunity to participate in the trans-

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formation of Cuban society during the early years of the Revolution. It was responsible for creating centres for learning work and organisational skills, eliminating old ideas of sexist oppression, and encouraging women to participate in voluntary community projects or to work full time. The FMC addresses women’s concerns in Cuba. The Association of Small Peasants (ANAP) was organised among those proprietors of small land holdings that never became nationalised. This organisation groups together the interests of small farm peasants and addresses the concern of the individual families. The Central de Trabajadores Cubanos (CTC) is the national labour federation that existed prior to the Revolution but was later transformed into a pro-government union whose leadership was directly linked to state leaders. It groups together all industrial-based and product service sector workers. Their responsibility is to hold regular and irregular forums that provide a space for workers to express their concerns, complaints and opinions, in addition to providing a medium between workers and managers. Managers cannot be members of this organisation. The elected leaders of the CTC are those who encourage discipline at the workplace as well as political participation and discussion. The Federation of University Students (FEU) was a progressive organisation that was created early in the twentieth century. It was an active part of instituting the Revolution, but later became a union of university students, which set up forums for students to express their concerns and complaints; also to propose projects for the government and reform in academia. The Union of Young Communists (UJC) was another mass organisation created for young people. Today UJC are the model youth of Cuban society; they are the best prepared academically or the best disciplined at the place of work. They are considered to be the future leaders of the Revolution and Cuban society as a whole. Here membership is selective and based on merits at school or work. They also represent the largest pool of future PCC members. There are other mass organisations, which have very little influence over Cuba’s political structure but encourage democratic participation, including elementary and secondary school organisations and sport unions. Their functions are more organisational than political. The mass organisations as a whole can be considered the democratic representation of civil society in Cuba, a civil society that is politically charged and linked to the Revolution (i.e., the

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state). It is through these means that a sense of popular participation is reproduced in Cuba. ECONOMIC INTEGRATION INTO THE SOVIET BLOC In 1972 the Cuban leadership inserted itself into the Council for Mutual Economic Assistance, the COMECON or the CMEA. The CMEA was a Soviet-inspired, parallel international market providing a ‘fair deal’ to the countries of the socialist bloc in Europe, Cuba and later Vietnam. Set up as a political response to the 1947 Marshall Plan in the West, the CMEA, created in 1949, was also an economic counterpart to the Organisation for European Economic Co-operation (today known as the OECD). The aim of the CMEA was to ‘develop economic collaboration among the Socialist countries and to coordinate their economic progress on the basis of equality of rights of all member states’ (Jeffries, 1993:27). The CMEA system worked on five-year plans. The Soviets would purchase Cuban sugar at fixed prices superior to those found on the world market. In turn Cuba would receive credits in petroleum and in industrial, medical and agricultural goods, not to mention construction materials for infrastructure. Additionally, the Soviet Union would provide more aid to fortify the Cuban military as it was always under the pressure of possible US invasion. For the following two decades, Cuba based more than half of its trade on this alternative market. With excess Soviet petroleum, Cuba would re-export refined oil to other countries in order to gain hard currency. This last item became Cuba’s primary hard currency income. This economic integration into the Soviet bloc would not have been possible if Cuban economic structures had not been compatible with those of other socialist economies in Europe. This explains the similarity between Cuba’s model of production and redistribution and that of the Soviet Union. In short, throughout a period of 19 years (between 1972 and 1991) the CMEA raised the standard of living in Cuba to that of Eastern Europe, and permitted the Cuban population to purchase goods and services found in industrialised countries. Due to the access to advanced materials in medicine and academia, social indicators such as life expectancy, literacy and popular levels of education were equivalent to that of most Western European countries (Stubbs, 1989:28).

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Socialist integration and the standard of living Some studies have already been conducted on Cuba’s use of Soviet aid and the distribution of purchases available from CMEA agreements. Qualitative as well as quantitative documentation has demonstrated that the revolutionary leadership pumped back a large proportion of the aid Cuba received not only into the domestic economy, but also into the population’s welfare (García Reyes and López de Llerga, 1997). Additionally, the hike in the standard of living, including life expectancy and a drop in infant mortality rate, can be attributed to the economic and material benefits of joining the CMEA. Within a decade, the Cuban standard of living no longer reflected that of a typical developing country. Social indicators reveal that Cuba, in comparison to her Latin American neighbours, was often far ahead in terms of the possession of material goods per capita (automobiles, televisions, etc.), but improvements in non-capital social qualities couldn’t be ignored. For instance, according to World Bank Development Reports the population per physician in 1960 was 1,038; by 1980 this had dropped to 219 and by 1989, 136 (World Bank, 1979; 1983; 1990). In little time, Cuba ranked among the world’s highest in literacy rates, medical doctors were sent on international missions, and infant mortality rates dropped dramatically. By the late 1970s Cuba started producing its own vaccines for children. Economically dependent – politically independent Despite the close economic ties between the Soviet Union and the revolutionary leadership, Cuba always held its own. One would think that due to the aid received from the Eastern bloc, Moscow would most likely have dictated all of Cuba’s foreign policies. But nothing could be further from the truth. Ignoring hints from Moscow that Soviet military equipment sent to Cuba should not be used in arming other national liberation movements, Cuba acted independently by aiding guerrilla efforts in Ethiopia and El Salvador and the government in Angola. The Cuban government also played a significant role in the Sandinista Revolution (Nicaragua) of 1979 (Ratliff, 1990:80). Thereafter, against Soviet will, the Cuban military aided in the Central American country’s defence against US-backed counter-revolutionary attempts. Cuba was never an appendage of Soviet interests in the Americas. Rather, Cuba became its own ‘Third World superpower’. Being a showcase for developing countries, the leadership often lent its support

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to international solidarity efforts. This included sending some of its most well-trained staff abroad, as well as welcoming students from Africa and Latin America to attend its prestigious Schools of Medicine. Additionally, Fidel Castro became popular among other developing countries, both socialist and non-socialist; he served as the NonAligned Movement’s chairperson between 1979 and 1983. This brought Cuba closer to countries like India and Egypt. It is true that Cuba stepped up international solidarity efforts and collaboration with left-wing movements under the auspices of the Soviet Union after the country entered the CMEA. But during this time Cuba was also experiencing good economic years in relation to the West, especially in its sugar trade deals. In view of all this, therefore, there can be no definite correlation between Cuba’s presence internationally and Soviet foreign policy. UNITY, CONTINUITY, STATE SUPREMACY AND POPULAR PARTICIPATION The 1959 Revolution was not a fulfilment of Cuba’s history of class struggle. Rather, it was a return to a necessary united party/state condition – such as José Martí had advocated – in order to achieve its pursuit of national independence and some sort of social progress within the confines of a capitalist world system. This happened almost more naturally than if it had been a conscientious fulfilment of human emancipation led by one party or movement. The existence of a revolutionary tradition, at the workplace and in academic circles, gave the impetus for social change at various periods throughout the neocolonial period. More specifically, the tradition of resistance against Spanish colonialism became naturally the spirit of anti-imperialism. The merging of working-class interests with those of intellectual circles that upheld the nationalist values of Cuban independence was done out of political necessity in order to overthrow a dictatorship and a senseless, vicious cycle of corrupt, electoral games in a neocolonial setting. Certainly this was done under the charisma of Fidel Castro, but it was his implemented ideas that actually mattered. The implemented ideas, in turn, were supported by the masses. This was possible through the alliance of Cuba’s most revolutionary forces, which permeated all sectors of society. Among them: the disenfranchised working class, which no longer had a vanguard party or friend in the state leadership as they had done during Batista’s first regime; the peasantry, which was landless and forced to work

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on fields belonging to foreigners; lastly, the intellectual class, which by the mid-1950s was entirely revolutionary and opposed to US hegemony. The Soviet Union had nothing to do with this, the Communist Party had nothing to do with this, and there was no compromising on Fidel’s behalf. This was genuinely a national consolidation of social forces, independent of both the Soviet Union and the United States. After China, Cuba was the first Third World country to liberate itself from modern-day imperialism. It was the first anti-imperialist state in the Americas and it became so by forming a domestic national unity. This was possible by eliminating the power of transnational classes on national territory and by placing an emphasis on domestic social justice, linked to international solidarity with the rest of the Third World. External pressures during the bipolar, Cold War era pushed the leadership of the Revolution to cuddle up to the Soviets. But it was the revolutionary tradition that provided the basis for the leading social forces to adopt Marxist ideology and so-called ‘scientific socialism’. Immediately after the triumph of the Revolution, certain basic initiatives demanded by the masses were made. Never before did the people of Cuba feel so much power as they did when they participated in the trials against the dictator’s officers. Furthermore, reforms regarding the distribution of land, the reduction of housing costs, free education and medicine were instituted instantly. The euphoria pushed hundreds of thousands of volunteers to cut sugar cane to sponsor economically the idea of a ‘New Man’, even though this ‘New Man’ carried with him a baggage of old fashioned and puritanical values. Nevertheless, the instant changes were not enough to hold a decade of popular revolution. Institutions guaranteeing the rights of citizens were necessary, economic programmes were necessary, a legal framework for civil society to express itself was necessary and – most of all – a reliable parallel market alternative to the world market was necessary. In terms of economic practices, the leadership seemed quite flexible in organising the inflow and outflow of capital in order to best serve state interests. Joining the CMEA in the 1970s secured Cuba’s sugar revenues and industrial imports at guaranteed prices. But Cuba did not rely upon this structure only. Investments and trade deals were conducted with the participation of some countries in the West, including Canada and Japan. Nevertheless, constitutional law institutionalised state supremacy over the domestic economy. These laws

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rendered control over economic forces to the state, but also created a sense of empowerment to producers and consumers in Cuban society. In Cuba, the market is a force to be manipulated by the elected, unified, and revolutionary leadership in order for it to benefit the progress of social and material development among the masses. Therefore, Cuba is understandably alienated from most international financial institutions such as the World Bank and the IMF. The pillars In the end, the Cuban Revolution can only be understood through the historical context under which it was born. Likewise, Cuba as an anti-imperialist state in search of social justice can only be understood by the historical social forces that moulded its very existence. In order for the social forces to realise their maximum potential in a world capitalist system, the movements which came to the fore converged to create and later preserve the required pillars upon which the state was built. In order to clarify this idea, a summary of each pillar is provided below. Continuity The theme of continuity is based upon the tradition of revolution against the existing world order that began in Cuba towards the end of the nineteenth century. Most political parties and groupings claimed to be the proper heirs of Martí’s ideas. But only a few individuals remained faithful to his tenets. During the neo-colonial experience, the ideas of a united party, absolute sovereignty and social equality were lost, even in political discourse. The success of the 26 July Movement meant the preservation of Martí’s revolutionary ideas. They were well read, well thought out and applicable to Cuba’s peculiar condition. Overall, the line of a non-compromising independence in the face of hegemonic structures was not only an idea that was bought by the masses, but a characteristic that revolutionaries had to come to grips with. History taught the communists to be consistent and not to put their faith in neo-colonial structures. Fidel and the other young revolutionaries maintained that current. Even to this day, Fidel invokes the words of Martí to muster ideological strength in this post-Soviet era. Unity Unity in Cuban ideology stands for a united social front of as many sectors of society possible under one umbrella, the Revolution or

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Communist Party/state. Though Martí was by no means a Marxist–Leninist, he would have been happy to see that a single party of the masses exists at least in name. Additionally, the state and the Revolution are one. Ideologically, this makes no separation between the state class and civil society. The entire population is politically charged, as almost all of its members are linked through the organisations that are controlled by the vanguard party. The choice of a single-party democracy as opposed to multi-party or liberal democracies is what keeps the Cuban government intact. All differences are resolved within Cuba, by Cuban communists for the Cuban state. Whether or not the decisions made at the top reflect the interests and opinions of those at the bottom is another question. But government propaganda makes it very clear that there will be no alternative movement with regard to the political directorship. State supremacy In Cuba, the state rules supreme above all other social forces. This includes the market and the way it behaves on domestic terrain. The market is seen as a natural resource that needs to be controlled by conscientious leadership. Shortly after the revolution triumphed, the idea was to abolish the market system in a push towards a Utopia. The retreat from Utopia meant bringing Cuba back to economic (material) reality. The ‘New Man’ could not develop if the material conditions of the country were to remain stagnant. The state leadership implemented certain market mechanisms and took advantage of the bipolar situation. While acting during the height of Cold War politics, it had to take advantage of that scenario. Hence, Cuba joined the CMEA and integrated itself into the Soviet bloc. In the next chapter, evidence will demonstrate how Cuba expanded state capacity over the market even in the post-Soviet era. Though many institutions and national companies were decentralised, they remained publicly owned. Popular participation Democracy is in the hands of the beholder; the definitions vary from country to country. But in line with national unity and the interests of the masses at hand, the leaders of the Revolution saw to it that the voices of the masses are heard in public and in the vanguard party meetings. Therefore, most sectors of society have a forum in which people can freely speak their minds. Some might say that they are afraid of persecution by party members, the police or the CDR.

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But these institutions could not be strong and last as long as they have if they were not seen as legitimate forms of expressions in the eyes of the vast majority of citizens. In every election, over 90 per cent of the population take part (August, 1999). This is another important key to maintaining Fidel’s popularity. The mass organisations have a character of their own, even if high-ranking communist officials participate in them. The CTC, the UJC and the FMC have leaders who are elected by the masses they represent. Their founders have a historical revolutionary link and the institutions themselves are bedded in revolutionary history. In the next chapter, I will demonstrate how the idea of popular participation was used in order to test the legitimacy of the revolutionary leadership. Finally, these four pillars of the Cuban Revolution are what together keep Cuba socialist. It surpassed the test of counter-revolutionary attack in 1962 and it has surpassed the turmoil of the post-Soviet era. The country suffered throughout much of the 1990s, but these four pillars remain in principle the same. If they were needed during the Cold War to maintain stability, much more are they needed now. In the next two chapters, I will demonstrate how these pillars have adapted to the new international context.

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3 The Causes and Impact of Cuba’s Crisis in the 1990s Throughout the first three decades of post-revolutionary society, Cuba’s orientation in domestic policies as well as external relations seemed to be clearly defined and structured around bipolar, Cold War conditions. Within that context, the Cuban party/state apparatus proved to be an exceptional model in post-colonial development and Cuba achieved the status of being a ‘Third World superpower’ in the anti-imperialist movement (Zimbalist, 1987; Stubbs, 1989). The basis upon which these assumptions are made can be found in the continuous rising standard of living and material progress documented between 1960 and 1989; the achievements in education, medicine and scientific research; and the country’s intervention in other postcolonial affairs. For example, Cuba’s repeated election as head of the Non-Aligned Movement, her military intervention in Angola and southern Africa, and the humanitarian and technical aid offered to countries like Jamaica, Nicaragua, Ethiopia and Grenada (Domínguez and Hernández, 1989c). Regardless of the undeniable contradictions and problems that Cuban society encountered during that period, it is commonly agreed that the country was consolidated under a politically unified communist party that implemented programmes of stable economic growth and relatively egalitarian social growth. These same characteristics, developed under a state-led economy, can be considered as the basis of party/state legitimacy in the eyes of the country’s vast majority. However, the state leadership and the country’s general population entered the 1990s under harsh circumstances, where all the previously mentioned developments, including and especially party/state legitimacy, were put to the test of political, military and economic isolation. The crisis that Cuba faced can never be exaggerated. Due to the break-up of the socialist bloc and the consequential fall of the Soviet Union, Cuba lost between 80 and 85 per cent of its external trade and more than 50 per cent of its purchasing power (Domínguez, 1995:23; Mesa-Lago, 1992:4). Within one year, 1989–90, imports from Eastern Europe, a third of which originated in the Soviet Union, 86

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were reduced by approximately 50 per cent (Pérez López, 1995:1). In total, Cuba’s foreign purchasing power shrank from $8.1 billion in 1989 to no more than $3 billion in 1992. After 31 consecutive years of economic growth, Cuba’s GDP contracted in 1990. At first, economic conditions resembled that of a recession, but later accelerated into a depression between 1991 and 1993. The drop in GDP was 34.8 per cent over this period. Exports fell 67 per cent and imports fell 72 per cent, resulting in a 30 per cent fall in domestic consumption (González Núñez, 1995:3). Additionally, the excess of national currency in relation to supply of goods became a serious macroeconomic problem. Food consumption plummeted and petroleum was removed from both the black market and the legal market. Due to the reinforced US economic embargo, Cuba could no longer purchase essential products, such as fuel and medicine, from its neighbouring countries; transportation and electricity use was drastically cut back and health services suffered. For the first time in the history of the Revolution, the population came to know malnutrition through the augmented rationing system. The Cuban masses were restless. During the PCC’s fourth Congress in 1991, the situation was blanketed by the phrase El Periodo Especial en El Tiempo de Paz (the Special Period in the Time of Peace, here referring to the end of the Cold War). The crisis that characterised the bulk of the 1990s in Cuba can be attributed to a variety of factors that can be classified into four broad categories, none of which is independent of the others; rather, they are all interrelated and often took effect simultaneously. These categories are: the internal economic dynamics and logistics of Cuban revolutionary social development; the evolutionary demise of the CMEA parallel market system; the complete dissolution of the Soviet Union as a global superpower and political structure; and lastly, the hardening of the US economic embargo against the island’s economy. The purpose of this chapter is to delineate these factors, describe their consequences and highlight their impact upon Cuban society and the structure of the state-led political economy. This study will explain how and why the one-party/state apparatus continues to exist. One mistake that is often made with regard to the Cuban crisis of the 1990s (and all other domestic crises of economic origin) is that of concentrating strictly upon external factors. Superstructuralists, found in Cuba as well as throughout academia worldwide, tend to blame all the problems of developing countries on the world’s political economy (Panitch, 1994:1). While superstructuralists may be right

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in the idea that we live in one world economic system and that points of comparison are only possible through a global perspective, it is nevertheless important to look at the internal dynamics of Cuba’s economy just prior to the fall of the Berlin Wall (the early to mid1980s) and possibly even further back than that (the 1970s) for historical references. It is equally important to understand what the situation was that Cuba was in and how the government and people reacted to the crisis. After all, what makes one country different from another is the manner in which autochthonous reaction to the world system takes place. The economic problems that Cuba encountered during the 1990s were not strictly due to the fall of the Berlin Wall and the demise of the Soviet empire. In Cuba, the analysis of change or adjustment is publicly promoted through the declarations of the PCC congresses, which had been held every five years ever since 1975, when the institutionalisation of the Revolution (meaning the creation of normative structures) and the edification of its political system took place. At each of these congresses the national agenda for economic development was discussed at all levels of society, where certain current global trends like neo-liberal capitalism and antagonistic factors like the US embargo are criticised. At the same time, problem solving geared towards making domestic productivity more efficient has played an important role in dealing with the economic crisis. Terms like efficiency, rectification and reforms are not new to Cuba. There has always been the need, not only to adjust to global trends, but also to ‘perfect socialism’ from within and raise the level of productivity. The documents produced by the PCC have been useful in the search for factors that help explain the economic crisis and the adjustments made throughout the 1990s. They tend to offer a critical view of the global political economy and also point out where efficiency in production and distribution need fixing. However, because economic research is controlled by the state apparatus and the documents must – by law – represent the intentions of the state leadership, many internal factors that have contributed to the crisis have been overlooked. Rarely does the PCC point to the drastic social consequences of the economic policies it puts forth. In this manner, it becomes difficult for the research centres in Cuba to reflect upon the domestic conditions the country faced during or prior to the time of global structural changes. So it is imperative to relate internal as well as external factors to the economic crisis; if not internal factors,

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then at least the internal conditions that were present at the time of mounting economic crisis. THE BACKGROUND TO THE CRISIS Though the seizure of state power by the revolutionary leadership was fulfilled in 1959, the state institutions that defined Cuba’s socialist character and command economy were only established during the 1970s (Domínguez, 1978a). It was this decade which set the parameters of state-led development and the interaction between the domestic and international socio-economic forces. Additionally, this can be considered as the time when the Revolution was institutionalised; whereby Cuba’s government took form and created a strong party/state apparatus. As mentioned in Chapter 2, the congealing of political structures and mass organisations under the constitution is what has ensured PCC legitimacy, in the eyes of both the state and the people, over the last two decades. But in order to participate in the global economy, the Cuban leadership had to shape the political economy according to the options that were available during the time of institutionalising the Revolution. Eckstein calls this era (the 1970s) the ‘retreat to socialism’, after the mistaken attempt of jumping into ‘radical communism’ during the 1960s (Eckstein, 1994). She points out that this retreat was not so much an ideologically inspired move, but rather a dawning of the realisation that the country needed to insert itself into the global economy. Bringing Cuba into economic reality included the need for Cuba to open up to the West for trade and commerce, as was common with all CMEA countries. For instance, in 1974 Cuba took advantage of the sugar price which was at the time US$0.68 (68 cents) per pound in the West (Eckstein, 1994:50). In this sense, trade with non-socialist countries was dependent on what terms of trade were most favourable to Cuba’s national project. In total, the Western bloc accounted for 41 per cent of the island’s trade by 1980 (Eckstein, 1994:263–8). This signifies that Cuba was never completely dependent on Soviet subsidies. It also means that the Cuban drive for normalising economic relations with the West is not recent. Even US-based corporations increased their trade with Cuba as the embargo was being softened in Washington under the Carter administration. In 1982, the Cuban legislature passed a law/decree regarding the Foreign Investment Code, which made formal the state leadership’s intentions to attract foreign hard currency into the country. The 1982 reform

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permitted investors up to 49 per cent of private ownership and profit. Sectors such as tourism, construction, and pharmaceutical production came out of this change and invitation. Relations with the world market economy were used in an attempt at developing the national economy to its highest potential. By turning to export-oriented growth and the formal reception of Western investors, the late 1970s and early 1980s showed indisputable signs of economic and social growth. As a result, the average yearly growth rate between 1981 and 1984 was 7 per cent GDP (FRI, 1997). It is interesting to note here that economic growth continued in Cuba while it did not throughout most of Latin America. While neighbouring countries experienced little or no growth due to the debt crisis of the early 1980s, Cuba started to reap the benefits of preferential agreements, not only with its socialist allies, but also by playing the game on both sides of the fence in opening up to foreign investment. THE EFFECTS OF INTEGRATION Turning to the world market took a toll on the state’s fiscal affairs. Despite the economic growth that Cuba experienced during the 1970s and the early part of the 1980s, other problems emerged at the forefront of the leadership’s concern. This was mainly a question of foreign debt and access to credits in hard currencies. During the mid1980s, the government’s ability to finance hard-currency imports began to fail. The blame can be put on the fall of world market prices for Cuba’s principal hard-currency-earning exports. During the early 1980s, Russia allowed Cuba to refine and re-export its oil to other countries; for some time, this was Cuba’s number one source of hard currency. García Reyes and López de Llerga (1997:192) note that between 1984 and 1987, Cuba imported 99 per cent of its required oil from the USSR; this is including the oil that it imported for refining and re-exporting, for which the country made an average of US$1.5 billion annually. But just as Cuba reached its oil-exporting peak in 1985, the following year was met by a reduction of approximately 50 per cent (Granma Weekly Review, 16 September 1990:3; Marconi Braga, 1997:16–20). For reasons that will be explained in the following sections, Soviet oil deliveries to Cuba were reduced on an annual basis by accords or by renegotiations of the original trade deals with the island. Additionally, the world market price for sugar had fallen abysmally. In 1980, sugar fetched US$0.27 per pound, in 1985 this price dropped

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to 7 cents per pound. This was the lowest price for sugar in real terms since the 1930s. Hard-currency earnings from sugar dropped by nearly 80 per cent between 1981 and 1985 (Granma Weekly Review, 16 September 1990:3). Cuba had come to confront the reality that its primary and historical product (sugar) was replaced indefinitely at an industrial level. Nickel, or the use thereof, during the late 1970s and early 1980s, was widely replaced by the production of plastic substitutions (Alonso, 1992:41). In the absence of the much-needed hard currency, Cuba’s import consumption from the West dropped. Even more importantly, the country’s trade debt to non-socialist countries mounted from 3.6 billion pesos in 1985 to nearly 6 billion pesos the following year. At the time the peso was roughly equivalent to the US dollar (Eckstein: 1994:72). With the exception of one debt rescheduling in the Paris Club in 1986, the country was unable to achieve success in obtaining more credits from the West. To exacerbate the problem even further, the value of the US dollar fell on a global scale; since Cuba had to contract many of its loans in other Western currencies – thanks to the US embargo – repayment became difficult. These factors pushed Cuba to depend more heavily on the socialist bloc. Finally, and in connection with the economic and social growth experienced in the 1970s and first half of the 1980s, the children of the Revolution (born in the 1960s) were inducted into the labour market in the 1980s with high levels of education and training. These young workers held high expectations and looked forward to working in offices, research centres, city hospitals or abroad in the diplomatic corps. Few were willing to go back to the small towns and the countryside to participate in agricultural production and manual labour. As a result, there was a fall in the productivity of physical labour. This fall rolled on until 1989, when productivity reached only half of what was planned and expected by national planners (Dilla, 1993). At the third PCC Congress in 1986, Fidel Castro addressed the problems of delays in Soviet oil deliveries, the lack of hard currency to finance trade with the West and the upcoming effects upon the national economy. Hints of austerity and seeking alternatives decorated his speeches (Pérez López, 1991). In addition to recognising the pressures of the global market upon the island, the state leadership pointed to domestic social and economic problems; among them, inefficiency, corruption and the straying away from revolutionary principles. Public resources and plots of land were used for domestic demands for goods, rather than for government export for the

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accumulation of hard currency. Managers at factories and other productive plants were seen as a developing parasitical class that should be put to more labour. Farmers, who were then allowed to sell on the legal free market, used their profits to buy luxury items on the black market. Corruption increased and state economic efficiency declined. In Cuba, a managerial class had formed and Fidel Castro identified it as the new domestic enemy of the Revolution. THE CAMPAIGN TO RECTIFY ERRORS AND NEGATIVE TENDENCIES In 1986, the government launched what came to be known as the Campaign to Rectify Errors and Negative Tendencies. The purpose of this was to correct the injustices imposed by those who sought their own interests instead of the collective’s. It was a moral campaign to re-emphasise the ideas and necessary commitments expressed in the words of Che Guevarra and the national hero José Martí. This period of reforms was characterised by a sort of dichotomy embedded in moral attitudes about socialism and the hike in market-oriented practices. In the same manner, it highlighted the inevitable contradictions prevalent in a society that tries to accomplish domestic egalitarianism while competing on the world market. While the campaign centred on curtailing certain market features, it reemphasised the collective forms of labour organisation. Additionally, this period was marked by some serious cleansing of the state bureaucracy at national and local levels (EIU, 1988:9). Cuba analyst Mesa-Lago concluded that the period of ‘rectification’ was a reaction to the Soviet Union’s perestroika, which will be discussed in the section concerning the impact of the fall of the Soviet Union (Mesa-Lago, 1992:8). The period of rectification was really a political, ideological and moral affirmation of continuing the real socialist project. But this period did not resemble one of transition, change or perfection in the economic aspect of the socialist project. While the Soviets were reforming their economy to the tune of neoliberal policies, Cuba reaffirmed its commitment to revolutionary ideals and one party/state leadership. The rationing system was reinstituted as a means to meet needs; bonuses were removed from individual pay and implemented only collectively. During this period, university students were asked to spend more voluntary time on the sugar and tobacco fields. At the same time, the government pursued more Western economic ventures. Foreign investment through joint

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venture arrangements was made in electronics, mechanical engineering, petrochemicals, pharmaceuticals, textiles and tourism. Sociedades Anonimas (SAs), or semi-autonomous state corporations, were created for the purpose of facilitating joint ventures. For example, Cubanacan is the best-known SA, which specialised in the tourism industry; later on, however, it began to diversify from services to actual exportable products. During the 1980s, Cubanacan negotiated a US$80 million contract in exporting the meningitis B vaccine (Cuba Business, April 1990:15; Eckstein, 1994:70). The moral antithetical aspect of the campaign was manifested when government officials encouraged the general population to return to Marxist–Leninist principles and the communist ideals proposed by Che Guevara. At the same time the government sought more ties with the world market system. Eckstein notes that: Several policies associated with the RP (Rectification Process) that were antithetical to socialist morals and principles and the new ruling ideological emphasis reflected state efforts to address the mounting hard currency crisis. For one, the SAs that encouraged the entrepreneurial spirit and foreign investment were designed to generate hard currency. Second, austerity policies were partly designed to increase the supply of goods available for hard currency export. The government, for example, increased the amount of textiles earmarked for export while decreasing textile rations, and it slashed sugar and motor vehicle gas allocations to increase the amount of each item available for export. The government also raised the electricity tariff to encourage more rational electricity use, so as to free petroleum for sale abroad. Third, tourism was tolerated during ‘rectification’ because it generated hard currency. (Eckstein, 1994:73) Towards 1989, the contradictions in the Campaign to Rectify Errors and Negative Tendencies were becoming obvious to the public. Certain welfare programmes were cut back by the government. Free and subsidised lunches at work were eliminated or reduced and university matriculation in 1989 fell to the level of the early 1980s (CEE, 1989:321). The corruption that was supposed to be eliminated never was, and the black market flourished throughout the economy. Where prices were mandated to be reduced, store managers kept violating the newly imposed price regulations (EIU, 1989:12). The queues at bakeries and other neighbourhood stock stores got longer, while

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scafflers would cut through selling the same products for slightly higher prices to people waiting in the long queues. In the Cubalse SA stores, reserved for diplomats and those allowed to purchase in hard currency (US dollars), employees with access to the dollars would illegally purchase products not available to the rest of the population. Despite the contradictions between morality and the pressing need for more market strategies, the rectification campaign brought about some economical benefits to the Cuban state retail sector. Since many of the private farms in this period fell into the hands of state cooperatives, the state was capable of conducting wholesale directly. Nevertheless, while personal expenditure of consumers (goods and services acquired directly by the people at official stores) increased by 6 per cent between 1985 and 1989, the recorded social expenditure of the state (in goods and services consumed collectively by the people) fell by 5 per cent (CEE, 1989:240–1). Internationally, this time was marked by the country’s need to adjust to global trends in world prices. Loyalty to the CMEA agreements became a stumbling block to the type of structural adjustments necessary to operate with the global changes. As prices in the West dropped for Cuba’s main export products, the island became much more dependent on the socialist bloc, especially the CMEA market system and more specifically the Soviet Union. Under these conditions, Cuba embarked upon her stormy voyage towards the 1990s. THE DEMISE OF THE CMEA As briefly stated in Chapter 2, the CMEA was an alternative market system which was thought to be based on fair, basically equal, trading terms among so-called socialist economies. The terms were concretely made through five-year plans and guaranteed the sale and purchase of Cuban products at prearranged prices. Between 1972 and 1991, Cuba had based more than half of its international trade on this alternative market system. During this period, Cuba linked its economy to the five-year plans implemented by the member states and became progressively more dependent on the socialist bloc especially after a global fall in prices of Cuba’s main hard-currencyearning export products. In this relationship, Cuba’s income was dependent on the commercialisation of its sugar, tobacco and nickel. From Eastern Europe (including the USSR), Cuba imported 40 per cent of the medicine consumed on the island, 16 per cent of agricultural fertilisers and 90 per cent of its public buses (BIC, 1997:21).

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In terms of marketable import products, the CMEA provided 63 per cent of Cuba’s imported food, 86 per cent of imported primary goods and 75 per cent of manufactured goods. In turn, 63 per cent of Cuba’s sugar exports, 72 per cent of its nickel exports, 95 per cent of its citrus and tropical fruit exports and 100 per cent of its small industrial and machinery parts and other manufactured goods exports were geared towards the countries of the CMEA. These figures represent the fixed trade between 1985 and 1989 (Rodríguez Beruff, 1995:6). The bulk of this trade was conducted with the Soviet Union. But García Reyes and López de Llerga concluded or estimated that excluding the Soviet Union, only 15 per cent of Cuba’s commercial exchange was conducted with the remaining member states of the CMEA system (García Reyes and López de Llerga, 1997:201). Trade with the USSR together with the CMEA amounted to 85 per cent of Cuba’s imports. Here we can see that Cuba, though benefiting more from CMEA trade than from trade with the West, was primarily dependent on no other country than the USSR. Jeffries (1993:190) estimated that by the end of the 1980s, the USSR provided up to 70 per cent of Cuba’s imports. More recent estimates give a figure of around 80 per cent by 1989 (Pérez López, 1995: 2). In the move towards integration into the world capitalist market, the relationships among the now ex-socialist countries began to corrode. The countries of Eastern Europe began to demand the repayment of debts Cuba had accumulated during the period of its participation in the CMEA. Additionally, the Eastern European countries started to raise their prices for mechanical and industrial goods. In 1988, Czechoslovakia and Bulgaria decided against renewing their preferential agreements with Cuba. Prices for products and manufactured goods coming from these countries were raised by approximately 20 per cent. Already in 1989, the official communist daily newspaper Granma started publishing the hiked prices for goods such as buses for public transport from Hungary (Granma, 1 October 1989:6). Due to the rise in prices, Cuba’s trade deficit was increased by 41 per cent in one year (Domínguez Reyes, 1991:21–30). Prices continued to rise rapidly during the following years. In January 1990, the heads of the member states of the CMEA met in Sophia, Bulgaria to decide the fate of the organisation. How would this parallel market of socialist economies – some of which were then in transition to neo-liberal models – continue to exist? Would it be restructured or completely dissolved? This meeting was of the utmost importance to the relationship between developing countries of the

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socialist bloc and the most industrialised countries like East Germany and Czechoslovakia. Since the chances seemed quite bleak for the continuing existence of the CMEA, Cuba had to rescue all the possible bi- and multilateral trade agreements made between the island and the industrialised part of the socialist bloc. At the same time, these same countries, with the exception of Cuba, were experiencing a social, economic and political transition to neo-liberal models. García Reyes and López de Llerga found that Ernesto Meléndez, president of the CECE (State Committee of Economic Collaboration) advocated a restructuring of the organisation. Because of the debilitating effects of the reforms in Eastern Europe on socialist states, the creation of a new multilateral post-CMEA trade organisation was deemed necessary by the Cuban leadership. At this same meeting, at which the vice president of the Council of Ministers – Carlos Rafael Rodríguez – participated, Cuba led the movement to maintain preferential trade agreements between the most industrialised socialist countries and those less developed countries like Mongolia and Vietnam (García Reyes and López de Llerga, 1997:202). The end result was that, due to Eastern Europe’s political crisis in 1990, there was no five-year plan for 1990–95. After Russia, one of Cuba’s biggest trade partners was the Democratic Republic of Germany. This entity ceased to exist when East and West Germany were unified on 1 July 1990. From this point on, the new Germany suspended all sugar trade deals with Cuba. It is also worth noting here that prior to the unification process between West and East Germany, Cuba had approximately 10,000 workers in the Democratic Republic, which produced for the island an extra income of US$3 million per annum. This additional income came to an end (García Reyes and López de Llerga, 1997:25). With the disintegration of the Soviet Union in 1991, the CMEA was dissolved on 28 June of that same year. Yeltsin’s ascension to power in Russia resulted in economic changes regarding former CMEA relationships, including Cuba. Yeltsin made sure that all contracts signed between Russia and Cuba were invalidated, certainly under pressure from the United States (García Reyes and López de Llerga, 1997:198). In the end, Cuba lost approximately 50 per cent of its purchasing power. China had become Cuba’s only powerful friend. Still all trading had to be made in hard currency, nothing of which resembles the preferential agreements made under the relationship with Eastern Europe. The demise of the CMEA together with the fall of the entire Soviet Union forced Cuba to look for alternatives and

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indeed to restructure its economy. The CMEA was a cushion between the socialist intentions of the Cuban leadership and the US-dominated world market. This cushion disintegrated and Cuba was left naked, the existing internal economic order apparently defenceless. CUBA AND THE FALL OF THE SOVIET UNION La desaparición de la Unión Soviética y el derrumbe del campo socialista europeo no nos tomó totalmente de sorpresa. Incluso advertimos mucho antes a nuestro pueblo de esa posibilidad. Con los errores estúpidos que estaban cometiendo y las concesiones vergonzosas que continuamente hacían al adversario histórico, veíamos venir los acontecimientos. (Fidel Castro in Federico Mayor, Cuba no negocia ni vende su Revolucion que ha costado la sangre y sacrificio de muchos de sus hijos, interview with Fidel Castro, in Granma Internacional, 22 June 2000) While in December of 1987, when the Reagan family and the Gorbachevs were dancing in the White House to celebrate the end of the Cold War in Europe, at that very same moment, thousands of Cuban troops crossed the Atlantic Ocean to combat South African forces in the Angolan city of Cuito Cuanavale. (Domínguez, 1995:23) Without doubt, the most important factor contributing to Cuba’s crisis during the 1990s and the evolutionary process of change was the disintegration of the Soviet Union and the severance of political, economic and military ties. The USSR was Cuba’s principal ally in the international sphere in addition to being its main economic patron and trading partner. On various occasions, Fidel Castro alluded to the future possibility of a Cuba without an ideological and economic superpower ally to back it up. The fact that the country was preparing for a radical break-up in the international system testifies to the alertness and consciousness of the Cuban leadership. However, no preparation in any amount of time could have sufficed to prevent the economic catastrophe that occurred during the first half of the 1990s. The deterioration of economic and political ties between the Soviet Union and Cuba must be looked at critically. The problems did not occur simultaneously with the fall of the Soviet Union; rather, Cuba’s crisis in the 1990s was due in part to a gradual rise of contradictions between state tendencies based on ideological grounds and those based, more importantly, on Soviet economic interests. This

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short but critical review is essential in that it helps to answer the question to be dealt with in the remainder of this book; namely, why does socialist Cuba continue to exist? A gradual break in relations Cuban–Soviet relations started to show signs of deterioration in 1981 when Brezhnev, then secretary general of the CPSU, announced during the 26th Congress that the USSR was interested in lowering the level of tension between itself and the West, but without lowering its commitment to the developing countries of the South. This new attitude was announced around the same time that Ronald Reagan took the presidency of the United States on the foreign policy platform of burying the Soviets economically and militarily, and making the Americas safe for ‘democracy’. Though Brezhnev seemed clear in explaining Soviet intentions on maintaining the superpower’s commitment to allies in developing countries, no statement made clear what kind of support would be given to revolutionary establishments like the PCC in Cuba and the Sandinistas in Nicaragua. Evidently, ideological commitment took a subordinate position to the attempt not to disturb the United States’ geo-political interests. García Reyes and López de Llerga (1997:135–9) have provided some interesting accounts of the development of changing attitudes within the CPSU at the start of the 1980s. They note that certain individuals within the Soviet Central Committee, like Karen Brutents of the Central Committee’s International Department and Brezhnev’s eventual successor as head of the Party, Yuri Andropov, were given the freedom, within academic papers and political statements, to criticise Soviet expenditure on the international communist movement. It was especially Andropov’s position after Brezhnev’s death that started the ball rolling in defining the Soviet Union’s new list of economic interests. This individual drew the Soviet Union’s attention to the need for modernising the Soviet economy and industrial sectors. In order to do this, Andropov deemed it necessary to reduce the country’s costs in helping allies in the South; this would include reducing certain subsidies and preferential prices in trade between Cuba and the Soviet Union (Domínguez, 1989:103–7). The causes here are essentially economic. But this economic move became more of a political problem as Cold War conflicts in Central America (Nicaragua and El Salvador) started involving increased Cuban intervention and solidarity aid. In 1982 Andropov and the CPSU made it clear to the United States that the USSR would be interested

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in setting up talks for peace in Central America rather than continuing the bloody battles from which the Soviet Union never benefited. On more than one occasion, the Soviet Union denounced Cuba’s military support for the Sandinistas in Nicaragua and the FMLN in El Salvador (Ratliff, 1990:80). Castro and the Cuban leadership, on the contrary, continued to request more military aid from the USSR in the light of US aggression throughout the region. Cuba stood firm in its commitment to the anti-imperialist movement in Latin America, while the Soviets sought out more ways of appeasing and improving relations with the United States. The commitment that Cuba displayed, in my view, was an affirmation of political independence and a discerning measure of PCC coherency in its foreign policy. Prior to this, the USSR started to reduce its contribution to the Cuban military apparatus. During the mid-1980s the Cuban government, nevertheless, doubled its military support and humanitarian aid in Nicaragua (Domínguez, 1995:24–7). Additionally Castro called back his troops from Ethiopia, which were at the time supporting Soviet interests in combating Eritrean rebels (Domínguez, 1995:28). The conflicts of external state interests began here, representing also ideological differences between the USSR and steadfast Cuba. The end of the Cold War The situation only got worse when Gorbachev came to power in 1985. By this time, the idea of reforming the Soviet political economy, with the government implementing outright market policies and privatisation programmes, had become consolidated, as was the leadership’s intention of lowering tensions between the two superpowers and bringing an end to the Cold War. The ‘new way of thinking’ and ‘reconciliation foreign policy’ were the fashionable formulas that determined not only the fate of the Soviet Union, but also the relationship between the Soviet Union and Cuba. Somehow, the diplomatic relations between the two countries did improve with Gorbachev, who sent a friendship delegation in early 1986 in preparation for the third PCC Congress. This Congress, which was supposed to convene in February, was delayed until later that year. The reason for this delay, as was announced in public by the Cuban government, was to take time to study the possibilities of reforms necessary to perfect the socialist project in Cuba (Granma Weekly Review, 15 June 1986:1). As mentioned earlier, in the section concerning the Campaign to Rectify Errors and Negative Tendencies,

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Fidel Castro was occupied with making speeches attacking the inefficient practices in Cuba’s domestic political economy. In response, the Soviets paid close attention to the economic developments in hopes of the island’s joining the superpower’s move towards a transition economy. Nevertheless, and to the dismay of the Soviet leadership, the third PCC Congress, which finally took place in November 1986, produced documents and created a policy determining the Cuban government’s intentions of reaffirming its commitment to political independence and socialist values. In his speech to the Party Congress, Fidel Castro stated that, in his opinion, the liberalisation of Cuba’s economy would eventually lead to political instability and hence the death of the socialist project; he concluded that the Soviet Union would eventually fall apart (Castro, 1987). Needless to say, Castro was correct. The end of Soviet solidarity Meanwhile, the reform movement in the USSR, which included the proposals of those economists who favoured reducing economic ties with Cuba, took advantage of this differentiating moment. Between 1987 and 1989 the Soviet press (Pravda) started publishing reports on the ‘misuse’ of Soviet aid to Cuba and emphasising the need for Cuba to change its economy in order to pay its external debt to the more developed member states of the CMEA. In 1989, the economist Nikolai Shmeliov pointed out that the USSR spent between US$6 and 8 billion annually on aid to Cuba and that the PCC did not use the economic aid efficiently; additionally, that two Soviet republics like Tajikistan and Kirghizia received together three times less economic aid and resources than Cuba (Bordreaux, 1992). These revelations caused some resentment and pushed the Soviet reform movement further away from solidarity with Cuba. Politically, this war of words was accompanied by an anti-Castro campaign in Poland, Hungary and Czechoslovakia. The press in these countries went on further to question Castro’s real reason for approving the application of the death penalty to General Arnaldo Ochoa and other military heroes of the war in Angola in 1988 (García Reyes and López de Llerga, 1997). In Cuba, the cleansing of the military was seen as necessary due to corruption and the trafficking in narcotic drugs, which embarrassed government leadership and the Communist Party’s reputation. The now ex-socialist countries of Eastern Europe, contrarily, insinuated that the executions were political, as Ochoa and company posed a threat to Fidel and Raul Castro’s popularity. The propaganda offered

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by the triumphant neo-liberalists in Eastern Europe influenced Soviet leadership in their attitude towards Cuba. Economically, the Soviets were already failing in their crude oil deliveries to other socialist countries, including Cuba. By 1987, the Soviet deficit on oil deliveries to Cuba was approximately 1.5 million tons, when comparing the trade accords to actual deliveries. MesaLago points out that, as a result of this, austerity measures on combustibles in Cuba had already started to take place by 1988 (MesaLago, 1992:26). Whether or not this reduction in oil deliveries could be directly linked to the inter-state disputes, what does remain clear is the gradual change in the Soviet attitude regarding the significance of keeping up good trade relations based on ideological preferences. Post-Cold War diplomacy between Cuba and the USSR In the diplomatic sphere, however, Gorbachev attempted to maintain respectful ties with Cuba; this was true at least in words. Gorbachev would love to have seen Cuba join in on the freedom bandwagon, but assured the world that the USSR would always respect the inalienable right of self-determination in all socialist countries (Excélsior, 8 June 1991:5). In 1989, Gorbachev visited the island for reasons which are – to this day – not clear. Gorbachev spent most of the time talking with Fidel Castro behind closed doors, but some dialogue with sectors of society outside the PCC, especially the military, was kept open. Additionally, during this time, thousands of Soviet citizens were residing on the island. The speeches that Gorbachev made in their presence and in the presence of the rest of the island’s population never specified disappointment in Cuba’s negation of perestroika. García Reyes and López de Llerga (1997:211) allude to the notion that this was possibly because the majority of Soviet citizens on the island represented the most conservative or orthodox brand of communists who were interested in maintaining co-operation between the countries. Towards the end of his visit, Gorbachev did sign a Friendship Treaty of Co-operation, which was to be effective for 25 years (Granma Weekly Review, 15 June 1986). The purpose of this treaty was to recognise the need to mobilise funds, which were freed through Soviet disarmament, towards the furthering of social and economic development of both nations. Unfortunately for Cuba, the Soviet Union did not last 25 years in order to keep up its commitment. Despite the somewhat friendlier diplomatic ties between the two countries, none of the commitments in words were reflected in real

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economic terms. Possibly to the disappointment of Gorbachev and others who stated their interests in maintaining close relations with Cuba, the economic leaders in the Soviet Union continued their policies of reducing non-profitable trade with their Caribbean comrades. Already by October 1990, Soviet oil deliveries were reduced by nearly 10 per cent (García Reyes and López de Llerga, 1997: 211). This naturally affected Cuba’s small industrial production and some of the population’s consumption habits. Austerity measures in all sectors were put in place by the government; hence began the initial stages of the Special Period. Cuba and the end of the Soviet bloc As the supposed Cold War of contradicting ideologies, military confrontation and economic models came to an end, so did the alliance between the Soviet Union and erstwhile comrade countries of the South. This was all due to the level of priority Gorbachev placed on building new relations between the USSR and the United States. In this process, it became evident that reconciliation between the two great powers – once arch-enemies – was contingent upon the severance of relations between Russia and its allies in the South. No longer was the Soviet Union to sponsor political and military activities among the revolutionary and progressive, anti-imperialist movements in the regions of Asia, Africa and Latin America. This aloof attitude demonstrated towards Soviet allies in the developing countries of the South sealed the decline of the USSR as a superpower and permitted the United States to take on a hegemonic role in the new world order. In this sense, Cuba lost its practical and strategic relevance to the Soviets. Simultaneously, the ideological and economic debates in the Soviet parliament and within the CPSU, between conservatives and reformers, or between hardline communists and neo-liberal procapitalists, were mirrored in debates on international trade between those wanting to maintain close relations with Cuba (the Cuban lobby in Moscow) and those who opted to reduce the links between the two entities. Needless to say, the latter group won their case in both debates. In contrast to other Soviet–Third World relationships, which came to a halt almost without a second thought from the CPSU leaders, Soviet–Cuban relations experienced a slow and painful death. This was due to the will and common interests of those leaders who wanted to maintain friendly relations between the entities up until December 1991, when the USSR was finally dissolved. For the Soviet Union, the

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Cuban case was significantly different from those of all other countries of the South. Cuba’s political apparatus and policy decision-making sources were never dependent on nor centrally managed by Moscow. Cuba was more of an economically dependent ally than a political subordinate, as were perhaps the nations of Eastern Europe, especially the Democratic Republic of Germany, Hungary, Romania, Bulgaria, and Czechoslovakia. Soviet armed forces did not arrive upon the island by force and confrontation. Rather, they were invited to stay, as the Cuban leadership never had any intentions of surrendering Cuba’s close ties with the United States, especially considering the island’s close proximity to the latter. In this sense, it was more difficult for the Soviet Union to leave a country that had invited its armed forces and technical help, rather than being expelled by the governments and peoples of states who rejected its presence, as was the case in Eastern Europe. Soviet collapse With very little resistance, the Soviet Union collapsed in 1991, as did the Communist Party that ruled it. Only on one occasion did the military, which included many loyalists to the CPSU, and the top ministers of the Soviet Council of State, attempt a coup for the purpose of maintaining Soviet political structures and reversing some perestroika policies. With a quick call to post-Soviet solidarity and in the name of democracy, the military bowed to the will of the disillusioned masses. Soviet communism came to an end when the failed coup resulted in the new state’s renunciation of communist ideology. On the following 12 September, US Secretary of State James Baker arrived in Moscow to discuss security measures in the post-Soviet era. One of the most impressive moments of the meeting was when Gorbachev announced that 12,000 Soviet soldiers would retreat from Cuban territory (García Reyes and López de Llerga, 1997:130) The Cuban leadership protested, as this decision was made unilaterally without taking Cuba’s security into consideration. The most pressing issue for Cuba’s state security interests was the fact that the United States had no intentions of retreating from Guantanamo Bay. The dismantling of the Soviet Union did not only mean a break of relations between Cuba and Russia. Rather, it meant that Cuba had to deal with the new political set-up that would provide a framework for possible future economic relations with Eurasia. The 15 republics comprising the former USSR were set free to create their new alliances. Not much had changed. Most of the new state leaders

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in those countries were members of the former CPSU or held high bureaucratic positions. Nevertheless, decentralisation did take place and, at least in written law, they were granted sovereignty. Due to the process of political decentralisation, which culminated during the structuring of the Commonwealth of Independent States (CIS), the ex-Soviet republics had achieved a certain political autonomy in relation to Moscow. By early 1992, Cuba was obliged to sign accords with each CIS country, individually (Granma Internacional, 10 January 1992:3). No longer did Moscow-centred political ideology direct economic solidarity between Eurasia and Cuba. Instead, the ex-Soviet republics became concerned with their own integration into the global market. The Russian Federation and the other former Soviet republics followed quickly with neo-liberal reforms. This shock therapy to the economy exposed almost all sectors of the Russian economy, with the exceptions of education, transportation and some parts of the medical system, to the free market and privatisation. The triumphant neo-liberal project in Russia meant a policy of reduced government spending; this went for internal domestic spending and most importantly for Cuba, internationally. As far as the Russian Federation was concerned, no more preferential subsidies were to be offered to Cuba or any other developing or (ex-)socialist country (Excélsior, 28 January 1992). Russia’s new deal with Cuba was based strictly on world market prices. In June 1992, the Russian Federation signed a trade accord with Cuba, whereby Russia would give 1.8 million tons of crude oil for every 1 million tons of sugar. (This was based on the then current prices of US$220 for a ton of sugar to $120 for a ton of oil.) This differs greatly from the trade accords between the two countries set up for 1989. Additionally, a sort of propaganda machine against communist Cuba was created. This was possible with the help of a number of Cuban dissidents residing in Russia during the time of the Soviet demise. Newspapers, journal reports and television programmes, which monitored and somewhat encouraged the transition to neoliberal democracy in Russia, portrayed Cuba as a country of people suffering the tyranny of the ancién regime (García Reyes and López de Llerga, 1997:172–3). Option zero Ultimately, the story is about a political crisis and a push for neoliberal reforms in one superpower, which affected its economic dependant. But what needs to be pointed out is that, though the

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demise of Soviet–Cuban relations was gradual, the disregard for legally binding contracts and terms of trade was not. Due to the political crisis that the USSR endured during 1991, Cuba received less than 50 per cent of the products it was promised (except for petroleum) according to bilateral trade agreements. As for petroleum, Cuba received only 71 per cent of the 10 million tons of oil it was promised for the exchange of its sugar. While Cuba succeeded in complying with the original trade agreements, the Soviet Union did not because that entity ceased to exist. In an article in the London Financial Times, Stephen Fidler pointed out how in 1991 the USSR delivered: • only 45 per cent of the 1.5 million tons of grain that were promised to Cuba; • only 16 per cent of the 1.1 million tons of fertilisers; • absolutely none of the 200,000 tons of sulphur; • only 38 per cent of the 100,000 tons of ammonia; • none of the 90,000 tons of rice; • none of the 10,000 tons of wood; • only 5 per cent of the 5,000 tons of soap; • only 26 per cent of the promised 30,000 tons of copper and aluminium. (Lobe, 2001:3) The purpose of pointing out these facts is not to blame Cuba’s crisis during the 1990s on the irresponsibility of Soviet or post-Soviet leadership. Rather, my interest in citing the empirical evidence is to demonstrate how dramatically the chaotic fall of the USSR affected Cuba’s production and service processes. Under normal circumstances, Cuba’s economic crisis should have begun during the early 1980s when the world market prices for sugar and nickel fell dramatically. The country’s productive capacity was reduced by internal social contradictions, and efficiency became the theme that had no end in Fidel Castro’s speeches. But due to the strong ties between Cuba and the Soviet Union, together with the price arrangements with the CMEA, Cuba was barely hurt by the global scenario. It is with this knowledge that I assert that the economic crisis which caused state cutbacks, the harsh rationing of resources, the minimisation of production and most importantly the restructuring of the political economy began in 1990, when the Cuban leadership came to realise that Soviet oil deliveries were to be paid in hard convertible currency based on world market prices starting the following year. This realisation was evident in the documents that were produced and published by the fourth

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PCC Congress. The Congress, which will be discussed in detail later on, publicly documented the severity of the hard times to come. The factors that caused the crisis were presented as the following: unequal trade between Cuba and the West, which tended to reduce the country’s income; the need to trade totally in US dollars; new high interest rates on Cuba’s foreign debt; a fall in the world market price for sugar; the fall of traditional trading partners for exports; the US economic and trade embargo; finally, the lack of access to financial and trade credits from institutions like the World Bank and the International Monetary Fund (Granma, 17 October 1991:2). But this was only the beginning of the Special Period During the Time of Peace. During the start of the crisis, the Cuban government continued to emphasise the need for efficiency in production. Additionally, new sectors were to be prioritised in the national economy; namely, biotechnology, tourism and scientific research. As far as the population was concerned, the government prepared the masses and indicated on numerous occasions that the country was to enter a wartime-like economy. This is what government chancellor Roberto Robaina called ‘opción cero’ (option zero); that is, zero energy, zero electricity, and zero transportation (Excélsior, 2 January 1992). From this point on, the government developed state-of-emergency plans to save energy. Among these schemes were the planned electricity blackouts all over the country and especially in the nation’s capital. Because community information and newspapers in Cuba are efficient in spreading the word, the blackouts took no one by surprise and were always conducted in an orderly fashion. Everyone knew that there was to be no electricity for lighting throughout most of the day time and for approximately three to four hours per night, much less for housing and building appliances (Granma Internacional, 19 February 1992; interviews, 1999). Nickel mining and processing industries had to be shut down, due to the lack of energy resources. This, in turn, became a serious problem for two reasons. First, nickel was considered to be one of the most important exports bringing in hard currency. Second, since the regime is dedicated to avoiding unemployment, the workers at the mines and factories were sent to the countryside. No one was brought to the countryside to cultivate and reap agricultural production by gunpoint, but there were absolutely no options. Hundreds of thousands of factory and office workers were sent to the barracks of food farms in order to replace the machines that were lacking fuel (Alonso, 1992:40). This immediate remedy to save the country’s agricultural production for domestic

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consumption did save many workers from being on the streets, but it certainly was not enough for the government to conceal one of the PCC’s best-kept secrets; that is, unemployment. For the first time in post-revolutionary history, the Cuban government announced publicly in May 1992 that unemployment in Cuba actually existed (Hockstader, 1992). This is understandable in a regime where one of the most basic human rights articulated in the constitution was that of every citizen to contribute to society by working where he or she is capable and willing. Full employment was the motto of the PCC between the 1960s and 1980s. Official figures estimated that the island’s unemployed represented only 6 per cent of the work force (García Reyes and López de Llerga, 1997:76). In terms of sugar production, Cuba never had a worse time. Because of the lack of fuel to drive large-scale production, the country did not even produce 6 million tons of sugar in 1992. This is a considerable drop in comparison to the 8 million tons produced in 1990 (Journal of Commerce, 16 April 1992). The lack of fuel pushed sugar production back nearly 40 years, as horses, cows and humans replaced tractors and ground turners This situation escalated to the point where by 1992, 10,000 tractors stood still due to the lack of gas and oil; these tractors, a third of the nation’s total, were replaced by undernourished oxen (García Reyes and López de Llerga, 1997:121). Petrol for private cars, which was already rationed by 50 per cent in 1991, was taken off both the official and black markets (Analco, 1992:28). The city avenues and the Central Highway were silent. Over a hundred bus routes were discontinued and 700 taxis in Havana were to be without fuel. At this point Fidel Castro ordered 700,000 bicycles from China (Granma Weekly Review, 2 January 1992:2); this was to be the new and dominant mode of transportation for the citizens in this economy, which was similar to that of wartime. Food consumption fell harshly as well. Due to the lack of fuel for transportation, and the materials to reap agriculture and handle livestock, the Cuban government’s ability to deliver the guaranteed food rationing for each Cuban citizen began to crumble. In 1991 and 1992, the government guaranteed each citizen the right to a monthly ration of only 2.3 kg of rice, 0.23 kg of cooking oil, 1.84 kg of sugar, 0.46 kg of fish, and only 0.46 kg of meat, chicken or soya substitute per month. Milk rations were restricted to children under the age of seven (interviews, 1999). The rest of the population’s food consumption depended on the black market or later on what was available for those possessing US dollars. By 1993, construction had

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dropped to less than 20 per cent of what it had been in 1989, the bulk of it in public housing (CEE, 1994:5). According to the Cuban government, the difference between official state expenditure and inflows produced a budget deficit in 1992 of over 5 billion pesos. These numbers alone are alarming in comparison to the state budget deficit in 1989, which was less than 2 billion pesos (IF, 1993:4). Additionally, this crisis involved serious inflationary problems, which are often measured by monetary liquidity. By 1994, liquidity among the general population reached 11.9 billion pesos, most of which was in savings accounts. Although real salaries decreased by 5 per cent between 1989 and 1993, the purchase of goods and services fell by 40 per cent (CEE, 1994). Who is to blame? The analysis of the severance of Soviet–Cuban economic ties confirms the theory that the so-called socialist economies are not and were never unlinked from the global market. This study has shown that Cuba’s economic crisis during the 1990s was in part due to a certain dependency on the state-led economies of Eastern Europe and in particular Russia and the USSR. As the countries of Eastern Europe gradually exposed their national products to the rise and fall of world prices, and neo-liberal tendencies started creeping into the party/state apparatus of the Soviet Union, Cuba started to become more isolated in the global political economy. With hindsight, dependency on the only state-led alternative to development in the global market, the CMEA, can be thought of as a big mistake. Of course, the PCC is the first to admit that ‘we’, the people, made errors in building ‘our’ country, that all is a dialectical process and that ‘we’ can learn from our mistakes, and that ‘we’ can overcome our problems and continue to (re-)build socialism. But the problems that cause crises, the inherent contradictions of the political economy, are yet to be unmasked by the revolutionary leadership. The PCC has yet to admit that as long as the Cuban party/state apparatus continues to operate in a capitalist world system, the country will always be exposed to the causes of economic crisis inherent in capitalist production. Instead, the PCC continues to blame the problems of dependency on the will of ‘traitors’ to the so-called socialist project. In the following sections of this chapter, this study will take a look at the biggest external problem that the PCC put forth in the analysis of Cuba’s economic crisis during the 1990s. It is the most frequently mentioned cause of many problems in Cuba, the one problem which

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captures media attention in the United States today and the problem that unites all progressive, left-wing movements in solidarity with the people of Cuba. It is the one problem that is usually labelled an external factor, a problem created from the outside – the US economic embargo. Later on, after reviewing this final factor in Cuba’s economic crisis, I will delve into explaining how this crisis resulted in the restructuring of the country’s political economy and, just as importantly, what effects the reforms have had on the general population. All together, this will answer the question of why and how the Communist Party/state apparatus continues to exist in a neo-liberal world. THE US ECONOMIC EMBARGO The US economic embargo, which has existed since 1962, has had a tremendous effect upon the island’s revolutionary development. The embargo, which eliminated Cuba’s sugar trade with the United States, can be seen as a reaction to the nationalisation of US companies that took place almost immediately after the Revolution. Moreover, it was a direct reaction to Fidel Castro’s announcement that he was a Marxist–Leninist and that Cuba would align itself with the socialist bloc (Thomas, 1971:201). Under the embargo, US companies were banned from exporting to Cuba directly. Additionally, the influence that the US had over the whole of Latin America politically was so immense that the entire continent, except for Mexico and Canada (and for a short period Jamaica and Grenada), joined in on severing economic and diplomatic ties with Havana. Andrés Escobar estimates that during the first 26 years (that is, between 1962 and 1988), the economic embargo cost the Cuban economy US$450 million annually. That would be a total of approximately $15 billion for the time period (Escobar, 7 July 1991; CEE, 1991:27). Vice-President of the Council of State Carlos Lage estimates that from 1962 until 1996 the embargo cost Cuba more than US$41 billion. He stated that without the embargo, with the same level of production and prices, the country would have averaged 40 per cent more in hard-currency earnings (Granma, 12 November 1996). Though these estimates are always questionable, the numbers seem quite reasonable when taking into consideration US trade capacity. Fortunately for Cuba, aid coming from the USSR and favourable trade agreements during the existence of the CMEA compensated for the lack of trading with the geographically natural and historical

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trading partner, the United States. Thus, for 28 years, Cuba was able to survive the trade embargo and actually grow economically and socially. However, when the towers of communism in Eastern Europe came tumbling down, Cuba became exposed to the fierce intentions of anti-Castro forces residing in the United States. The reinforced embargo Both wealthy, conservative anti-Castro Cubans and those US politicians who throughout the Cold War pursued the imperialist intention of toppling Cuba’s party/state apparatus automatically assumed that because of the fall of communism in Europe, Fidel Castro and the PCC had no chance of lasting more than a couple of years (Oppenheimer, 1992). Some pressed for a military invasion, others for a hardening of the US embargo. Yet others, the bulk of academia and many economists, took it as a given that the Cuban government would not be able to handle the economic crisis caused by the severance of economic ties with the former Soviet Union. This last group of thinkers concluded that, just as the transition economy in Eastern Europe produced a political change within government circles as well as a dissatisfied attitude among the popular opposition movements, thereby resulting in the decomposition of the social and ideological base of the state, Cuba too was doomed to yield to the same reforms and experience a radical breakdown of the socialist project. In Washington, DC, research centres dedicated to the study of the Cuban economy sponsored various projects and eventually documents emphasising the discourse of a post-Castro Cuba; one of these is the Association for the Study of the Cuban Economy, which sponsored the semi-annual ‘Cuba in Transition’ volumes. This collection of essays, reports and talks given at Florida International University was set up in contemplation of the eventual demise of Cuban socialism. The titles of the articles alone give away the mindset of the mostly US-based researchers: ‘Reconstructing Cuba: From Marxism to Democracy, 199?–200?’; ‘Elements of Political Restructuring in PostCastro Transition’ (Rivera, 1991; 1992); ‘The End is Near: Why Cuban Socialism Failed’ (Roca, 1993). In an academic fashion, Sergio Roca wrote this last-mentioned article with a theoretical framework based on Janos Kornai’s work, which was dedicated to explaining the causes of the fall of Soviet communism. All these mistaken assumptions will be tackled in Chapter 4. I mention them briefly now in order to provide a background on the attitudes and intentions of the antiCastro movement and the push for a hardening of the US embargo.

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Excited by the widely discussed and almost obvious possibilities of the fall of the Cuban party/state apparatus, the Cuban–American Foundation (CANF) lobby group mounted pressure on the US Congress to take action upon the Cuban case. In 1992 US Congressman Robert Torricelli sponsored the bill that would mark another decade of US–Cuban conflict. The Cuban Democracy Act (the Torricelli Act), which would reinforce the 30-year-old embargo, was aimed at destroying the Fidel Castro-led regime and punishing other countries for trading with the island. The law was implemented immediately. This was made possible through CANF’s contribution to the 1992 US presidential campaign, when the CANF donated US$120,000 to Bill Clinton’s contingent (Eckstein, 1994:94). The written object of the law was to punish any businesses that were investing in Cuba, in addition to prohibiting the IMF and the World Bank from facilitating business transactions on the island. Cuba was excluded from these Bretton Woods institutions since the US can enforce their voting power here. Voting in the World Bank and the IMF is weighted by monetary contribution; the US contributes the most. This act can be understood as a reinforcement of the embargo that characterised US–Cuban relations, in that prior to the Torricelli Bill, US subsidiary companies in Mexico and Canada were allowed to export to the island and participate in joint ventures. According to Trueba González, US subsidiary companies in 1991 exported products and services worth $300 million to Cuba (EIU, 1992). Total transactions with Cuba amounted to $718.7 million in that same year. The biggest companies involved were Mobile Oil, Esso-Exxon, and IBM. Migration policies However, the hype died out between the end of 1992 and 1996. US economic aggression against Cuba began to simmer down after US corporations saw the benefits of investing in Cuba, even if trade was conducted via third countries. Esso-Exxon, ITT, and IBM all unsuccessfully lobbied against the Torricelli Act, but received broad attention from the US media (Granma Internacional, 30 June 1993:4). Additionally, this bouquet final, which exacerbated Cuba’s already difficult position, was not producing the desired outcome. Cuba remained socialist, or at least a one-party/state apparatus. Although no official change was made on the embargo policy, the Office of US Interests in Havana set up negotiation talks with Cuban government officials (Granma Internacional, 30 June 1993:4–5). In August 1993, recent Cuban émigrés, who were distressed by the economic condition

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of the island rather then being true political refugees, pushed businessmen, lawyers, doctors and other professionals to form a moderate counterpart to the CANF; it was called the Cuban Committee for Democracy. This group sought negotiations between the Cuban community throughout the US and the Cuban government; they succeeded in getting medical supplies and other materials to families and friends on the island. But though the CCD intended to override the powerful influence that the old guard of anti-Castro forces had over the US government, the CANF’s economic power and strong networking within the US Congress prevailed. Once again, this was due to the leverage that large enterprises run by Miami-based Cubans had upon US Congress. Relations between Cuba and the United States improved for a spell when in 1994 a massive migratory crisis hit the shores of Miami. It was in this year that the Cuban government allowed 30,000 Cubans to ‘flee’ the island. This massive exodus produced a fear in the United States, recalling the days of the Mariel exodus in 1980, when thousands of Cubans were able to leave the country and arrived unexpectedly on Florida beaches. Conservative and anti-immigrant forces in Florida quickly called US federal attention to the legal and illegal influx of Cubans, many of whom were former convicted criminals in their homeland. And so the leaders of the two countries compromised on a new migratory-visa regime. But the United States maintained the ‘wet foot/dry foot’ policy, which encouraged certain brave resisters, especially among the young, to attempt to leave the island by unsafe means in the hope of reaching US shores. The law stated that if a Cuban national were to arrive upon US dry land territory, the individual would be considered as a political exile. If the individual were to be caught by the US National Coast Guard or the Immigration and Naturalization Service crossing territorial waters, then the US government would reserve the right to deport the Cuban national back to his or her homeland. In the United States, this wet foot/dry foot policy created some resentment among other ethnic and migrant communities because of its discriminatory character (Hoefte, 1995:83–90). The Cuban exile community in Florida backed this measure as it coincided with US foreign policy to support those ‘oppressed’ by ‘non-democratic’ regimes. The Helms-Burton Law In 1995, the Cuban parliament passed the New Law on Foreign Investment, which invited foreign companies and individuals to

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invest directly and up to 100 per cent in ventures; the character of this law was non-discriminatory. In other words, even Cuban–Americans and former exiles were invited to invest. This law will be discussed later in greater detail. But it is important to mention it here in order to describe how open (desperate, perhaps) the Cuban government was in re-establishing contacts with Miami capital holders. Despite the New Law on Foreign Investment’s friendly gesture to Cuban exiles in the United States, the CANF and other Miamibased forces set out to discredit the changes made in Cuba’s economic and political system. One week after 24 February 1996, when the Cuban Armed Forces shot down a pirate jet violating Cuba’s territorial space, the Republican Party-dominated US Congress passed the HelmsBurton Law. The Helms-Burton Law was, according to President Bill Clinton, ‘a powerful message to Fidel Castro, that the United States will support anyone who fights for freedom and democracy in Cuba’. The Helms-Burton Law allows any Cuban exile in the United States the right to sue any individual or company that purchases any property confiscated by the revolutionary government. One writer in the Economist described the law as a ‘scarecrow’ to deter enterprises from investing in Cuba (Economist, 10 March 1996:30). The pirate jet had been sent and flown by the Miami-based group Hermanos al Rescate (Brothers to the Rescue); this group allegedly receives funds from the CANF, the CIA and Cuban–American enterprises (Granma Internacional, 1 March 1996). Because of the proximity of the two events and the press commentaries on Cuban military defence, one might as well assume that the latter was a direct result of the former. In his book concerning the role that the world-famous rumproducing giant Bacardi Rum played in formulating the Torricelli Act and the Helms-Burton Law, Calvo Ospina describes the politics of the US economic embargo against Cuba as an ‘occult war’ between Cuban state corporations and Miami millionaires. The study was well defended and provides the reader with surprising facts concerning corporate influence in US laws concerning Cuba. However, while studies like these are significant in understanding the adverse relationship between the two countries, they tend to disguise the essence of the economic embargo; that is, the intentions of the US state leadership to undermine the social revolutionary and antiimperialist processes that characterise the Cuban Revolution. The bottom line is that the embargo continues to be in place today because of US imperialist intentions. Cuban–American corporations

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and their lobby groups only support the embargo with capital and intellectual back up. The embargo’s illegality For the United Nations General Assembly, the embargo is illegal according to international law in that it coercively violates Cuba’s right to self-determination. Additionally and especially in its latest phase, i.e. the Helms-Burton Law, the embargo was viewed as an impediment to the self-determination of all nations; this attitude is manifested in the progressive loss of support the US has received in upholding the embargo. In 1992, only 59 countries voted in favour of ending the US embargo against Cuba, with 70 countries voting against; this was shortly after the passing of the Torricelli Bill. Every year thereafter, the number of countries opposed to the embargo against Cuba has increased. In 1993 the resolution calling for the embargo’s end passed 88 to 57, with four abstentions. In 1994 the score was 101 to 48, with two abstentions; in 1995 it was 117 to 38, with three abstentions; in 1996, 139 countries voted in favour of ending the embargo against 25, with three abstentions; and in 1997, 143 countries called upon the United States to end the embargo and scrap the Helms-Burton Law. In a word, there is currently no international backing for the embargo; the world sees it as unjustified. Looking at the embargo critically There are fundamentally two problems when looking at the embargo. The first is the way the embargo is used in Cuba as an excuse for all the shortcomings of the present system. In 1996, one Cuban worker told me: ‘Cuba is nice, you just have to understand it; if anything goes wrong, all you have to do is blame the US blockade’ (interviews, 1998). In all my research I have not found a single document pertaining to the Cuban political economy, or even a single issue of the Granma newspaper, that does not contain some assessment on the effects of the embargo. There has not been a single speech by Fidel Castro that does not, even if it is only briefly, rebuke the US for its sanctions. All the food shortages, lack of equipment, materials, schoolbooks and medicine, diseases, malnutrition in the countryside, even the weather; all the blame goes to the US embargo. Secondly and ironically, when one arrives at any of Cuba’s recently remodelled airports, one cannot help but notice the stacks of Coca-Cola cans standing as proudly as the native Varadero Rum on the bars. But this

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sight is not complete without the accompaniment of Winston, Marlboro and Camel cigarette cartons. In the tourist area shops, US toothpastes and Palmolive–Colgate body soaps are available. In the ‘dollar shoppings’, milk imported from Spain is available to all who can afford it. It is not uncommon to see clothing stores selling Levi 501 jeans for New York City prices. The streets of Havana today are filled with cellular telephones, all kinds of cars, plenty of gasoline (sold in US dollars, of course) and Nike T-shirts on the backs of youth. Where then is the embargo? How can one account for the inconsistencies here? Why are there plenty of US products on the dollar market, which is still state run, but a lack of medical products, books for schools, milk for the general population? These inconsistencies do not go without explanation. The country finds itself in a situation where it needs to recuperate its capacity to produce and sell in the world market in hard currency. Since there are no more five-year plans and no more guaranteed prices for its main products, Cuba needs to sell everything it can in hard currency (US dollars), in order to accumulate capital for the state. After all, even the means and materials of reproducing the so-called conquests of the Revolution – housing, medicine and education – are bought from abroad in dollars. The state’s principal economic objective is to accumulate as many dollars as it can (Rodríguez Beruff, 1995:23). This not only means making dollar profits on domestic products, but it also indicates the development of a mercantile economy in which products are bought from abroad – including US products bought from the Panama Canal Free Trade Zone – and profits are made in the tourism industry. Certain products that are bought abroad, even essential household items like cooking oil – bought from Spain, Panama and Mexico – are then being sold in dollars. Some of the prices seem quite inflated in comparison to neighbouring Caribbean countries. Nevertheless, these products do sell. During the 1980s, the dollar stores were reserved for tourists and diplomats; hence the term diplotiendas was applied to these entities. But today, since the dollar has been legalised, the government seeks to benefit from those Cubans who have relatives living abroad; gifts in dollars have become a major source of hard currency income for Cuba. Obviously, the dollars need to be spent. This is the explanation that the PCC offers the general population.

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The effects of the embargo on the health-care system Despite the ambiguities and contradictions that the embargo entails, one thing is for certain, and that is the effect that it has had on the national health-care system. No institution has been hit harder by the economic crisis of the 1990s – in which the embargo plays an important role – than Cuba’s health-care system, which provides free services to all its citizens. Conditions like food shortages, power outages and lack of materials for construction have always plagued Cuba, even in the best of times. But for a short period during the 1990s, the health-care system was found to be crumbling, and diseases that were preventable in the 1980s were becoming rampant in isolated communities. As is well known, one of the Revolution’s so-called triumphs or conquests is the health-care system. Previously, the revolutionary medical and health-care system was not only a showcase for the Third World, but the know-how in science and medical technology was comparable to that of the United States and Western Europe. Cuba’s infant mortality rate is among the world’s lowest and life expectancy is equivalent to that of the industrial superpowers (Lobe, 2001). But all this has been put in jeopardy. Today, lack of both simple and essential materials, makes it difficult to provide the best quality health care for Cuba’s citizens. Surgeons are forced to reuse medical gloves and patients wait endlessly for simple X-rays due to the shortages in film. Also a very telling fact of the Special Period is that the number of surgical operations performed between 1990 and 1995, dropped by some 40 per cent (Cuba Information Agency, 1998). What is interesting about the medical aspect of the economic crisis is that here is a case where the blame can be placed directly upon the US embargo. The Torricelli Law enacted in 1992 banned the sale of US products through third countries. In 1995, the Helms-Burton Law sought out to punish any foreign company that invests in the medical field. As a result, it became more difficult for the party/state apparatus to buy medical equipment or medicines from US companies or subsidiaries of those firms without permission from the US government. Globalisation of the marketplace in the 1990s simply exacerbated the problem. US pharmaceutical giants continue to buy up droves of medical companies in Europe and Latin America. Now some drugs are only made in the US or by US-owned monopolies, and Cuba is thus shut off.

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Embargo and legitimacy But what the embargo actually does in Cuba is to legitimise the government’s hostility to the United States, and its economic and so-called democratic formulas. Fidel Castro has been successful in gaining the popular support of the general population and the rest of the world because of US aggression. Political repression and tough police control on the streets and at the factories are legitimised because of scarcity, which in turn is popularly understood as the result of the embargo. One can say, ‘This may be Castro’s finest hour.’ After the Pope’s visit in January 1998 and his criticism of the embargo, the US appeared to be dropping restrictions on humanitarian care. A limited number of direct flights from Miami to Havana carrying medical supplies and foodstuffs, is now permitted. It should be no secret: the embargo actually unifies the country. This is not to say that the state benefits economically from the embargo, but politically there is every reason for the Cuban government to call upon the masses to oppose this externally imposed fact of life. Some day the embargo will be lifted. What then will be the cause of shortages, underdevelopment and economic crisis? I would not go as far as Jorge I. Domínguez and state that the Torricelli Bill enacted in 1992 was a gift from God to the Cuban government (Domínguez, 1995:34). However, the country did suffer economically and the pressures created by this law, though rendering legitimacy to the Cuban government, did have their effects on the general population, who in turn must respond to the party/state apparatus in supporting or resisting policies. Additionally, the HelmsBurton law, the way it was imposed and the manner in which it was denounced worldwide, also affected the population and its view of the United States. The attitude may be summed up by saying that the most anti-Castro Cubans living on the island were pleased to support the party/state apparatus in the face of US economic aggression. The reinforced US economic embargo came just in time to legitimise the anti-imperialist regime when its shortcomings were becoming more obvious towards the end of the 1980s. THE STATE’S RESPONSE AND THE IMPACT UPON CUBA’S POLITICAL SYSTEM The end of the Cold War, the demise of the socialist bloc in Eastern Europe and the hardening of the US economic embargo all led to a

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situation where Cuba was found to be more and more isolated within the global economy. This predicament forced the revolutionary leadership to deal with its own economic problems realistically and begin a new search for alternatives within the framework of the pillars and foundations of the party/state apparatus. As a result, the 1960s debate on how to maintain sovereignty and promote development was rehashed, and so was the idea of national development on terms favourable to equitable domestic redistribution. Here I will outline the impact that the economic crisis has had upon Cuba’s political and economic structures. Many of the changes explain how the revolutionary leadership was able to maintain stability and overcome the dire straits of economic chaos. After delineating the changes that accompanied – or that were a direct reaction to – the economic crisis, this study will have come to answer the first half of its central research question: Why and how does the one-party communist political apparatus continue to exist? First, it would be appropriate to review what has been stated so far. I have already identified the four broad groups of causes to the economic crisis that is often called El Periodo Especial, those being: internal economic dynamics and logistics of Cuban revolutionary social development; the evolutionary demise of the CMEA parallel market system; the complete dissolution of the Soviet Union as a global superpower and political structure; and lastly, the hardening of the US economic embargo against the island’s economy. These factors caused a problem of shortages in fuel and energy, a lowering in the consumption of food and a problem with its distribution, a fall in general production, a setback in the national health-care system, and the deterioration in the population’s standard of living. In contrast to the literature provided by official PCC research and other independent cubanologos, I found the Periodo Especial to be a useful term, not so much in describing the economic crisis as in describing the government’s immediate response to that crisis. Ultimately, this period resulted in the inevitable restructuring of Cuba’s domestic political economy and the implementation of what is traditionally called market-orientated policies. In Spanish, this would be called apertura, or opening, to the global market forces. Actively forming a new model The Special Period in the Time of Peace involved making political reforms, seizing the economy, and pushing the population to make various sacrifices in order to save the revolutionary social order. Using

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market reforms was nothing new to the party/state apparatus. As stated earlier in this chapter, market strategies in domestic markets as well as in the sphere of foreign investment were used as early as the mid-1970s. However, during the 1990s the government had to resort to certain market practices that would have been absolutely inconceivable in revolutionary Cuba prior to the crisis. This idea was best reflected in the words of a PCC member who told me: ‘We have to think like capitalists but continue to be socialists.’ In terms of the actual political structure, some changes were made. In the minds of some, these changes will always be seen as PCC responses to the waves of anti-communism and the ‘pro-democratic’ fanfare that have swept across the former socialist bloc and around the world during the neo-liberal triumph, mentioned in Chapter 1. For others, political reform in Cuba is seen by the population as a priority that has continued, as it did in the past, to influence party decision-making. Communists in Cuba do not like to link the events of economic turmoil and the demise of the worldwide Communist movement with the political reforms that the country has experienced; whereas the PCC leadership constantly re-emphasises that their political model of democracy is authentic to Cuba and, as a sovereign nation, no foreign models or pressures have been taken into consideration. However, the timing of the political and economic reforms appears to be more than just a coincidence. Remember that since the end of the 1980s, new democratic models, based on European liberal and multi-party democracies, were being established worldwide by popular demand. This was true for most of Eastern Europe and parts of Africa, but also in Latin America, especially in Chile. Fidel Castro and the PCC, who have been in power since 1959, had to respond to the new world order that not only imposed a standard culture of neo-liberal economic development in Third World countries, but also ordained multi-party elections. In response to the liberal democratic demands in the West, Castro said ‘that no other regime is as democratic as a Socialist regime’ (Granma Internacional, 27 December 1992). This meant that the country would not turn to foreign, multi-party political and neo-liberal models. Rather, that Cuba will continue to be ruled by a single, solid party representing the interests of the masses and built upon the historical events, legal resources and pillars that created the Cuban revolutionary experience (August, 1999:225). In other words, the one-party state apparatus would only endorse changes that were consistent with the pillars of unity, continuity, state supremacy and – especially – popular participation. The severity of

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the economic crisis that hit Cuba in 1991 caused the PCC to depend more on the general population, as former socialist allies shunned the Castro regime. The fourth PCC Congress In May 1991, with the USSR on the verge of collapse, Fidel Castro made his llamamiento, or call to the general population to participate in the changes that needed to be made in order to accommodate the island–nation to the new global political economy (Granma Internacional, 21 May 1991:8). Industrial sites provided for mass meetings of workers where, for instance, during the days prior to the 1991 fourth PCC Congress, over a million people voiced their complaints, suggestions, and ideas regarding more than 50 issues that dealt with people–government relations. This occurred also in the workplace of factories, schools, sugar-cane fields and hotels. Some call this popular participation the hallmark of Cuban democracy. I would say that this was really a sampling of opinions and popular ideas from which the PCC could measure the extent to which it could please the population without jeopardising state coherency or the pillar of unity. It also offered a sense of accountability to the masses. Eckstein criticised the llamamiento as a ‘one-shot affair; there were no follow-up sessions where people could, en masse, articulate grievances without fear of reprisal’ (Eckstein, 1994:115). In my experience in Cuba between 1996 and 2000, I could not say that I witnessed any fear on behalf of the general population of reprisals or penalties for complaining and articulating grievances. Furthermore, another llamamiento for discussion was made later on in 1997 in preparation for the fifth PCC Congress. In any case, the important changes were the actual political reforms that took place and how they came to pass. For instance, although the reformed constitution of 1992 was filled with articles that seemingly enhanced democratic rights in Cuba, it is important to note that the constitution was never opened up to popular debate or criticism. Hence, the constitution, or the base law of the land, continues to be a tool used by the PCC in order to lead the domestic political economy. However, it was the democratically elected legislative body (ANPP) that approved the constitution. In 1991, the fourth PCC Congress agreed to allow for the following: the making of constitutional reforms, the incorporation of religious leaders and laymen into the PCC, the listing of all guaranteed freedoms and property rights under the reformed constitution, and secret and

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direct elections of representatives on all levels (municipal, provincial and national) of the Assemblies of Popular Power. The reformed constitution, which was implemented in 1992, created the legal means by which the country could open up to a new model of political/representative structures, and modes of production, planning and redistribution that were nonexistent prior to the economic crisis. On the high level of ministries and state management, there is evidence of a new and sometimes decentralised group of institutions or ministries that deal with the various sectors of society. For instance, what was once called the Central Board of Economic Planning (JUCEPLAN, formally the SDPE) has been broken down into what are now called the Ministry of Economy and Planning and the Ministry of Finance and Prices; the State Committee for Foreign Economic Co-operation (CECE) is now the Ministry of Foreign Investment and Economic Co-operation; the State Institute of Tourism (INTUR) is today the Ministry of Tourism (MINTUR); the State Committee of Labour and the Committee for Social Security have been combined into one Ministry of Labour and Social Security. All of these, especially the Ministry of Foreign Investment and the creation of the Ministry of Tourism, depict how the state on an organisational level has adjusted to the new needs induced by the economic crisis. A new electoral regime and local economic organisation Prior to the 1992–93 general elections, provincial deputies and national representatives to the ANPP were elected by Municipal Assemblies. Another political reform supposedly changed the level of authority the PCC had in influencing the selection of candidates. Previously, in order to be a candidate, one had to be selected by the candidacy commission, which was traditionally chaired by a PCC member appointed by the party. Since the reforms, this position is reserved for appointment by the worker’s union (CTC), whereby worker representatives attain a higher level of participation in the political process (August, 1999: 225–7). By the elections of February 1993, half of the 225-person Central Committee of the PCC and the entire 25-member Political Bureau had been replaced by a younger generation of communists. The Council of State had also turned over by as much as 50 per cent. Ninety-three per cent of all eligible voters participated in municipal elections, and in the February 1993 Provincial and National Assembly elections the voter turnout was 99 per cent (CEA, 1998:15). Castro remained in his position as head of the Council of State and commander-in-chief of the Revolution. Dissidents were

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technically allowed to run for office, but, since Cuba has no multiparty tradition, no dissident was willing to run as an individual. On the local provincial and municipal levels, new managerial structures were created for the purpose of organising industry, agricultural production and other economic activity. The constitutional reform of 1992 allowed for the creation of Consejos Populares, or (local) Popular Councils, as a new strategy for economic and planning governance. These councils are comprised of delegates from the electoral college for municipal government and representatives from mass organisations such as the FMC, the UJC, the CDR and the trade unions (CTC). Elected local officials with a strong background in economics, accounting or engineering head the Councils. In this instance, the municipal government was relieved of its function in the management of production. In turn, the Municipal Assemblies could concentrate their efforts on infrastructure and public services. The councils would oversee production in industrial and agricultural bases and determine the action to be taken in the name of efficiency. This would include the number of those employed, the amount of subsidies requested and the planning of further economic growth (Valdés Paz, 1996:30). Prior to this, regional or local economic planning was always headed by the Executive Committees of the Municipal Assemblies, which was usually chaired by a member of the Communist Party. Though at least one PCC member is always present in the Popular Councils, the management is actually conducted by a new managerial cadre who specialise in the areas of economic planning at specific industrial and agricultural sites. Adjusting state supremacy In the economic realm, the reformed constitution redefined the idea of socialist property and how it can be used. Article 15 of the constitution was rewritten so that the state would appear as the possessor of the ‘fundamental’ means of production in contrast to the previously mentioned owner of the ‘total means of production’. Additionally, the constitutional reform allowed for legislation concerning foreign investment. Article 23 now allows for the transfer of state property to private property when deemed necessary by the people (i.e., the National Assembly and the Council of State). While affirming the state as the supreme manager of natural resources and redistributor, the new constitution recognises that there are various economic means of exploiting resources to create profit, which would benefit the state and its socialist project. This includes the idea of

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inviting foreign companies to invest directly into the country, in order to provide more infrastructure, capital and new technologies. These constitutional changes, however, could never capture the real, organisational reforms that have transformed the institutions of the state and the political economy under which production in Cuba takes place. Following the constitution, the laws concerning economic reform emanated first from the need to recover from the economic crisis. The end of five-year plans Domestic planning during the Periodo Especial differed from the planned economy during the Cold War. No longer could five-year plans mobilise the forces of production and set the standard for Cuba’s participation in the global economy. Rather, it was the urgency of meeting the basic needs of the party/state apparatus in order to carry out production and redistribution. Since the fourth PCC Congress, the government has taken measures to adjust the country to the world market, one year at a time. The objectives of the PCC during the 1990s were to: • recuperate Cuba’s capacity to produce for profit in the international market; • diversify the various sectors of the economy in accordance with the present global conditions, i.e., produce only what can be sold; • preserve the maximum level of economic socialisation in order to maintain the fundamental conquests of the Revolution. (PCC, 1997) In one phrase, the idea was to integrate Cuba further into the world market system while maintaining the fruits of state-led development. Since the reforms and adjustments to the new global scenario were not induced with the help of economic advisors from the United States, as was the case with the former Soviet Union, we can speak of native restructuring plans in the Cuban case. This native reconstruction and period of reforms can also be described as structural or organisational transformations of the institutions and modes of production that the state endorses (Monreal and Carranza Valdés, 1995). The organisational transformation of state institutions is quite clear, even though the ‘mode of production’ essentially remains stateled. Nevertheless, the impact upon the social development of the

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country needs to be looked at critically. As will be pointed out towards the end of this section, the results pose a threat to the egalitarian structures that were instituted by the party/state apparatus. Organisational transformation in Cuba has been manifested in the following: a)

the decentralisation of foreign trade, that is eliminating state monopoly of power over foreign commerce; b) the development of commercial infrastructure and financing; c) new models of businesses, including new models of business management and self-employment; d) the auto-financing and decentralised managerial direction of hard currency profit making companies; e) the creation of new economic agents of the private sector; f) a managerial revolution in terms of getting better qualified managers of production and technical education to run businesses; g) development of a competitive culture in the marketing of products and services; h) the creation of new managerial positions; i) gradual introduction of world market prices; that is the sale and purchase of import goods in US dollars, as well as the sale of certain Cuban products in the tourist industries only. (Carranza Valdés, 1994:32) The economic reforms In real terms, this organisational transformation was manifested in six experimental and working programmes. The first was what has been called the creation of a dual economy whereby a system of production and consumption of goods and services based on the US dollar (USD) would exist alongside the subsidised economy of sale and purchase of guaranteed goods and services in the national monetary unit. The second programme reflected the organisational transformations in business, productive and agricultural management, whereby the central government in Havana would no longer control the process of specialised production, and company managers would behave as they would in private corporations by implementing policies favouring efficiency. The third was the opening up to new forms of labour, namely self-employment, whereby the emerging popular means of meeting essential and everyday needs (including what was previously considered to be black market activity) became formal

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and recognised by the government. The fourth was the opening up to foreign and direct investment (FDI), whereby private corporations were welcomed to exploit resources, labour and production services in partnership with the Cuban government on national territory. The fifth organisational change was the move towards tourism as a principal producer of hard currency for the party/state apparatus. Following these immediate changes was a sixth: the need to establish a new banking system to handle the income, savings and holdings that the new economy produces (FI, 1998). Legalisation of the dollar One of the most problematic moves by the Cuban government, in its quest to rid itself of the economic crisis, was the introduction of the use of hard currency and its free circulation. In August of 1993, the Council of State approved Decree-Law No. 140, which legalised the possession and use of hard currency by Cuban citizens. The legalisation of the US dollar allowed for those who had access to it to purchase goods in the tourist industry, as some products could only be sold in USD. Prior to this, possession of the USD was punishable by imprisonment. Many Cubans illegally possessed US dollars in order to participate in black market activity and the sale of contraband. Long before this reform took place, many Cubans with family in the United States had access to dollars. The government eventually recognised that a large proportion of the Cuban population possessed US dollars, and it had previously been the objective of the party/state leadership to confiscate all dollars for the state to use for the purchase abroad of state needs and infrastructure. Previously, repressive tactics had commonly been used by the police to control black market activity and round up the millions of dollars that Cuban nationals possessed (Carmona Báez, 2000). In an attempt to fix the economy, it finally made much more sense for the Cuban government to legalise the use of foreign and hard currencies in order to create a dual economy for the benefit of ‘recuperating’ a potentially powerful source of collective income. The National Bank of Cuba declared that pesos would be freely exchangeable for hard currency, at the newly set up casa de cambios, for the purpose of buying products and services. Among the first hard currencies recognised by the state were the US dollar, the German mark, the Canadian dollar, the French franc, the Spanish peseta and the British pound. The exchange rate for the peso to the dollar was copied from the black market as a natural starting point; thereafter,

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other hard currencies were to be exchanged at the daily rate of the dollar and those other European monetary units. There is no longer an incentive for Cubans to engage in black market activity in order to gain access to dollars or change dollars for pesos. The exchange rate varied during the first couple of years. In 1994, the US dollar was sold at 150 pesos. But after 1995, the value of the dollar in Cuba fell to 20 pesos. Its value has remained relatively constant during the last eight years (1995 to the present), from 20 to 25 pesos to the US dollar (FI, 1998). This aspect has contributed to the competitiveness of those sectors of the economy that conduct their businesses in hard currency. Also, the de-penalisation of the possession of hard currency has helped create a working and competitive internal market on the island. The supply of goods and services offered in USD has become one of the major sources of income for state accumulation. Between 1994 and 1997, economic activity of services and small commerce brought in US$1.5 billion (Marquetti Nodarse, 1998:51). This brought in more than all other agricultural and traditional trade in products such as citrus and tobacco during the same time period. By the same token, the de-penalisation and free circulation of hard currency is related to the increment in employment in the sectors of finance and trade, which is conducted strictly in US dollars. This additionally resulted in the financing of many industries strictly in dollars and the opening up of private bank accounts for citizens and businesses in dollars. The introduction of the USD has also aided Cuba in fully integrating into the world economic system by bringing it up to par with international norms of state financing. At the same time, the presence of US dollars has brought Cuba numerous problems, which, more than anything else, make the political economy and the maintenance of the pillars of the Revolution a delicate balance. Some of the disadvantages in legalising the USD, among many other sociological implications, are the following: • the reduction of the use of the national peso in the domestic market; • the weakening of the use of job salary as a stimulating incentive for work; • the establishment of foreign monopoly services that conduct business in dollars; • the difficulty in estimating real levels of efficiency and competitiveness of national production units and services.

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Making it both possible and legal for Cuban nationals to conduct direct economic transactions in foreign hard currencies has led to the return of certain economic practices that are pre-revolutionary; these will be discussed later. Some of these practices had been eliminated after 1959 due to the rigid system of monetary control, which allowed only the party/state apparatus to conduct economic transaction in USD or hard currencies, and only with businesses from countries outside of the CMEA. One of the principal objectives of the legalisation of the use of the USD was to guarantee party/state accumulation of this powerful resource from the hands of the populace and channel it into restoring the value of the national monetary unit and supporting monetary liquidity, which was a major economic problem for the country during the 1990s crisis. It was thought to compensate the deficit of convertible monies, which was due to the fall of export income since 1993. It was also thought to help the balance of payments and foreign debt. Additionally, this reform was an alternative to devaluation of the national monetary unit. As is already known from the experiences of Latin American countries, as well as the former socialist economies of Eastern Europe, devaluation only expedites the recessive tendencies in the already crisis-ridden economy. Devaluation of national currencies does little to improve the productive structure of the country; even though devaluation cheapens production for export, it is not enough to produce a national jump in production. Objectively, a country would have to wait a long time before being able to incorporate new capacities for production and services. In the Cuban case, the devaluation of the national monetary unit would not have produced favourable conditions for the country. Worldwide, the peso is already an invalid and non-convertible unit. For Cuba, this would have meant the liquidation of the entire national reserve. The estimated potential amount of USD that would be added to the national reserve was $500 million. But by 1996, the free circulation of USD produced approximately $800 million for the country (Marquetti Nodarse, 1998:53). As I shall demonstrate later in this section, the de-penalisation together with the new modes of production of goods and services like self-employment and agricultural co-operatives pushed the Cuban economy towards recuperation. It also provided an emerging market based on foreign enterprise trade and decentralised and autofinanced state companies. In a relatively short period of time, the introduction of the USD has produced an important economic

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growth, which led to the improvement of the infrastructure and of national income levels. In 1994, the income from the supply of goods and services offered in USD became one of the principal sources of income for the party/state apparatus. This process became consolidated in 1996 and 1997, when internally, businesses in dollars provided the state with US$600 million (Marquetti Nodarse, 1998:53). The result has been the recuperation of the peso’s buying power, though it is used only in small transactions. For instance, foods in the co-operative markets are sold in pesos and a great number of products and services can be purchased in pesos. Individuals exchange dollars (which they may receive abroad from family remittances or contacts with foreigners) for the pesos that are necessary to buy these basic products. Yet I would dare to say that the possession of the USD has become absolutely necessary for many Cubans in order to meet their basic, everyday needs, as the ration system had been debilitated and certain products such as cooking oil are never delivered to the local ration stores. Therefore, it would not be entirely correct to speak of a dual economy, but of the dollarisation of the Cuban economy. Cuba is not yet a typical consumer society where the market is based on a variety of high quality products. The domestic dollar economy is still based on a small retail market that depends on the simple availability of products due to the free circulation of hard currency. A very high concentration of this type of market is found in the sales of household products like cooking oils, canned foods and meats, soaps and cosmetics. A typical Cuban spends approximately $10 every time s/he enters these dollar markets (Marquetti Nodarse, 1998:57). But in addition to this, there is the spending that occurs in nightclubs and the nightlife of nationals, and McDonald’slike fast-food restaurants, which in the past were reserved for diplomats and open only for the tourist industry. When it comes to the new supermarkets and stores that sell in USD, tourists contribute or buy the least (Rodríguez, 1998:6). This is probably due to the fact that tourists are not interested in spending money on something that they can buy at home at a better quality or price. It took a while for Cubans to learn this market psychology. At the same time the experience proved that Cuba has the capacity for creating an internal market. In cafes and restaurants, the tourist participates in the dollar market a little more, but the contribution of nationals is still very important. When it comes to net profit, this internal dollar market is superior to the net profit gained in tourism.

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The internal dollar market produces 100 per cent profit gain for the state in comparison to the 30 per cent found in joint venture tourism (Marquetti Nodarse, 1998:58). Finally, de-legalisation not only allowed Cuban nationals to participate in and have access to this market but also increased the state’s national reserve. Decentralisation Since the reforms, the government has decentralised the management of business and rendered economic authority to the newly established, local economic organs. Although most native businesses remained state owned, they are not controlled from Havana. Rather, the fourth PCC Congress anointed the practice of autogestión (self-management), where the managers of each business would really manage their particular businesses, make payments, receive payments, organise employee benefits and deal with the demands of local unions; this was conducted in order to cut government costs (PCC, 1998b). Local businesses were made accountable to the Consejos Populares, which, as mentioned earlier, would oversee industrial and agricultural production. ‘Socialist competition’ was implemented, whereby those businesses that were not successful in the discipline of selfmanagement were inevitably closed down due to the lack of subsidies. This experiment started off with sugar mills and factories, food stores and also dollar businesses. Decentralisation was also geared towards those companies that deal with export production. Hence, an increased number of sociedades anonimas (SAs) were created as the export services were loosened from central government in order to run more efficiently. SAs, as mentioned previously, are semi-autonomous state agencies that are set up to deal with foreign capital and production for export. Day-to-day management of finance for these agencies is run independently from state budget restraints. In simple terms, their main purpose was to make money for the country while working with hard currency. Again, these agencies geared towards foreign enterprise relations are nothing new. Many SAs in the 1980s, such as Cubanacan, dealing with tourism and the hotel business, Contex, the fashion industry and sponsor of Surchel beauty aids, and Artex, the company specialising in promoting artists, musicians and dance abroad, are all now agencies that are responsible for pouring millions of dollars into the Cuban economy. Other SAs, such as Gaviota created a reputation with health tourists and high-income visitors. All of the SAs were responsible for attracting foreign investors to the island. Cubanacan, again, the tourism

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company and hotel constructor, has since the 1980s attracted foreign investors from Mexico, Venezuela, Spain, and Italy (FI, 1989:8). Cubalse, the country’s largest SA, was able to grow physically and in profits due to the process of decentralisation; as a result, new SAs were created under the Cubalse umbrella. Similarly, production in agricultural businesses, to meet the nutritional needs of the population, has also changed. During the Special Period, the government instituted a mechanism thought to be more efficient in the production of common agricultural products, mainly sugar and its distribution. By 1992, 83 per cent of all arable land was held within the hands of the party/state apparatus, which – due to the crisis – was no longer capable of providing fuel, transportation and materials to carry out its exploitation (FI, 1998:40). As a result, in September 1993 the ANPP approved the laws establishing the UBPCs or Basic Units of Co-operative Production. These open up private farms and unused but fertile agricultural sites, with workers living on the plots; they resemble small farm businesses that work independently of the state. Each UBPC consists of two committees, one concerned with management and marketing, and a second dealing with the technical and labour aspects. Most of these units consist of already existing state farms, but they also include small family farms and properties. Additionally, the workers on these fields were given permission to use parts of the lands for growing food products for their own consumption. At first, most of the production was geared towards the sugar industry, which was still state-run. But by 1994, the task of the UBPCs was opened to the production of basic food and livestock goods. These self-managing entities were allowed to sell their products in city and town markets (Echeverría León and Pérez Rojas, 1997:69). According to documents prepared by the PCC, in 1992 75.2 per cent of all agricultural land was held within state hands. By 1995, the state possessed and conducted production on only 27 per cent of arable land. The UBPCs now control 48 per cent of the agricultural land in Cuba, whereas the private sectors and the Credit and Services Co-operatives (CSC), which work similarly to UBPCs, use the rest (FI, 1998:5). Cuentapropismo The concept of self-employment never ceased to exist in Cuba after the 1959 Revolution. But because during the early years of radicalisation the country experienced big transformations towards essentially collective modes of production, self-employment became

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an unusual way of making a living. Most of the participants in the non-state sector were found in the rural areas of the country and were characterised as a group of people generally older than 50 and with low levels of education (Núñez Moreno, 1997:41). Since these groups of people only represented an insignificant percentage of the workforce, little attention was paid to their existence. However, as a result of the drastic conditions imposed by the economic crisis of the 1990s, a larger percentage of the workforce started to turn to informal means of acquiring goods and the means to purchase them. Those who were able to harvest, roast and distribute coffee, for instance, did so without involving the party/state apparatus. Where the state was incapable of providing goods and services to the general population, the black or underground marketeers stepped in to meet the daily needs of the people. As Núñez Moreno (1997) has demonstrated, a jump in the number of those participating in the self-employed/informal sector was a direct result of the ‘deformations’ that occurred in Cuba during the crisis in 1990 and onwards. In 1988, only 41,000 workers were considered to be officially self-employed (Díaz, 1993:40). But no one knows exactly how many individuals participated in the black/informal market as a principal means of acquiring daily needs. In my interviews with party members, the self-employed and a variety of people off the streets, I found that the bulk of Cuba’s population has always depended on the black market to supplement their income in addition to meeting basic needs. No scientific investigation needs to be conducted in order to arrive at the conclusion that during the first years of economic turmoil, most Cubans depended on alternative markets, including bartering. It seems only logical that, with the lack of food and fuel deliveries, the economy in Cuba pushed the population to create innovative means of survival, rather as happens during a war. These alternative or clandestine markets eventually got out of hand and hurt potential state accumulation. Eventually, the Cuban government sought a cure for black market activity in which the production of goods and services was accomplished without the state benefiting from them and the police force was used in a futile fashion to stop a popular means of survival. Certain services, like butchery, transportation of agricultural products, cosmetic services and restaurants were no longer profitable for the state. The idea was that these services and the sale of products could be done more efficiently by means that would entail personal incentives. The idea was not to create free market capitalism, but to

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create an independent domestic economy based on supply and demand in order for the state to profit and recuperate the excess of cash in the country, not only in pesos but also in dollars. As a result, in September 1993, the Council of State passed the Decree-Law No. 141, which legalised or made formal the concept of self-employment. This law allowed for individuals and singular family units to exploit their own manual labour in small self-made businesses. In maintaining the socialist value of prohibiting the exploitation of man by man, cuentapropistas are not permitted to employ other individuals; though two or more self-employed entrepreneurs are allowed to register as partnerships, splitting the profits equally. The biggest services are found in the restaurant and tourist accommodation businesses in private homes, butchery at the meat markets, taxi transportation and car repair shops. On a smaller scale, there are hair styling and beauticians, babysitting, bicycle taxis, carpentry and delivery services. According to the accompanying rules of DecreeLaw No. 141, self-employment can be exercised in 157 different occupations, and business transaction may be conducted in either dollars or pesos. Since the laws and rules of cuentapropismo were made in times of emergency planning, official government data on the registering of the self-employed are not quite coherent for the first two years of its existence. But some research does indicate that by 1995, 208,346 workers were registered in the self-employed sector (Núñez Moreno, 1997:43) In any case, this newly recognised employment and market structure produced a number of problems with which the legislative powers of the country had to deal. These problems will be dealt with more specifically in Chapter 4. But it is worth mentioning here that the possibility for earning money in dollars, as opposed to pesos, created a big divide among workers. The situation quickly got out of hand, to the point that some individuals who opened their homes to tourists could earn as much as US$500 per month, whereas a physician or teacher would make only up to US$20 per month. Towards the last part of this chapter I will demonstrate the effects this income disparity has had upon the population. Naturally, a new personal income tax regime was implemented in order for the state to profit from self-employees and to control the income disparity. Law No. 73 of 4 August 1994 was the first personal income tax regime set up in all of the history of revolutionary Cuba. The regulations are strictly enforced but are changing constantly. Taxes on the profit of certain services amounted to up to 50 per cent on

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individuals earning in US dollars (CEA, 1994). ‘Lo que hay es para todos’ – what exists is for everyone – is the friendly picture painted by government propaganda in newspapers (Juventud Rebelde, 19 January 1996:4). But the tax system on self-employed income contains a number of aspects that indicate an underdeveloped scheme and prove this mode of production to be only experimental. The manner in which the taxes are collected appears to be rudimentary in comparison to the tax regime in most countries. Local inspectors of the Provincial Committees of Economic Planning collect taxes on a monthly basis; the money is collected in cash. Another problem that emerged instantly out of the experience of self-employment was the question of representation. Were the cuentapropistas to have representation in the CTC? What were their rights? Certainly, because of the experiences that were witnessed in Eastern Europe, especially Poland’s Solidarnosc ascension to power and the demise of the Communist Party in that country, most PCC members that I have interviewed stated that the state leadership would never give any thought to the idea of promoting an alternative self-employed workers’ union. Again, these among other contradictions will be dealt with more concretely in Chapter 4. FOREIGN DIRECT INVESTMENT As mentioned before, Cuba already had a legal avenue for foreign investment since 1980, when the government passed Decree-Law No. 50 on the establishment of economic associations between Cuban SAs and foreign companies in joint ventures. During the 1980s, foreign companies were invited to invest up to 49 per cent in joint ventures with the state. Though the country did benefit from the capital inflows that foreign investment produced, this law was insufficient in attracting the desired level of badly needed hard-currency production during the 1990s. The biggest problem was that few foreign investors were willing to invest in a business in which they would only receive 49 per cent of the profits. Finally, in September 1995, the National Assembly of Popular Power approved the New Law on Foreign Investment (Decree-Law No. 77). This law codifies property rights for all foreign investors and does not discriminate according to nationality. Additionally, the law allows for Cubans residing abroad to invest and buy property in Cuba. The New Law also codifies property rights for all foreign investors, taxes on profits, the rights of nationals who work in private businesses,

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and the profit ratio for remaining state–private joint ventures. Private foreign companies are now welcome to install capital and production sites for the exploitation of natural resources and production labour. The law allows for investment in any and all sectors, excluding the national health-care system and hospitals, education and the military, although investments may be made in enterprises controlled by these essential state institutions. According to the law, and in accordance with the constitution, which abolishes the ‘exploitation of man by man’, all Cuban workers remain employees of the state and will receive state payment and securities in the national monetary unit. Of course, the government’s share of profit or sale of property is paid for in hard currency. These dollars in return are to be used for the improvement of public health and educational facilities, as well as for the repayment of foreign debt. Due to its highly skilled and educated labour force, Cuba has always been an attractive site for foreign investors. In tourism, the country offers a wealth of natural resources and sites that invite hotel construction and tourist services. In this sense, the New Law on Foreign Investment opened the door to potential earnings that the country already possessed. Every year, Havana holds its International Fair to welcome new businesses to the island. The Cuban government planned this move carefully; it was studied by the PCC and CTC research centres since the reforming of the constitution in 1991. Hence, it took approximately five years before this law was actually implemented. During that time, the government set up consulting agencies for the long line of prospective foreign investors. By 1993 approximately 280 companies from 36 countries had representatives in Cuba for joint venture agreements (Granma Internacional, 7 July 1993:13). By the close of 1995, over 200 agreements had been signed involving FDI of 100 per cent ownership by transnational corporations, from a total of 40 different countries. This provided the state with an income of US$2.1 billion for that year (CEA, 1996:8). The countries with the largest investors in Cuba were Spain, Canada, Venezuela, Mexico, France and Italy. Foreign companies have invested into the exploitation of natural resources such as nickel mining and petroleum explorations, in addition to fishing. But the sale of technological services to other foreign businesses has also been a big area of investment. Because of the legalisation of the possession of the US dollar and other hard currencies, a market has now opened to investors to sell products and services directly to the population. However, the

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largest sector affected by the New Law on Foreign Investment has been the tourist industry. Tourism, a realm apart Unfortunately, there is not room to go into much detail about the topic of tourism here. Tourism is a very important sector for Cuba, and generates all kinds of funds for the country. Because of the organisational and normative changes in Cuba’s political economy, tourism has been able to grow to its potential, as the island is now a hot spot for European, North American and Latin American visitors. The rapid development of tourism as a major source of hard currency income produced the need to utilise the resources the country possessed in the most efficient manner. Again, the state set out to control a new dollar-earning industry by creating new institutions that would monitor and handle this large sector. To this end, in 1994, the Ministry of Tourism was established. Tourism accounts for most dollar accumulation in Cuba. According to the Ministry of Tourism, holiday visitors brought in approximately US$1 billion between 1995 and 1997. Cuba’s dependency on tourism is continuing to grow and it has begun to simulate pre-Revolution economics. Of course, the difference here is that tourism remains in the hands of the Cuban Ministry of Tourism in partnership with foreign investors. By 1997, there were 28,000 hotel rooms; 30 per cent of them run by foreign enterprises (Granma Internacional, 7 September 1997:1). In 1996, Castro made his comment on tourism and the economy; he stated that tourism will not change the economic culture in Cuba, nor will tourism replace the rest of the traditional economies. However, during the PCC Congress, tourism turned out to be the salvation of the Cuban economy (PCC, 1998b). Cubanacan SA now provides stateof-the-art health spas, which attract Cuba-friendly world celebrities such as South African Nelson Mandela and Argentine football star Diego Maradona. Wealthy visitors contribute hundreds of thousands of dollars to the health and ecological tourist sectors, which in turn are pumped back into health and education (Granma Internacional, 8 January 1999). The accelerated process of investment during the first few years after the implementation of the New Law on Foreign Investment created a strong demand for a heterogeneous workforce. Professionals from a wide array of backgrounds flooded the tourist sector: engineers, lawyers, and teachers have abandoned their careers in order to work

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for tourism. Even during the most difficult of economic times for Cuba during the 1990s, those who worked in tourism were seen as having the best jobs and positions in Cuban society. For some, working for tourism presents an image of a new class of materially well-off individuals, who within months acquired access to cars and new homes; workers in this sector see such material benefits as estimulo (incentives). Workers in tourism are often presented with jabitas (plastic bags of goods available only in dollars) and the opportunity to buy products normally sold in dollars in the numerical equivalent in pesos: shoes, clothing and household products from abroad. Tourist industry workers are seen as the motor of the domestic economy because they are responsible for the management of the bulk of dollars that enters the country. Some Cubans think that those who work in the tourist sector live like tourists, that they are always receiving tips and that they live like kings with access to satellite television in the hotel lobbies, although this is not always true. However, already there exists a perception of class difference; a job in the tourism industry is an envied opportunity. Tourism brings on other social problems like prostitution, access to drugs from abroad and violent theft. So far, party/state control of these problems has manifested itself in the form of police-sponsored repression and the attempt to keep young native spectators away from the tourists. The country does not know quite how to deal with the problems that a tourist-led economy can bring. Traditionally, the PCC is called the (ideological) motor for the revolutionary state; but it is not uncommon to hear managers and economists halfjokingly say that now tourism is the motor of the Revolution. It would be more than fair to say that to enter the tourist sector of the national economy is the dream of a large portion of Cuban youth and recent university graduates. Direct access to dollars, optimal working conditions, ample space for professional mobility and a diversity of available positions are what the sector offers. Even sociology and philosophy students are entering the sector, taking on positions in teaching aesthetics at FORMATUR, the school for tourism sector training. There are 75,000 employees in the tourist sector, more than 30,000 of whom are young adults less than 30 years of age; many of them are members of the UJC (CEA, 1998). The members of the UJC are said to have a better political preparation; they are thought of as those strong enough to enter a world surrounded by opulence while maintaining their commitment to the principles of the Revolution.

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Tourism is called the face of Cuba, because tourists gets their general impression from contact with tourism workers. That might mean quality services at the bars and the beaches; that might also mean prostitution. Accordingly, Juan José Vega, President of Cubanacan Group SA says, ‘the first trenches of ideological struggle is in the tourist sector’ (Granma Internacional, 7 September 1997:3). State welfare has benefited from these young workers. At many sites the employees, under the direction of the UJC, have organised tip campaigns, calling for a ‘voluntary surrender’ of tips for the benefit of the Revolution. For example, between 1993 and 1998, El Aljibe restaurant in La Habana gathered US$360,000, all of it going to the Ministry of Public Health (JR, 15 November 1998:2). These and many other such projects are what make the tourism industry a dynamic contribution to the economy of Cuba. But the contribution itself automatically implies contradictions in Cuban society, between those chosen to work in tourism, with access to nice commodities, and those who cannot find their way into the sector. Each economic space becomes an area for ideological struggle and critical analysis; the Cuban leadership’s job is to find out how to control the contradictions and minimise the social costs. Bank system reform Due to the already mentioned organisational transformations of state institutions and norms of economic legislation, Cuba was forced into restructuring its monetary policy and banking system. Prior to the reforms, the only existing bank in Cuba was the Banco Nacional. It was initially the legalisation of the possession of hard currency that created the need for these reforms. The first scheme in decentralising the bank system was the creation of the Banco Popular de Ahorros, a savings bank, in 1993 (FI, 1998). This bank relieved the national bank’s responsibility of holding personal savings in the national monetary unit. A separate bank was created for the savings of hard currency earnings: the Banco International de Comercio (BCI), which opened up in 1994. But because of the increasing number of foreign investors, expatriate residents on the island and the new self-employed businesses that were created, this small reform did not suffice. Hence, also in 1994, the government passed Decree-Law No. 84. Under this legislative measure, Cuba’s Banco Nacional ceased to hold the banking monopoly, which governed all monetary and business transactions on the island. Previously, all savings and personal bank accounts, hard currency conversion, foreign investment and money transfers

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were controlled by the above-mentioned centralised state institution. This law opened space for private banks and financial organisations to operate on the island, as well as for the presence of representative and working offices of foreign and privately owned banks. The National Bank was renamed the Banco Central de Cuba; this entity now deals strictly with national reserves and state capital holdings. Additionally, CADECA SA (casas de cambio) was created in October 1995 for the purpose of issuing convertible pesos (a new monetary unit representing dollar purchasing power domestically) and for actual peso–dollar exchange for individuals. This entity was recognised as an independent corporation, free from central state control (FI, 1998). These consequential reforms have opened up the island to more than twelve large foreign banks and five private or non-governmental Cuban banks. Among the foreign banks are ING Bank of the Netherlands, Banco Bilbao Vizcaya, Banco Exterior of Spain, National Bank of Canada and Société Générale of France. The domestic private banks, such as the Agricultural and Industrial Bank (a commercial bank), deal mainly with budget enterprises and UBPCs. The result, though still in the making, is a surrender to what can be referred to as the international norms of banking systems. Additionally, the upgrading of computing and the technological infrastructure of money transfers and credit systems has been implemented in order to leave room for the future possibility of receiving credits from European and global financial institutions (La Jornada, 4 June 1996). Other recent economic strategies Though I have already mentioned the six major components of the organisational transformations of state institutions, other developments have continued to take place in the Cuban government’s attempt at inserting the country into the global political economy. From among them, I can briefly mention here the creation of Free Economic Zones (FEZs) or what are called in Spanish Zonas Francas. This has been another organisational change, which it is hoped will generate capital and make space for rapid levels of commerce. Since 1997, through these new FEZs, the Cuban government allows foreign companies to conduct commerce which benefits all parties, especially those that need to purchase products for the reproduction of services in joint ventures like tourism. This facilitates the necessary acquisition and access to foreign products which Cuba itself cannot produce; it also generates a moving economy

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where competition benefits the national economy as a whole. The advantage of providing room for free competition among international corporations in the sales and purchases of products, especially high-tech products, is that the highest quality of the commodities at the lowest prices will raise domestic standards of corporate and industrial materials to those of the global norms. Furthermore, the opening of the FEZs has provided more employment possibilities for the working population. Once again, the government continues to manage wages for the nationals that work at the five FEZ sites on the island (Granma Internacional, 7 January 1998). I have found more than 40 detailed articles of law regarding the implementation of the FEZs. These laws are meticulously tailored to maintain strict control of the treatment of Cuban workers, the way in which foreign enterprises must relate to government agencies on the ground, the definition of property, insurance and security, and the creation of the new Ministry of Foreign Capital and Economic Collaboration. The laws make clear the geographical limitations of Free Economic Zones, which are always kept far away from city centres and residential quarters. No person can enter the FEZs without permission from the Ministry of Foreign Capital and Economic Collaboration or without possessing an identity card issued by the Ministry of Labour and Social Security (MTSS, 1998; CEA, 1998:40). SIGNS OF SLOW RECOVERY In classical terms, using Gross Domestic Product (GDP), the result of the reforms implemented since 1995 has been a slow recuperation of economic growth. In terms of the long-range results on GDP prior to and during Cuba’s economic crisis, we can note that in 1989 the country’s GDP grew only 0.7 per cent in relation to the previous year; in 1990, when the Soviets delayed all their oil deliveries, the GDP contracted by 2.9 per cent. This fall into economic crisis continued throughout 1993, when the recorded GDP growth amounted to –14.9 per cent. It was in 1994 that the country’s domestic economy started to demonstrate signs of getting out of the crisis, but still there was no sign of recuperation; for this year the GDP experienced a 0.7 per cent growth. The following years showed signs of some improvement: 2.5 per cent in 1995, 5 per cent in 1996 and 2.5 per cent in 1997 which in all but one year was low compared to the predicted average growth of 4.5–5.0 per cent (CEA, 1996:1–5). According to government sources and PCC literature, the principal factors which hindered such

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planned growth were the following: worsening external financial conditions as a result of the Helms-Burton law; the fall in sugar production; the deteriorating terms of trade due to the fall in nickel prices; adverse climatic conditions which affected agriculture; and Thrips Palemi bacteria which (blamed on a certain US conspiracy) plagued many crops (CubaNews, 1 July 1997). I would venture to say that though the US embargo (in its Torricelli and Helms-Burton phase) did have an effect upon further potential growth, the main factors that affected domestic production were the lack of inputs and spare parts in the industrial sector, the weak position of the peso, the social adjustments that needed to be made in new managerial structures and the lack of experience in local managerial directorship. Though the economy never reached the leadership’s annual planned goal, the 1997 GDP 2.5 per cent increase demonstrates that the planned economy can maintain a tendency of gradual and sustainable recuperation of the national economy, a return to growth rates as seen in the early 1980s but only as a result of prioritising certain sectors. For instance in 1996, when the GDP growth rate was recorded at 5 per cent, UBPC production shrunk 2.8 per cent due to low efficiency in economic terms of the sugar and non-sugar sectors of that area. There were 1,576 units of UBPCs, with 37 per cent of all arable land; these units projected an output of 5 million tons of sugar, whereas the year only offered 4,252,000. In this same year (1996) industrial production grew by 7.8 per cent; sectors of light industry, such as detergent, cosmetics, and household cleaning goods, grew 10 per cent; materials for infrastructure construction, 12 per cent; production of electricity grew by 7 per cent; the food industry, 9 per cent; crude natural products (nickel and petroleum), 12 per cent; the sugar industry, that is not only the production of sugar but the manufacturing of sugar-related products like rum, foods, juices and combustibles, 4.4 per cent (CEA, 1998:3–5). The growth in the nickel industry is particularly interesting in that it shows a relationship between success in production and the reforms that were made, especially in terms of foreign investment. Although the world demand for nickel is today nowhere near the demand during the 1970s, due to plastic substitutes, certain foreign industries continue to have an interest in its production due to the need for nickel for producing sulphides in the metal-refining industry. An example of this was the Sheritt of Canada Group, which agreed to join the Cuban government’s Compania General de Niquel in creating the Moa Nickel Company in 1994 (FI, 1998: 48). This partnership in

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exploiting this primary product has had an extraordinary effect on its production. The figures produced, by the Cuban government, and also confirmed by the Canadian government, testified to a 64.4 per cent increase between 1994 and 1995. Whereas nickel production in Cuba during 1994 resulted in approximately 27,000 tons of the metal, in 1995 Cuba, in partnership with the private Canadian group, registered a production of over 46,000 tons of nickel. This result superseded nickel production in 1987, which only amounted to 37,000 tons. In 1996, production levels increased again by 31 per cent. This has meant an additional annual income into the country worth over US$100 million. In 1996, one year after the passing of the New Law on Foreign Investment, the Australian Western Mining Corporation sealed a US$600 million agreement with the Cuban government to exploit the lateretic nickel reserves in Holguin Province (FI, 1998:48–50). In terms of the tourist sector, growth in production, construction and services grew, as did the inflow of tourists on a yearly basis. In 1995 over 740,000 visitors spent their holidays in Cuba on tourist visas; this was a 19 per cent increase over 1994. In 1996, 900,000 tourists arrived on the island. And in 1996 and 1997, over 1 million tourists per year chose Cuba as their holiday destination. In terms of net revenues from tourism throughout the first half of the decade, government figures conclude that in 1991, tourism provided Cuba with a little over US$500 million, whereas in 1995 revenues amounted to over US$1 billion (CEE, 1999:20). In order to guarantee economic recuperation and in order to reach a GDP growth between 2.5 and 3.5 per cent in 1998, the Cuban government considered it essential to increase the level of economic efficiency and the optimal usage of scarce resources in hard currency and achieve a productivity growth of between 1.5 and 2.5 per cent; whereas the index for energy consumption growth was only 1.3 per cent (CEE, 1998: 36). Additionally, a reduction in the excess of monetary liquidity in the hands of the population (in cash or in savings accounts) was deemed necessary by state economists. Nevertheless, some improvement has been made. In 1993, liquidity of the population amounted to over 11 million pesos; in 1994 liquidity fell to 9,940,000 pesos; in 1995 this fell to 9,251,300 and in 1996 it was down to 9,039,600 pesos. This last figure amounted to 38.8 per cent of the entire GDP for 1996, which still does not reflect a slightly healthier 21.6 per cent as was indicated for 1989. However, an improvement was witnessed in comparing 1996 liquidity rates in

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percentage of the GDP to 1993’s liquidity rate, which amounted to 73 per cent of Cuba’s GDP for that year. The large reduction of liquidity can be attributed mostly to legalisation of the possession of hard currencies and the dollarisation of the economy, which led Cubans to change their pesos for dollars in order to purchase essential goods. In terms of foreign debt, which now is counted only in hard currency terms, the government provided figures indicating that the total foreign debt did increase between 1994, when in US dollars it amounted to $9,082,800,000 to $9,161,008,000 in 1995. But the state budget deficit (to current GDP) decreased drastically between 1993 and 1995; in percentages the former (1993) reached a level of 32.7 per cent, and in 1995 fell to 3.5 per cent (FI, 1998:45). All these indicators prove that Cuba began to recuperate its production process in 1995 and the economy was open to more growth in capital accumulation. Social indicators and contradictions in Cuba’s political economy Despite the desire of many in Miami, the Cuban people did not follow the path of their erstwhile Eastern European comrades. During the crisis of the 1990s demonstrations and riots were not seen on the streets, and the government, concerned with developing strategies, received overwhelming support from the masses. People adjusted their diets and ate less varied food, as bread queues grew longer. Transportation in the cities as well as in the hilly countryside was reduced to the Chinese bicycle and large, cheap cargo wagons imitating public buses (the camellos). Nevertheless, Fidel Castro boasted that during this difficult time, not one school, hospital or day-care centre was shut down (Granma Internacional, 8 February 1995:3). As I have shown in Chapters 1 and 2, the Cuban government’s primary responsibilities to the country have been to maintain a relatively high level of egalitarian social indicators through redistribution among the population, welfare in housing, food, education and medicine, and social stability based on the growth of the economy. The social achievements that have been accomplished since the party/state apparatus was established are considered to be among the most important fruits of the Revolution, which legitimises the regime. Though few would argue with the fact that no schools or hospitals were ever shut down during the crisis of the 1990s, other socioeconomic indicators need to be taken into consideration in order for the analysis to be complete. In terms of total public spending, government sources indicate a pattern simulating the rest of production and spending in all other

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sectors of the country’s economy during the crisis. The comparison, beginning in 1989 with an outlay of budgeted activities totalling over 7 billion pesos, reaching the lowest trough in 1992 with an outlay of 6 billion pesos and rising again in 1996 back to 7 billion pesos, demonstrates an overall improvement. The largest expenses for the state have been education, public health and social security. Social security and retirement benefits increased by 5 per cent between January 1997 and January 1998 (MTSS, 1998) and have increased at least this much ever since. An identical pattern is found in terms of welfare expenditure directly to the population. But the same could not be said of public health; from 1990 to 1991, expenditure in this field contracted from 937.4 million pesos to 924.9 million. However, in 1992, public health spending did increase to over 1 billion pesos. There was a slight decrease in 1994, although spending was still over 1 billion pesos. Every year thereafter up until the year 2000, the Cuban government has kept up its commitment to increasing expenditures in the public health sector, including salaries for those in the health profession. Additionally, the number of health-care workers has continuously increased between 1993, when there was a total of 308,352 to 320,427 in 1995. During this same crucial period, the population per physician ratio fell from 214:1 to 193:1. Again, the figures from 1996 to 2000 demonstrate a continuous growth in the number of doctors that Cuban universities produce (FI, 1998:12) This point will be elaborated on in Chapter 4. Despite the effects that the embargo had on the health-care system, certain achievements in this sector can be noted, including the 1997 infant mortality rate (7.2 per 1,000) which puts Cuba among the 25 countries with the lowest infant mortality rate in the world. In this same year, the mortality rate of those younger than 5 years of age was 9.3 per 1,000. National vaccination programmes continued to guarantee the immunity against twelve illnesses commonly found among infants (CEA, 1998:8). The figures for unemployment are less impressive. In 1997, the rate was 6.9 per cent of the able working population, which was a drop from 7.5 per cent in the previous year, with 66,300 positions in the service sector (15 per cent state and 53 per cent non-state and 30 per cent mixed). The cuentapropismo solution could then have also been seen as an attempt to remedy unemployment. Many of the cuentapropistas between 1994 (when the law of self-employment was implemented) and 1997 were displaced workers from assembly factories closed down during the first half of the 1990s, or university

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or high-school dropouts who had discovered money-making on the streets before self-employment was normalised. Nevertheless, and in contrast, the unemployment rate for 1998, which was 8 per cent, indicated a reversal in the trend to turn to self-employment (MTSS, 1998). But the unemployment rate for 1999 did decrease back to 7.3 per cent (CEE, 2000:7). More recent figures on cuentapropismo and unemployment will be delivered in the next chapter. Social welfare Few can contest the grand social achievements that were accomplished during Cuba’s economic crisis during the 1990s. They not only contrast sharply with neighbouring countries but also indicate a tendency to maintain and increase the state’s responsibility to the population. How the Cuban economy was able to produce a set of programmes resulting in slow recuperation while at the same time reinforcing the commitment to welfare is what amazes social scientists. However, even though these official figures seem impressive, another part of the story is not told. Socioeconomic indicators usually concern themselves only with numbers that indicate government output in social expenditure and the condition of the general population, for example, life expectancy, infant mortality rates, etc. However, I have chosen to take other social aspects into consideration, namely: disparity in income and capital accumulation, the effects of legalising the dollar, social problems such as prostitution and the development of racial discrimination, and the contradictions emanating from the new forms of labour, such as self-employment. These aspects can be related directly to the list of organisational and normative transformations mentioned earlier in this chapter. Disparity in income The biggest social problem that I have identified in Cuba today is the disparity in income and material goods among the population. As I will demonstrate, this is a direct result of the reforms and organisational and normative transformations that the political economy has experienced during the crisis. As a rough introductory guide, we can look at the concentration of liquid capital into fewer hands. Haraldo Dilla (1999) notes that by looking at the statistics derived from bank accounts (information provided by the National Bank of Cuba), we see a progressively smaller group of people holding an ever greater share of the capital.

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… in late 1994 14.1 per cent of the total accounts contained 77.8 per cent of the total amount of savings. A year later, 13.1 per cent of the accounts contained 83.7 per cent of the total and by 1996 the concentration had reached the point where 12.8 per cent of the total number of accounts (some 600,000 accounts) represented 84.7 per cent of the total savings accumulated, some 6.6 billion Pesos. More significant perhaps is the fact that in the same year 2.7 per cent of accounts contained 43.8 per cent of all savings. These figures indicate personal savings at the National Bank alone. They do not take into account the savings accounts in the new and private banks, which hold savings in the national monetary unit as well as in dollars. Though no figures were provided, as they would be difficult to gather during the current time of bank system restructuring, I would venture to say that figures from all the dollar savings accounts on the island most probably indicate an even larger concentration of capital into even fewer hands. This gross reality provides proof of a growing disparity among Cuban nationals, a big contradiction due to the reforms. The growing unequal distribution of wealth to which Dilla alludes is, in my opinion, due to the creation of a dual monetary system and the opening of self-employment as a new mode of production. As mentioned earlier, prior to 1993, Cubans possessing US dollars would be severely punished. One of the first economic reforms that were made during the Special Period was the legalisation of the possession of hard currencies by Cuban nationals. This process – which I identify more realistically as the dollarisation of the economy – can be studied by looking at the effects it had upon the general population and the instant differences that it created among certain social groups. The first divisive effect is the rift that is created between those with FE (literally ‘faith’, but short for Familia en el Exterior, or those with family abroad) and those without. Those with relatives in North America or Western Europe are the first to benefit from the dollarisation process. They experienced a different Special Period, possibly a glorious Special Period. These are the individuals who immediately went to the stores, traditionally reserved for diplomats and directors of corporations, to buy cement and paint for their home repair, stylish clothing from Benetton, Sony televisions and sound systems, Fiat cars and mopeds, fresh meats and fine wines from Europe. These small material differences should not be underestimated. They create deep scars among neighbours and relatives,

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between blacks and whites (recognising the fact the more well-to-do Cuban population outside Cuba are white), and especially between employees and managers or PCC members. Again, this legalisation created a dual economy, in which many products from abroad and many services produced domestically are sold in US dollars. The only products and services which continue to be sold in pesos are monthly rations, daily bread rations, supplementary foods from the UBPC markets, transportation, refreshments and beverages provided by cuentapropistas, secondhand books, cultural activities (theatre, ballet, concerts) and local entertainment (bars, cinema and sports halls). The so-called ‘dollar shoppings’ or diplotiendas, which were initially opened for the tourist, became providers of Cuba’s occasional consumer goods paid for in dollars. Some medicines that are considered to be non-essential by the government, cough medicines, anti-diarrhoea medicines and aspirins, for example, have to be paid for in US dollars. In terms of nutrition, only the minimal food basket is guaranteed for Cuban families. A typical food basket per person comes to $2.25 per month, but that food basket does not have all the nutritional value that it had during the 1980s. Fresh fruit is not usually included, neither are meats, cooking oil, or dairy products. The monthly rationed food basket consists of basic staple products (rice and beans) and includes a guaranteed round piece of bread per day. Hence, most Cubans continue to turn to the black market to supplement their needs. The drive towards tourism Meanwhile, in the tourism industry workers are comforted by new forms of work incentives. Jabitas, plastic bags of cosmetic and clothing goodies, which can only be bought in dollars but are specially given or on occasion sold to workers in tourism at subsidised prices, provide the prime example. This is a sort of stimulus for tourist industry workers, who can also receive tips in dollars directly from the tourists. Previously it was illegal for Cuban workers to accept the dollars; today it is not only commonplace and legal, but it is encouraged. Out of 100 Cuban workers that I interviewed at random, 94 stated that there is a big difference in the standard of living between those who work in tourism and those in other sectors (interviews, 1998). Many of those interviewed used the word ‘abysmal’ in describing the standard of living of those who do not work in tourism. The remaining six, who included professional athletes, a physician, and accounting specialists in the new financial sectors, were opposed to the idea that

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there was any difference in standard of living. Clearly, many students graduating from the universities are more inclined to want to work for the tourist sector. The difference between those who come in contact with foreign capital and those that do not is becoming more and more obvious. Self-employment and inequality As far as cuentapropismo is concerned, the self-employed generally make much more money than state workers; those who can earn dollars are at an advantage compared with those earning pesos. Dollar earners can buy materials for the production of services. Profits for those who conduct businesses in pesos are based on the sale of products made from (raw) materials t bought from the state, whereas dollar earners conduct their businesses strictly in the service industry (restaurants, bed-and-breakfasts, etc.). Material earnings and benefits for dollar earners (home improvement, cars, televisions, etc.) lead to a significant hike in the standard of living. There is a considerable difference between the average income of those who conduct their business in the national monetary unit and those who use the US dollar for the production and sale of their services. I found that cuentapropistas dealing in dollars can make nearly $500 a month after taxes, whereas the peso-earning pizza maker may earn as little as 150 pesos. Additionally, most of the dollar-earning self-employed are those individuals and families with FE. This indicates that many of the new and successful businesses, such as paladares (home-restaurants) and bed-and-breakfasts, are funded by family abroad, who have been able to send their island-resident relatives money to start and maintain high-income earnings. My study also demonstrated a possible rift in ideology and sympathy towards the Cuban government; 56 per cent of the cuentapropistas with FE that I interviewed said that they did not care so much for the communist government. In contrast, of those that did not have family abroad, 63 per cent answered not only favourably but also quite enthusiastically in their support for the Communist Party-led state. Though the former group represents a small percentage of the entire population, their attitudes do represent a developing difference in ideas between those with access to dollars and those without. Racism Though many claim that the Revolution abolished racism in Cuba – at least institutionally – 40 years of progressive social order cannot

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erase 500 years of history. The attitudes and prejudices of racist ideology remain prevalent and are manifested in the way individuals identify themselves. Even to this day, the colour of one’s skin is still inscribed on passports and identification cards (Bazuin, 1997:83). The same can be said for cuentapropismo, especially in the light of what was explained earlier about those self-employed who receive dollar remittances from abroad – they are usually white. It is interesting to see what prospects racist attitudes have in the developing domestic market; will the inequalities between whites and blacks in pre-revolutionary times be manifested again? What is certain is that the largest represented race in cuentapropismo is white. Additionally, there is a longer family tradition of running small businesses among whites than blacks, who prior to the Revolution were usually not found in the small proprietor class. A sweeping though accurate generalisation can be made that white families have more experience in setting up small, family-run shops, restaurants and stores. The kiosks and restaurants are usually run by families and relatives, parents and grandparents who remember pre-revolutionary days and possess the knowledge of how businesses are run; they in turn hand these traditions down to their children. Tourism, prostitution and racism As tourism is expanding, a feeling of fear is being conjured up among Cubans. This fear dates back to the Cuba of the 1950s. Those over 50 years old remember Havana when it was a US tourist playground dominated by gangsters who also owned other ‘industries’ like gambling, drug trafficking and prostitution. Government policies regarding tourism show evidence of contradictions. For example, Cubans are denied access to many tourist facilities, or hotels are only open to those Cubans who can pay in dollars. This creates an ideological and political problem and highlights the contradictory values of government policies, because through the Revolution Cubans have been trained in a quasi-egalitarian system. Tourism greatly affects wages and one can no longer speak of equality among Cubans. For example, within one week, a tourist cab driver (or a prostitute) earns the equivalent of a doctor’s monthly salary. Furthermore, today the stream of tourists – mainly coming from Europe – confront the Cubans with other ideologies, which has both positive (knowledge and consciousness) and negative (frustration at not having those dollars and not having the ability to travel) effects. Tourism is a catalyst to change; it increases the domestic understand-

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ing of world affairs and the world market system. At the same time it brings with it materialism, prostitution and frustration. The government’s intention when it first promoted tourism during the 1980s, and then during the Special Period, was to keep the tourists in their hotels and on the beaches, visiting Cuba only through guided tours. The tourist industry was set up as an industry ‘apart’ from the population. But this changed, as more and more workers were drawn into the tourist industry, the fastest growing and most profitable business in Cuba. But one cannot have two ‘spheres’ (domestic and foreign) kept separate from each other. Tourists want to meet Cubans and vice versa; to hinder that is to play with nature. Furthermore, realising the importance of the dollar, Cubans make an effort to get into contact with tourists. Even though the numbers of black and white Cubans working in the tourist industry are about the same, tourism also means more racism. Blacks tend to witness their passports and identity cards being checked more often when entering a hotel. If the passport is Cuban and one is black, entrance is often denied unless, of course, dollars accompany him or her. Of course one can argue that this is a prejudice based upon the attempt to separate the tourist community from the natives, for the purpose of ensuring that tourists are comfortable and are not bothered by needy Cubans. But the fact remains that these prejudices are manifested in segregating blacks from whites. Why can’t a black man be a tourist? The ideas of racism reminiscent of the 1950s are only reinforced. The increasing number of joint ventures and the legalisation of the dollar are two other important outcomes of the Special Period, contributing to increasing class differences and stronger lines of racism. The head of the Anthropology Department at the University of Havana reaffirmed the notion that racism has grown as foreign influence increased. She stated, for example, that the firmas mixtas (joint ventures) prefer to employ white Cubans. Even though the Cuban state organises all workers to apply, foreign firms choose white males, which surprised her as she is used to working, in the same type of company, with many women and blacks. Not only the joint ventures, but also the legalisation of the dollar had consequences that played along racist lines (Bazuin, 1997). Curiously enough, prostitution was not outlawed immediately in 1959. Pimping became prohibited only in 1961, but the traditional posadas (government-run hotels) were to remain open to ‘satisfy a social need’. Prostitution thereby became state-controlled (Matthews

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and Salas, in Bunk, 1994:96). In 1970, the government changed its approach and considered prostitution to be a growing social problem, which needed to be outlawed (Bunk, 1994:104). Today prostitution is an everyday phenomenon in which the borders between simply talking, friendship and something beyond this seem very blurred. Jineterismo is a broad term that is used to describe a range of activities such as having a ‘good time’ and a drink at a hotel with a foreigner. It could be extended to dancing with tourists, letting the foreigners buy nice clothing or having sex with the visitor. The different ranges or scales of jineterismo make Cubans say that it is not prostitution in the conventional use of the term. In Cuba there are male jineteros and female jineteras. Bazuin notes that it is the latter that are talked about more often in Cuba, even though the number of males and females in prostitution is equal (Bazuin, 1997). Even the government have openly expressed their view towards jineterismo. Fidel Castro himself seems to have changed his mind in the times of economic hardship. The excuse he gave for Cuban prostitution today is that these women are jineteras and not prostitutes since no one forced them to do it. Castro stated that these jineteras were ‘highly educated hookers and quite healthy’ (Washington Post, 3 March 1992:A31). When speaking to Brazilian government officials, Castro said: ‘Our hookers do not do it out of obligation, or necessity. Here prostitution does not occur for that reason but because somehow they like it.’ But government policy remains unclear, as more youth turn to these means in quest for the US dollar. Consequences and legitimacy All together, the combination of the economic crisis and the responsive reforms can be understood as an apertura (or opening), which has been conscientiously and gradually implemented for the purpose of adapting Cuban society to global changes. All the while, the PCC under the leadership of Fidel Castro has maintained social stability and continuity (at least in words) with the socialist project. In line with the 40-year-old project, the specific changes in Cuba’s political economy remain self-imposed. This is not a World Bank or IMF plan, but it is a profound change that essentially modifies the relationship between Cuba and the global economy. To the dismay of those who watched in hope for the fall of the Communist Party/state apparatus and predicted an eventual demise of the revolutionary political structure, the PCC has remained firm and has led the country out of economic chaos. In turn, the population

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has responded by adapting to the imposed changes. No one knows how many more reforms will be implemented in the future, but what remains clear is that market-like strategies in Cuba have never interfered with social spending. On the contrary, the Cuban government continues to maintain its commitment to the essential social achievements of the Revolution. Nevertheless, the unorthodox socioeconomic indicators that I have taken into consideration do indicate that ever since the state leadership implemented the reforms leading towards the organisational transformation of production and accumulation, rifts of inequality have appeared among the population. Hence, egalitarian values and equal distribution of wealth and resources have experienced a shaky imbalance. Changes were made in the political structure, more specifically in the representative electoral process and in the definition of private property. The constitutional reforms and the laws and programmes that followed up through the Special Period, were welcomed by the population. Additionally, Party discourse on social justice and antiimperialism were ever-present. It is in this light that one can conclude that the preservation and even enhancement of the essential pillars and foundations of the Cuban Revolution, described in Chapter 3, were a necessary element, if not the most important, in maintaining and protecting the one-party/state apparatus.

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4 Structural Adjustments and Social Forces in Cuba: How Cuba’s Economic Model was Shaped by Global Trends In Chapter 3, I explained the causes and consequences of Cuba’s economic crisis during the first half of the 1990s, the necessary process of political and economic restructuring that the country endured after the disintegration of the socialist bloc in Eastern Europe and the reinforcement of the US economic embargo. The survey conducted on the domestic response – called the Special Period – answered the questions as to why and how Cuba’s party/state apparatus survived the crisis and continues to exist. This chapter is dedicated to identifying newly established social structures that have emanated from the measures and reforms executed during the Special Period. Parallel to this task, I will identify the similarities and discrepancies between Cuba’s new economic model and those global trends identified in Chapter 1 as the central characteristics of neo-liberal globalisation and transition economies. My principal argument here is that while the policies of economic and political reform implemented by the party/state apparatus were portrayed as a temporary or emergency reaction to global pressures, some new structures have been instituted and have proved to be stable and quasi-permanent. These new structures, which were shaped by global trends, create new social forces and reposition old ones in order to maintain the pillars and foundations of the Revolution’s existence. By identifying the new structures, both organisational/institutional and normative, it will be possible to estimate the extent to which global pressures determine or shape the current Cuban model. In short, what has been demonstrated up till now is that the Cuban party/state apparatus has utilised the world market as a substitute for the benefits it used to receive from the former Soviet bloc; in this chapter, I will demonstrate the effects this replacement has had upon Cuba’s political and economic structure and the consequences for 152

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the pillars that have maintained the party/state apparatus throughout the last four decades. The first part of this chapter consists of a brief survey of Cuba’s demonstrated economic and social growth between 1996 and 2000. The purpose of this section is to provide a background to the euphoria of success that the Cuban government stresses. I will use both domestic sources and also international and critical ones in order to avoid oficialismos. From that point on, two specific practices that characterise the country’s new economy will be analysed in order to reveal the structures and repositioned social forces that define Cuba’s adjustment to the global political economy. These are what have been called the process of ‘entrepreneurial perfection’ (perfeccionamiento empresarial) and the system of self-employment (cuentapropismo) mentioned in Chapter 3. Though I defend the idea that the Cuban party/state apparatus distances itself from the fashionable measures taken up by most other countries, I will expose the areas of Cuban society that are moulded by – and most resemble – trends in the global political economy. Among them, downsizing at the workplace, labour flexibility and dependency on foreign investment. The Cuban response, which is essentially based on the foundations of anti-imperialism and social justice, will then be deconstructed and evaluated according to the pillars of the Revolution’s existence. DEMONSTRATED ECONOMIC GROWTH Since 1996, Cuba’s GNP growth rate has averaged 4.6 per cent per annum. In 2000, the GNP registered a growth of 5.6 per cent. This overall growth was fostered and accompanied by a 2.9 per cent reduction in energy use, a 3.5 per cent increase in labour productivity and a 16 per cent increase in domestic and foreign investments. The demonstrated growth in productivity in communal and social services was recorded as 3.4 per cent. Meanwhile, state workers’ salaries have increased by 7.7 per cent with a global increase targeted at schoolteachers and health-care workers. Cuba remains a service-oriented economy, as 62 per cent of its exports are concentrated in services. Nevertheless, there was a 16 per cent increase in the export of goods and an 11 per cent increase in imports for domestic consumption (MEP, 2001:1–5). It is this miracle that has continued to amaze global economists, friends and enemies of the Revolution. How does the basic-level

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industrial and service-oriented Third World economy of a socialist government and state supremacy, with an anti-neo-liberal stance demonstrated in its discourse, produce such exceptional results while maintaining and providing for the majority of the population a guaranteed access to health care and education? According to government propaganda, this economic growth is not yet satisfactory and still does not resemble the economic growth experienced during the 1980s and prior to the collapse of the former socialist bloc. Nevertheless, the country has just begun to recover and, according to government propaganda and the country’s leading economists, is on its way to irreversible social and capital growth (Granma Internacional, 22 December 2001). The sector that experienced the largest growth in 2000 was agriculture, which registered a 14.5 per cent increase in comparison to the previous year. This was followed by transport and communications, with a 9.3 per cent increase for the same period. Industry, including small arms production, mining (minerals and petroleum) and manufacturing, grew by 5 per cent. Cuba’s historical and traditional primary export industry, sugar, likewise experienced a relative growth towards the end of the crisis decade. The 1999–2000 harvest produced 4 million tons of sugar within 114 days. This represents a 7.3 per cent increase in relation to the year before. The gains from sugar export after the last harvest totalled US$2.2 billion according to the Ministry of Sugar (MINAZ, 2001). Loans for small businesses and construction have also increased, not only in the national monetary unit but in US dollars as well. During 2000, Cuban banks lent out approximately US$2 billion. In the national currency, banks lent up to 5.5 billion pesos. It was reported that 40 per cent of the population have saving accounts in both the national and foreign currencies. This reveals an increasing trust in the national banking system. The technological advances made in Cuba’s finance system have been just as impressive. Currently, 200 national companies in Cuba operate their monetary transactions electronically. 350,000 black-strip cards have been produced and are currently in use for the distribution of employee’s salaries and for the deposit of money into savings and cheque accounts. Since 2000, 78 ATM machines have been operating in the country. Havana is now awash with mobile telephones, computer stores, shopping malls and tourists. The picture is quite different in 2001 from what it was in 1996 (Granma Internacional, 22 December 2001).

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CAUSES FOR ECONOMIC GROWTH During the 2001 session of the Central Committee of the PCC, party officials cited four principal factors that have contributed to the economic success story and, more specifically, to the acquisition of foreign capital (Granma Internacional, 15 May 2001). Firstly, they attributed the growth to the expansion of the service sector, especially tourism, which experienced a 10 per cent growth during 2000, with 1.8 million visitors, primarily from Canada, Germany, Italy, Spain, France, the United Kingdom, Mexico and Argentina. Seventy per cent of Cuba’s tourists are concentrated in this group of countries. That is five times more visitors than in 1990 (the start of Cuba’s economic crisis). While in 1990, Cuba had only 12,900 hotel rooms, 35,000 rooms were available at the start of 2000. These figures are in addition to the accommodation provided by self-employed or family hostel businesses (Granma Internacional, 22 December 2000). In 2000, the Cuban state corporations poured 522 million pesos or US$21.6 million into the tourism industry. The national earnings from this sector reached US$1.9 billion. Tourism now employs 90,000 workers directly (hotels and accommodation, airport, transport and guides). Indirectly, this service industry links a network of 300,000 workers in the service line (renting of automobiles and other popular services provided for the tourist, such as massage, mineral baths, sport facilities, and restaurants) (Granma Internacional, 15 May 2001). This demonstrates a very large dependency on tourism as the main provider of foreign capital to Cuba. The dangers of depending on tourism were affirmed in 2000, when state economists had expected over 2 million visitors. The problem was found in the fall in value of the euro and European national monetary units in comparison to the US dollar. Since the economy, especially the tourist industry, is based on the dollar as its primary unit of exchange and costs, the number of European visitors tended to stagnate and will most likely decrease until the value of the dollar is reduced. According to the commercial director of urban hotels of the Sol Meliá Group, Carmen Martinez Teran, 2000 was not a good year for any Caribbean country or tourist market. The failure was due to the hike in oil prices, which had substantially increased the price of airline tickets. In any case, Cuba continues to be the hottest spot for tourist growth in the region. Between 1996 and 2000, the average annual increase in the number of visitors to Cuba was 18.6 per cent,

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while in the rest of the Caribbean it was between 3 and 4 per cent (Comellas, 2001a). The second area of improvement that contributed to Cuba’s economic growth was the reduction in wasteful energy usage, achieved through efficiency plans rather than austerity measures. The PCC pointed out that in agriculture for example, a more efficient use of energy has been demonstrated. In 1989, the harvesting of one ton of tropical vegetables and tubers used up 95 kg of diesel and 19 kg of gasoline. In 2000, 37 kg of diesel and 3 kg of gasoline were used to produce the same amount. A similar tendency was demonstrated in the production of nickel. In the most important and productive nickel mining and refinery plant, Ernesto Che Guevara, located in Moa, half the amount of combustibles used to produce a ton of the mineral in 1989 was used in the year 2000. During this last year, 72,000 tons of nickel were produced. This reflects a giant step in nickel production, as the total amount of nickel produced in 1989 was only 45,591 tons (Granma Internacional, 21 April 2001). The third causal attribute to Cuba’s new economy has been the increase in the extraction of local petroleum and its input at the service of electricity and the production of cement and nickel. This has led the country to a greater self-sufficiency in combustible energy. The prospects for more exploitation of local oil seem hopeful. In 2000, 2.8 million tons of crude oil was discovered on national territory. With the recent news of other large untapped petroleum pools lying in Cuban territorial waters in the Gulf of Mexico, the government estimates that by the year 2005 production might reach as much as 5 million tons per year (Granma, 15 January 2001). The increase in petroleum production saved the state US$400 million in 2000. Currently, 70 per cent of the country’s electricity is generated by the burning of petroleum produced by the country’s own oil reserves. Additionally, and thanks to foreign investors, most central generators have been updated or reconstructed using Japanese technology in electricity production – this has replaced the outdated and inefficient Eastern European generators. This same method will be introduced into nickel ventures and the production of cement. Half of Havana’s population depend on natural gas for their household purposes, including cooking and water heating. This natural gas accompanies the extraction of crude oil in Cuba’s north coast by the CojimarVaradero Company (Granma Internacional, 27 April 2001). But none of this petroleum extraction would have been possible without the participation of foreign capital in the form of joint ventures. The

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costs and deductible profits which will most likely revert to the home countries have not yet been estimated. Therefore, PCC prospects can be considered a little too optimistic. Finally, foreign investment is revered as the most important contributor to Cuba’s economic growth. Without it, the sectors of tourism, petroleum extraction and tobacco export would not have succeeded in experiencing growth. As was mentioned in Chapter 3, FDI was recognised officially in 1995. Prior to that, the Cuban government allowed foreign entities to invest only up to 49 per cent in joint ventures. Although most investors are still participating through partial ownership contracts with the Cuban government, direct investment of up to 100 per cent has increased since the law on FDI was passed. Between 1995 and 2000, approximately US$4 billion has been invested in the country by foreign enterprises. In total, there are currently 394 associations operating with foreign capital (MEP, 2001:3–4). In terms of joint venture or private investments in the country, in 2000 there was an increase of 11 per cent in comparison to the previous year. Out of the US$5 billion that were poured into the Cuban economy, US$1.5 billion was invested in construction and the modernisation or renovation of thermoelectric plants, the transport of crude oil, gas and nickel, the construction of hotels, and in telecommunications. By the close of 2000, 31 new joint venture companies had been created (MEP, 2001:3–4). Brascuba, a cigarette company founded in 1996 with private Brazilian and Cuban national capital, can be considered an example of successful joint venturing. With two co-presidents, Adolfo Díaz Suárez (Cuba) and Fernando Teixeira of the Souza Cruz Tobacco group (Brazil), the company earned US$20 million in 2000. Due to the investment-income policy, Cuba receives half of this amount. To demonstrate a real entrepreneurial growth, in 1996 Brascuba produced and distributed 571 million cigarettes under three brand names; in the first half of 2001, the company produced 2 billion cigarettes in six varieties. This joint venture depends on local as well as foreign markets (within the region as well as in Europe) by selling under the brand names Hollywood, Continental, Popular, Romeo y Julieta, Monterey and Vargas. Though the number of employees was not revealed by corporate or government sources, Brascuba boasts that the average age of their workers is 32, mostly women, with 40 per cent being university educated (engineers and executive office managers) and 58 per cent having a middle degree in vocational and

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technical training (Granma Internacional, 21 June 2001). These last statistics reflect the professional environment that surrounds joint ventures in Cuba and explain why the island is currently a desirable market for foreign investors. In 2001, FDI provided the national economy with US$1.2 billion. Fifty-one new contracts were signed for 2001, with Venezuela being the number one investor specialising in petroleum exploration and refining (Volkskrant, 12 July 2001). The Sol Meliá Group, a Spanish pioneer investing in the Cuban tourism market, finished the year 2000 managing 20 hotels around the island. Additionally, Sol Meliá bought up Havana’s historical Habana Libre Hotel. (Granma Internacional, 18 January 2001). The French group Total-Elf is currently the number one private gas provider for Cuba. They, together with Trafigura, a British company, provide the Cuban state corporations with the most up-to-date technological advances in the use of natural gas (Granma Internacional, 27 April 2001). Whether 100 per cent FDI or joint venture, foreign investment in Cuba has played an extraordinary role in the island’s survival during the past five years. While companies like Hitachi, Total-Elf and Sol Meliá are providing Cuba with capital and new technology, the party/state apparatus is providing healthy and highly educated Cuban workers to exploit the new markets. SOCIAL GROWTH Cuban government statements and propaganda often reiterate the importance of social development in accordance with economic growth. According to the PCC Statement of Social Policy, since the Revolution of 1959, the main priorities of the leadership in social policy have been to: • provide the entire population with access to a minimal or basic food source; • guarantee each citizen equal access to a decent health system and education; • disperse an adequate income for the retired and those economically vulnerable sectors of the Cuban population; • provide every worker with sources of employment, protection and benefits;

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• provide every citizen comfortable and affordable housing, preferably private housing (most Cuban citizens own their houses); • attain a society that progresses towards justice and human solidarity. (Source: Government of Cuba, 2001) Clearly, there exists a correlation between economic growth and social development in Cuba. It is understood that social development could not happen without economic growth, as humans can only satisfy their material needs with collective material gain, and as economic growth provides the necessary resources to satisfy the needs of society as a whole. Social policy in Cuba has officially followed the line that all economic gains should be directly invested in the national programmes that promote social development. In Cuba, resources invested in the social programmes that guarantee social development are not considered to be mere costs, as is the case in most countries that practise the neo-liberal reductionism that was mentioned in Chapter 1. Rather, investment of capital and materials in social programmes is considered to be the satisfaction of the PCC’s objective priorities. This was demonstrated during the 1990s economic crisis, which was highlighted in Chapter 3. But this investment in social programmes for the state’s contribution to social development is not simply moralistic. The investment in maintaining social development is rewarded with high levels of education; in other words, the creation of a highly educated cadre of workers who are ready to confront the global political economy. Vice-President of the Council of State Carlos Lage once mentioned that what makes Cuba so attractive to foreign investors, besides political stability, is the population’s health record and the fact that it has the most educated group of workers that any developing country can provide (Lage Dávila, 1996). Cuba’s social development did backfire during the mid-1980s, when the first generation of educated youth entered the job market and found only jobs that required lower levels of education. The job market was flooded with engineers, doctors, lawyers, translators and other university-educated professionals (Carranza Valdés et al., 1997:3). But as the country recovered its economic and productive capacity, in addition to opening up to foreign investment, the need for these professionals began to grow. Today, there are more workers needed in informatics (IT) than ever before. Economists that have studied

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capitalist economy (as it is called at Cuban universities) are now employed as directors and managers of state companies. Engineers are now hired on a continual and contracted basis by foreign enterprises via government temporary agencies. The need for workers with computer and Internet knowledge has also increased (Granma Internacional, 29 November 2000). In no other Latin American country are the numbers of educated professionals so high per population as they are in Cuba. Therefore, there is no incentive to give up these social programmes. On the contrary, the government is compelled to continue this social policy as the party/state apparatus benefits from it. As demonstrated through the crisis of the 1990s, the productive capacity of Cuba’s healthy and educated population can withstand the worst economic crisis and the new global economic order. Cuba is competitive precisely because of its policy emphasis on social development. As far as health care and education are concerned, the party/state apparatus continues to demonstrate its commitment to rising above global standards. As of 2001, there is one physician per 168 inhabitants. In the national family-care programme alone, the country counts on 30,600 physicians. Approximately 1.7 billion pesos are dedicated to the salaries and benefits of health-care workers annually. These include physicians, specialists at major hospitals, nurses, nurse technicians, laboratory workers and assistants, etc. In 1999, 98 per cent of the Cuban population were given general physical examinations by family doctors. Access to health care continues to be free of charge to Cuban citizens, as it is considered a human right. Education follows health care in social priorities; obviously the costs are much lower. The party/state apparatus is still responsible for the education and professional training of Cuban citizens, including kindergarten, nurseries and adult education. All this indicates an increase in government investment (Government of Cuba, 2001). Statistics on health and education will be revisited using international sources in the next section. In terms of living conditions, some improvements should be noted here. Between 1997 and 2000, the newly recognised unemployment rate dropped considerably. Whereas in 1998, the official unemployment rate was 7 per cent, the rate dropped during the course of 2000 by 1.5 per cent. This was largely due to the creation of jobs by gearing the country’s economy towards tourism. An additional help was the opening of new enterprises with foreign capital. In 1999, 87,000 new permanent jobs were created in tourism in the Eastern provinces of

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the country. Women’s participation in the job market is especially notable. As of 2001, women constitute 42.9 per cent of the entire workforce. The average monthly salary among Cuban state workers went from 211 pesos in 1998 to 223 pesos in 1999. This is excluding bonuses that are given at the workplace in US dollars. Workplace bonuses increased by 18.9 per cent between 1999 and 2000; in 2000, US$53.2 million were distributed as bonus incentives (MTSS, 2001). These figures do not reflect the salary of those working in the new state corporate sector, because those workers receive additional salaries linked to their productivity. Currently, there are 781,000 workers under the new system. The new state corporate sector is discussed below in the section concerning the process of entrepreneurial perfection or el perfeccionamiento empresarial. The Cuban government has been successful in ensuring that hunger and illnesses caused by malnutrition are kept at a minimum. Food consumption experienced a jump between 1998 and 1999 when caloric intake averaged 2,369 kilocalories and 59.4 g of protein (based on beans, soya and meats) daily. During the same year, sales at public food markets increased by 18 per cent. Nevertheless, prices at public markets did increase by 6 per cent, putting a higher burden on the Cuban worker and making it difficult for the individual to believe that their living standards were rising (PCC, 2000; 2001). Housing for the Cuban population did experience an improvement in 1999. This sector has always been a problem for Cuba, as the party/state apparatus, in its ideologically driven days, established that comfortable, affordable and preferably private housing for all Cuban citizens was a necessity. During 2000, the Cuban government completed the construction of 35,000 new homes for families. Additionally, the co-operative mini-brigades – composed of volunteers who help build housing in order to acquire their own privately owned houses – built an additional 15,000 homes and flats, bringing the total number of homes constructed in 2000 to 50,000. The government records that there was in addition an increase in the number of completed home repairs of 21.2 per cent in comparison to 1999 (PCC, 2001). There are a number of other social indicators and statistics that may reveal a hike in the standard of living of the common Cuban. Reliable as they may be, it is impossible to verify their relevance to this research. While the government uses the fact that (for example) 40,000 new telephones have been installed by the state corporation ETECSA in 1999, there is no indication as to whether these telephones

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went to new businesses or private homes. Likewise, the reduction of what Cubans call apagones (blackouts or power outages), which was recorded as having decreased by 25 per cent in comparison to 1998, does not show how it affected the standard of living of the Cuban worker. However, one Venezuelan writer did say that the lessening in frequency of power outages is a visible sign that the Cuban way of life is getting better (Rangel, 2001). WORLD BANK DEVELOPMENT REPORTS AND OTHER INTERNATIONAL SOURCES In order to keep this background on social growth indicators objective, it is necessary to include reports from institutions other than those that belong to the Cuban party/state apparatus. Though Cuban sources are rarely questioned or contested by international sources, there are reasons to look outside Cuba for comparative figures. Most importantly, the Cuban government does not have the resources to acquire indicators for other countries, and, has always depended on transnational research to confirm their own position in the global political economy. In other words, Cuban sources are relatively reliable, but not sufficient. The largest source for social development reports is the United Nations Human Development Report of the UNDP, which uses tools such as the Index on Human Poverty (IHP). This index categorises countries according to the percentage of each country’s population living beneath the poverty level. Factors such as access to clean drinking water, adult literacy, infants’ average weight and the number of nationals that die before the age of 40, are all taken into consideration. According to this index, in 1997 Cuba had 5.1 per cent of its population living beneath the poverty level. That places the country second out of the 78 developing countries that allowed the UNDP to measure their social development standards (UNDP, 1997). The same organisation compiles what is called the Index for Gender Development (IGD). The purpose of this tool is to measure differences between the sexes in standard of living, education and employment (profession and salary). The UNDP includes 104 countries in this report, including industrialised and economically advanced countries. Cuba ranks 21st in the most gender-equal countries, with more than half of its technical managers and engineers being female (UNDP, 1997). Cuba’s social record has even caught the eye of international financial institutions that have promoted many of the neo-liberal

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policies that the revolutionary leadership has rejected. According to World Bank indicators and statistics, Cuba, despite the slow and stable progress to economic recovery, has a record that demonstrates the enhancement of its social achievements. The party/state apparatus has reduced the country’s infant mortality rate from 11 per 1,000 in 1990 to 7 per 1,000 in 1999. This places Cuba firmly in the ranks of the most economically advanced nations. According to World Bank Vice-President for Development Policy Jo Ritzen, the infant mortality rate for 2000 stood at 6 per 1,000 (Lobe, 2001). This is the same rate as Spain during the same year. The infant mortality rate is just another indicator that demonstrates Cuba’s superiority in social development in comparison to its neighbouring Latin American countries, which follow the neo-liberal policies prescribed by the World Bank and the IMF. In 1999, Argentina’s infant mortality rate stood at 18 per 1,000; Chile’s was 10 per 1,000 and Costa Rica’s 12 per 1,000. For the entire Latin American and Caribbean region, the average infant mortality rate was 30 per 1,000 in 1999. The infant mortality rate can also be broken down to give the rate for children under the age of five. For Latin America as a whole, the infant mortality rate for children under five averaged 38 per 1,000 in 1999. Cuba’s infant mortality rate for the same age group during the same year was 8 per 1,000. This last figure is 50 per cent lower than the rate in Chile, the Latin American country that comes closest to Cuba’s social achievements (World Bank, 2000). Public spending on education during 2000 in Cuba amounted to approximately 6.7 per cent of the gross national income; this continues to be twice that of other Latin American and Caribbean countries and is even comparable to Singapore’s spending. During the Special Period, net primary school enrolment for both boys and girls reached 100 per cent; this figure from 1997 was an increase from 92 per cent in 1990. This rate was not only well above the 80–90 per cent rates achieved by the most advanced Latin American countries, it also surpassed the United States, according to Ritzen (Lobe, 2001). In 1997, there were 12 primary students for every Cuban teacher; this ratio ranked equally with Sweden. The Latin American and East Asian average ratio was 25:1. The youth illiteracy rate in Cuba is zero. In Latin America the average is 7 per cent. Only Uruguay comes close to Cuba with its 1 per cent youth illiteracy rate (Lobe, 2001). Similarly, and again according to World Bank statistics, Cuba’s health-care system remains outstanding. The government dedicated 9.1 per cent of its GDP during the entire decade of the 1990s to health

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care; this is equivalent to Canada’s rate for the same time period. In 2000, Cuba achieved the highest doctor-per-population ratio in the world; the rate was 5.3 doctors per 1,000 people. It is therefore no wonder that Cuba has no problem sending off medical experts to disaster areas in neighbouring Latin American countries, free of charge (Granma Internacional, 15 March 2001). World Bank officials went so far as to say that other developing countries have a lot to learn from Cuba, that it is a model (Lobe, 2001). These statistics reflect a growing appreciation in the World Bank for Cuba’s social record despite the fact that Cuba’s economic policies are virtually the antithesis of the ‘Washington Consensus’ on neo-liberal economic orthodoxy with its Structural Adjustment Programmes (SAPs), described in Chapter 1. It is ironic that the same institutions that have prescribed privatisation and state reductionism praise Cuba’s ‘anti-model’. For the past decade, the World Bank has insisted that its core mission has been to improve the lives of the poor. But it did so by promoting policies that were geared towards concentrating all efforts on orthodox economic growth. Productivity and increasing GNP rates were considered to be the prerequisites for social development. The experience of Cuba, even during the worst years of the Special Period, has proved this assumption wrong. CUBA’S MOST RADICAL CHANGE – SISTEMA DE PERFECCIONAMIENTO EMPRESARIAL Up to this point, I have described the miraculous success in economic growth and social development that the Cuban people have experienced since the reforms that were implemented during and after the crisis of the 1990s. The party/state apparatus and its leadership initiated a series of reforms that were characterised in Chapter 3 as basically an apertura or state-controlled opening to the hegemony of the world market. The opening to the market reflects the adjustments that the Cuban government was forced to make after the fall of the Soviet bloc. In short, the results of this event had consequences that were favourable to production and to the stability of the revolutionary regime. However, economic indicators of growth alone cannot explain the impact that the series of reforms had upon Cuban society. Nor can the reforms that were implemented during the first half of the 1990s solely explain the new structures governing Cuba’s political economy. In order to understand the impact of global pressures upon the country, it is necessary to look at structural changes that emanated

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after 1996. Some of the changes reflect a development or extension of the programmes implemented during the 1990s and others recently came to the fore with the adoption of specific production policies. During the fifth PCC Congress in 1997, the themes of decentralisation, economic efficiency and competition became more pronounced in party discourse. Cuba’s political economy was said to have reached a new stage of development. … la Politíca Económica inicia una nueva etapa, que debe abarcar aspectos estructurales de la economía como la diversificación, crecimiento y dinamización de las exportaciones, el desarrollo de la base alimentaria, y la eficiencia económica en sus aspectos energéticos, materiales y financieros, por solo mencionar algunos; y comprende asimismo la coordinación de políticas específicas y la utilización de instrumentos económicos y jurídicos más complejos y eficaces. En las nuevas condiciones en que opera la economía, con un mayor grado de decentralización y más vinculadas a las exigencias de la competencia internacional, el control oportuno y eficaz de la actividad económica es esencial para la dirección a cualquier nivel, priorizando en particular la auditoría estatal. (PCC, 1998a) In turn, Party discourse became officially a programme for furthering economic growth and national development under a new model. It was based upon the idea that socialism needs to be constantly improved in order to serve the needs of the revolutionary state and the population (Government of Cuba, 2001). The party programme called for a change in the line of production. It consisted of a managerial revolution, the purpose of which was a move towards the mentality of entrepreneurial leadership, towards behaving and conducting business as if the Cuban economy were based upon private, market capitalism. This was made possible by allowing more autonomous room for the directorship of enterprises to behave as they deemed wisest, but within the confines of state or public ownership. In this sense, production in socialist Cuba is no longer geared towards meeting the basic needs of its citizens, but towards meeting the demands of consumers, both inside and outside of Cuba. Along with this change of raison d’être, came also the fall of state subsidies for inefficient production, or production that was not profitable, so that it made no sense for the state to sustain it. This section will outline what this economic programme entails.

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Prior to the Special Period, during the Campaign to Rectify Errors and Negative Tendencies, the Cuban government’s discourse had often centred on perfecting Cuban socialism. In Spanish, this is known as el proceso de perfeccionamiento. Eckstein (1994:60–3, 116–19) noted that, in discourse, perfeccionamiento was geared towards re-emphasising the values of socialist society. I have depicted some of these values while describing the foundations of the 1959 Cuban Revolution in Chapter 2. Nevertheless, perfeccionamiento also meant making the state-run economy, which was formally dependent upon the support received from the former socialist bloc and especially the USSR, more efficient. In contrast to this concept exists the present day process of perfeccionamiento, which is not directly related to the values of socialist society by any means. The revolutionary leadership can only argue that the change that Party discourse has promoted since the fifth PCC Congress is indirectly involved in sustaining socialist values in that it supports the party/state apparatus in keeping public governance over the market (state supremacy). But this is only obviously so in Fidel Castro’s speeches. The process of change in Cuba’s production line has to do more with adjusting state-owned business practice in order to increase profits and making production and service more efficient. In order to realise this, it became necessary to link Cuban productivity to the global market, since economic growth (import and export) needs to be measured in hard currency. Along with this growing link to the global market, more autonomy was rendered to business leaders, and labour wages were linked to productivity. This process is what is understood as the perfeccionamiento empresarial (hereafter, sistema de perfeccionamiento empresarial or SPE). The programme, which will be outlined in the following pages, is considered by the PCC itself to be the most radical of all reforms that post-Cold War Cuba has yet experienced (Granma Internacional, 16, 18 March 2001). The SPE has its roots in the reform processes that have been experienced by the nation’s military–industrial complex, headed by General Raul Castro (Fidel Castro’s brother). By military–industrial complex meant is here the business line that the military created for its own benefits and purposes. As mentioned in Chapter 3, during the Special Period even the military cut down its expenditure and conditions proved to be difficult for those who made the military their lifetime career. Troops were no longer sent out to foreign countries but had to concentrate on producing their own food for subsistence. Raul’s famous words were ‘beans are more important

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than guns’ (EIU, 1993:7; Granma Internacional, 5 May 1993:4). The military’s main contribution to society during the years of economic crisis was the transport of produce to markets and government centres for redistribution, and work in the sugar fields. But what it did, it did with efficiency. This meant that when the military took over a business or task that was usually covered by civilians, it reduced the number of workers that were involved in the process and it completed the task in a timely fashion. The guiding thought was to produce more and better quality results with a smaller workforce, less energy use and no waste. After the worst years of the economic crisis (1996 and on), Raul Castro remained in control of the tasks that were taken over by the military. And as the entire nation went in search of hard currency, the military likewise sought capital growth. Raul Castro became, then, a sort of president or CEO of the entrepreneurial Revolutionary Armed Forces (FAR). The Army restarted a small assembly line of ammunition that had formally been used during the war in Angola (EIU, 1991). This business now exports bullets, small bombs, and guns, and earns hard currency profits from the sale of these products. Exact information on this industry has been concealed by the government and has been protected by security intelligence laws (Granma Internacional, 29 November 2000). But further good examples of entities that produce for military consumption and sale can be found in Uniones Agropecuaria Militar, which deals with agricultural products produced by the Army, mostly sugar; Industria Militar, which produces everything from military clothing to guns and tanks; Construcciones Militares, which produces cement and construction materials for public housing as well as defence centres, schools and hospitals; and GEOCUBA, which is an excavation company that locates and exploits natural petroleum deposits. These four companies are under the direct leadership of Raul Castro (Granma Internacional, 18 May 2001). The Council of State, together with a number of social and economic research centres in Havana, the FAR and also a number of business leaders, formed a work group that sought means to implement the military mode of production to all state enterprises. Officially, this entity, known as the Executive’s Commission for the SPE, came into being in 1998. Nevertheless, I would venture to say that the work group was started well before the fifth PCC Congress, as the SPE was legitimised by the Party Congress’ documents and 1997 Economic Resolution. The military’s experience was to be applied to state corporations and to serve as a model for the future Cuban economy.

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Therefore, the Executive Commission for the SPE continues to be monitored by the FAR (Nueva Empresa Cubana (hereafter NEC) on Decree-Law 187/98: Sobre las bases generales del perfeccionamiento empresarial). Its current director is former military colonel Armando Betancourt Pérez. Since 2000, the FAR has set up five Juntas de Gobierno (government boards of direction) that monitor businesses in the SPE. According to General Raul Castro, ‘the SPE has to be a journey without delay or going back’ (Granma Internacional, 18 May 2001). Logically, the SPE would have begun with the newest state enterprises, as these would be starting fresh without deficits and with young business leaders. But what gave Cuban economic leaders the confidence to prepare all national businesses for hard currency operations and competition was the state’s own hard currencygenerating experience. Remember that Cuba was never completely dependent on Soviet aid and that on certain occasions up to 40 per cent of its national income was dependent on the private, Western market (see Chapter 2). Hence, the concept of conducting business with orthodox market rules is not totally foreign to the experience of the Revolution or party/state apparatus. Cubalse and CIMEX will be used as two concrete examples to depict the inspiration by which the Cuban party/state apparatus pursued the SPE. Cubalse Cubalse is a state-owned corporation consisting of a group of companies with diverse social functions.4 It offers clients, both foreign and domestic dollar holders, a diversity of products and services. The corporation’s head office draws up policies and strategies and supervises the activities of each company. The corporate structure consists of the president and three vice-presidents in the fields of development, budget control and planning, who in turn govern the individual companies, and the general stores and office managers. Throughout Cuba the group directly employs 6,200 individuals. Cubalse controls a network of more than 170 shops and service units – shopping centres, supermarkets, boutiques, restaurants, a golf club, photo and video shops, laundry and dry cleaning establishments, cafeterias and veterinary clinics. Principally, it serves members of the 4. All the information gathered for this section derives from documents prepared by the directorship of Cubalse and CIMEX, and also from interviews with some of its employees and information technology (IT) specialists (Cubalse, 2000).

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diplomatic corps, businessmen, foreigners who live in Cuba, tourists and Cubans who have access to dollars. It also does business in real estate, automobile, wholesale, financial, legal, land transport and shipping sectors and offers specialised services in photography, graphic design and advertising. It is an import–export entity with its own resources and offices throughout the country and abroad. The figures testify to the corporation’s success. Cubalse has an income of over US$248 million per year. But the history of the corporation and how it came into being is extraordinary for a state-run economy of the Third World, in addition to being very informative about what the new corporations in Cuba can look like. Cubalse, like most corporations and companies in Cuba, receives its name from the combination of two or more words that describe the service provided. Cubalse stands for Cuba al servicio del extranjero (Cuba at the service of foreigners). The name indicates those the corporation serves historically and the type of state funds it will be generating, i.e., hard currency, mostly US dollars. In 1962, the government, in a first experimental stage, established an agency dedicated to the recovery of state assets (RVE), the purpose of which was to discover how valuable the country actually was and collect an initial domestic funding source for the revolutionary state. It became an organisation in charge of recovering and caring for real estate, objets d’art and other national patrimony. In the same year, the Enterprise for Service for the Diplomatic Corps (ESCD) was created to provide services for the members of the remaining diplomatic missions in Cuba. In 1964, the RVE opened up a small chain of food and hardware shops (diplotiendas) for the ESCD. By 1969, the RVE’s network of retail shops began to engage in operations in hard currency (US dollars); the commercial activities started growing at an enormous rate and a process of diversification began. In 1974, the RVE absorbed the ESCD and assumed that entity’s commitment in the sphere of service for foreign state representatives in the country. This is when Cubalse, SA was founded. Cubalse would run independently of the SDPE (the revolutionary Ministry of Economy), which was organised by Che Guevara, but the budgetary constraints were still imposed by members of the Central Committee of the PCC. Between 1975 and 1980, the network of retail shops and services experienced a steady growth along with the country’s general economy. The steady increase in imports led Cubalse to be classified as a foreign trade enterprise. During the early 1980s, Cubalse established an agency for real estate which, in addition to preparing

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homes and property for foreign diplomats, engaged in offering a repair service. With profits generated from these new agencies, Cubalse opened the Havana Golf Club in 1984. As the corporation grew, so did the need to find employees. Thus, an employment agency was established for the purpose of hiring qualified individuals who would serve as personnel for diplomatic missions and international organisations with offices in Cuba and commercial firms run by Cubalse. The diplomatic missions and other foreign entities would pay the state in hard currency for these services, but workers would always receive their benefits in national currency. The corporation grew so big that by 1992 a Cubalse office opened in Panama. Now, while the country was suffering a serious economic problem during 1993, more pressure was put on Cubalse to increase profit rates. Each of Cubalse’s operations was expected to contribute to the increase in profits, and a five-year expansion plan was implemented. But the existing operations were not enough, new operations were needed to carry out import and export transactions. Hence, in 1994, Cubalse created its own shipping company, which began operations with two regular routes: one to Panama, where Cuban companies could purchase products from the United States, and another to Mexico, which became one of Cuba’s most important trading partners. By the end of 1994, Cubalse had 99 shops and service units in operation in 29 cities and towns around the country. The expansion created a need for the renovation and extension of informatics systems and the establishment of more offices abroad, mostly in Latin America. One of the contributing factors to the immense expansion of the corporation was the Council of State and the parliament-approved Decree-Law in 1993 allowing for Cuban nationals to possess hard currency. Those with access to US dollars went on shopping sprees and a domestic dollar market was constructed, with Cubalse as the basic provider of goods and services to dollar owners. By 1995 Cubalse became the principal leader of Fiat and Peugeot automobile sales in Cuba; this made it easier for companies and even individuals to purchase cars and motorcycles. On Havana’s Malecon, a large Fiat store was opened along with a Cuban speciality shop selling rum, ice creams and pastries. The store attracted not only tourists; it also added a commercial flavour to the romantic scenery traditionally enjoyed by habaneros at Malecon. The Food and Beverage Company was created as a wholesale distributor; Aster laundry and dry cleaning services was introduced and a new chain called Oro

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Negro gasoline and service stations and ‘Cubanitas’ cafeterias are now extended to all the provinces. In 1996, Cubalse opened a new line of businesses. Photo printing centres, graphic arts and advertising companies were opened in Havana and Santiago de Cuba. A new alternative to the world famous McDonald’s fast-food restaurants, Rapidito, was opened as a chain business, and initiated a sort of service import substitute that has proved to work just as efficiently as its North American inspiration. Cubalse even started opening up disco-clubs and bars. Also in 1996, the effects of the 1995 New Law on Foreign Investment (explained in Chapter 3) were found in the inauguration of Lares, a real estate company that started generating profits from the sales and rentals of renovated luxury homes in the lavish Miramar area of Havana. Between 1997 and 1998, Cubalse continued to grow, with the establishment of a finance company and legal bureau dealing with import/export issues. By 1997, the five-year expansion plan – that had begun in 1993 – was completed in full. Cubalse is currently a state corporation holding 21 companies involved in a wide range of competitive businesses throughout the country. Plans are now being called for to create a business system abroad in five countries. Cubalse is Cuba’s only state enterprise that has always operated independently from the centralised socialist economy. The production of goods and services operates on a hard currency budget, while the workers’ salaries have always been linked to the national currency. During its history Cubalse has experienced some changes in its structure. This is especially true in the boom experience that was caused by the Periodo Especial. Due to the economic crisis Cuba endured during the first half of the 1990s, the Cuban party/state apparatus looked for all kinds of options that would generate income for the state. Since Cubalse was already a state corporation operating in hard currency, the leadership took advantage of this corporation and allowed more autonomy for its managers in planning expansion. This experience was an essential inspiration for the programme that became known as perfeccionamiento empresarial. CIMEX CIMEX, SA is Cuba’s largest corporation, with 29 companies in its organisation. It was set up in 1980 with the purpose of capitalising on visiting émigrés and their expenditure, though its name derives from ‘Cuban Import/Export’ (Eckstein, 1994:70). As government initiatives started to redevelop the tourism industry, this semi-

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autonomous agency provided services to foreigners in the fields of holiday packages, flight bookings, car rental and organised tours. CIMEX is currently the primary entity responsible for joint venture contributions. As was mentioned before, the Cuban government adjusted the laws during the 1980s to accommodate foreign investment, allowing up to 49 per cent of private foreign ownership. By 1989 this corporation grew to the point where it controlled 49 companies in the aforementioned services, in the manufacturing of national products and wholesale distribution of seafood, biotechnological products and medicine. During the reform and decentralisation process of the 1990s, CIMEX relinquished responsibility for over 20 semi-autonomous agencies, enabling them to start up as independent small chain businesses. Among those remaining in CIMEX’s hands is Havantur, Cuba’s biggest tour operator. In 1991, during the PanAmerican games that were hosted in Havana, CIMEX took charge of most of the commercial activities associated with the event. During the same period, CIMEX opened up a shipping line for trade between Havana and Panama. Cubalse later took this over. Most recently, CIMEX has demonstrated increased growth and continues to conduct business in hard currency. During 2000, CIMEX surpassed its annual financial target by 5 per cent and has achieved 11 per cent growth in its hard currency operations over the last five years. CIMEX’s total sales reached US$167 million with a $10 million increase in the sales of national products. CIMEX has invested in a chain of joint venture companies, including gasoline stations, real estate agencies, tour operators, an international financial bank, business in the duty free trading ports (FEZs) and import agencies and other associations. Between January and November 2000, Havantur brought in 334,000 visitors (their year’s target) to the island via Canada, Spain and Mexico. Continuing with joint ventures, CIMEX attracted Total-Elf, a French petroleum product distributor, to open petrol stations in every major city in the country. The increase in the sales of national products has been demonstrated as well. Today, state companies and joint ventures produce 89 per cent of CIMEX’s consumer food commodities. Among the products with the highest demands during 2000 were food and soft and alcoholic drinks. Over 87 per cent of Cuba’s toiletry products were also produced on the island by the Cuban company Surchel, SA. Fifty per cent of household appliances, such as refrigerators, were also produced in Cuba. What is seen here is a retail company that operates in hard currency, while specialising in the sale of national products.

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All of CIMEX’s workers are paid their salaries in pesos, but those who provide direct services to foreigners may receive tips in hard currency. However, according to Executive Manager Elizabeth Pérez, the tradition of rendering (volunteer) tips to the state continues, and CIMEX workers inside and out of the country contributed US$180 million to help finance a children’s cancer hospital (Granma Internacional, 10 January 2001). The relevance and implications of CIMEX and Cubalse The revolutionary leadership was keen to have Cubalse and CIMEX expand their services and businesses years before the opening up of foreign direct investment. This gave a head start for the state to invest in monopoly services and production without being in competition with foreign enterprises. If it were not for Cubalse or CIMEX being given the opportunity to operate autonomously from the central government, foreign enterprises would surely have stepped in to provide the expatriate community with all the products and services the state itself had and could offer. Now Cubalse has the opportunity to conduct business not only with individual expatriates, diplomatic missions and foreign government agencies, but also with a bigger tourist pool in addition to foreign investors and their corporations in the free economic zones (FEZs). Due to the legalisation of the use of hard currency, Cuban nationals who possess US dollars are now important consumers of Cubalse’s and CIMEX’s products and services. From Cubalse and CIMEX a number of things can be discovered. First, the Cuban party/state apparatus never abandoned its ties with the world market system. It was impossible for the party/state apparatus to function as a legitimate state recognised by foreign entities while operating solely in socialist currencies like the peso or even the Russian rouble. Secondly, the state corporations experienced a boom only when they were exposed to the world market. This implies not only an already existing or potential entrepreneurial spirit within the revolutionary leadership, but also the viability of a future managerial–entrepreneurial social bloc. Thirdly, in order for these state corporations to increase profits, they had to have a controlled number of employees selected by top management and not by the PCC or the Ministry of Labour and Social Security (MTSS). The numbers were small, and though there is no exact government or official statistic concerning the downsizing of employees during the recent economic boom, I was able to interview a number of exemployees who testified to their displacement from their positions.

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Some of them have ended up in self-employment, something that will be dealt with in the following section. Fourthly, Cuba now more than ever depends on international capital in order to upgrade its corporate enterprises. Since the demise of the Soviet bloc, Cuba’s access to new technology is now dependent on what the foreign investors can offer national industrial intelligence. Fifthly, and especially in the case of Cubalse, the creation of a temporary employment agency or office of employment, offering what is known in the Netherlands as uitzendbureaus, indicates that there will always be a need for freelance or temporary workers who operate on contracts designed by foreign investors and managers of joint ventures. The tendency is to create a reserve army of labour that is subject to the international financial market. This tendency will be elaborated later. Already, there are clues as to what structural influences the global political economy has upon the party/state model. From the above examples, we can conclude that there is a move towards increasing the flexibility of labour. Ultimately, what has been learned from these experiences is that state supremacy over the national market can work in coexistence with the world market dominated by private enterprise. It was this evidence that motivated the Cuban party/state apparatus to explore further means of employing market-like structures for state-sponsored production and marketable services. There are, nevertheless, essential differences between the experiences described above and those methods and goals that are implicated in the SPE. Although increased autonomy and decentralisation in the SPE resemble the modus operandi of Cubalse and CIMEX, the disbursement of wages, salary scales and benefits are grossly different. There are many aspects of the SPE that can be studied, but the most interesting for this study is the amount of autonomous power that the new managers possess and execute in the line of production and, just as importantly, labour policy. As I will demonstrate, the changes resemble a private market reform rather than any of the measures the revolutionary government might have employed during the existence of the socialist bloc. How the SPE works How the process of entrepreneurial perfection actually works has been documented by the Ministry of Labour and Social Security (MTSS) and its SPE Executive Commission (Government of Cuba, 2001). While recognising that production in an isolated socialist economy does not have the purpose of serving the needs of the

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worker directly – only indirectly – the language in the texts prepared for the SPE also demonstrates a change in labour relations. The SPE resembles more a state capitalist economy, as explored in the writings of the Frankfurt School mentioned in Chapter 1, than the morally socialist line of production that Che Guevara envisioned. The PCCsponsored texts are decorated with socialist wording but their structure resembles that of the private corporations that are found in market economies. The texts are available to the public via the Internet (www.nuevaempresa.cu). The ultimate goal of the SPE is to transform all national businesses into modern, efficient and globally competitive entities that produce commodities and provide services that are marketable and profitable. In order to do this, each company must conform to the standards and requisites that make national enterprises eligible to participate in the new economy without major investments coming from public resources. According to the Introduction to the documents prepared for the process of entrepreneurial perfection on the web site, application of the SPE entails passing each participating company or corporation through a series of four phases. The first phase entails organising and computerising all systems of accounting in order to make the companies nationally compatible with the standards that guide the SPE. The second phase is to achieve an accurate balance of expenditure and income in order to prepare for profit maximisation. The third phase consists of implementing the new hierarchical structure of production and management that is indicated in the documents that govern the SPE’s activities. This phase includes reducing the number of overlapping positions within the company in order to reduce costs, i.e., downsizing. The final phase is reaching a substantial level of profit; this is planned upon compromise between the Executive Commission for the SPE and the Directorship Committee (explained in detail below) of each enterprise within a two-year period. Additionally this phase will include a demonstrated continual decrease in the ratio of energy used to production of services and an annual reduction of waste. In order for a company to be considered as a participant in the SPE, it must follow these phases. Again, approval to proceed from one phase to another is strictly controlled by the Executive Commission of the SPE, which is heavily influenced by the military leadership of General Raul Castro and Armando Betancourt Pérez (NEC, 2001 Introducción).

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Structural changes in the line of production Each business, company or corporation is appointed a director by the Executive Commission of the SPE that guides the entity in every aspect of operations, personnel relations and financial planning. As mentioned above, the Executive Commission of the SPE is composed of members from the Council of State, a number of economic researchers from Havana and the military. Under the director, just as with Cubalse, there are three vice-presidents or directors who control specifically the areas of accounting, management and future planning. To assist the director or president of each entity, a Directorship Committee serves as a board to deal specifically with personnel relations and monitor planning and economic growth. The Directorship Committee consists of a group of so-called ‘experts’ to oversee the changes being made during integration into the SPE. This committee of experts has no executive power but rather serves as a witnessing group and base for input in ideas for discussion, suggestions and considerations. It is also considered to be an organ for conflict resolution and studying problems between management and workers. This committee is the democratic and ‘socialist’ aspect of the SPE. It is composed of between five and seven members, with one position reserved for the workers’ union (CTC), one for the UJC (Union of Young Communists) and two or four workers elected by their colleagues. A member of the PCC may also be invited to participate in this committee (NEC, 2001:1). This Directorship Committee replaces many of the functions that the CTC representatives in each workplace had, including planning, work schedule, personnel regulating, etc. In a company that is applying the SPE, a certain hierarchy exists that distinguishes the various levels of production. Though the distinctions may have always existed in Cuba, they have never been as pronounced and ordained by state authority as they are today. In the new Cuban model of state-owned enterprises, workers are divided into categories that reflect the same kind of division of labour that would be found in a capitalist economy or private company. The various levels involved in production are broken down into the following categories: worker, service and dispensation operator, administration and secretarial worker, technician and project manager, and directors. The following details are derived from the information publicly available from the government’s web pages on the Nueva Empresa Cubana for 2001 (NEC, 2001).

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Salaries are offered on a sliding scale and are graded according to experience and capacity. The grading system uses a scale from I to XXI, in which workers, service operators and administration start off with a Grade I salary and may rise as far as grade IX. Grade I workers start off earning 150 pesos per month and their salary at grade IX is 345 pesos per month. Service operators can start off at 130 pesos per month and their grade IX is, at best, 285 pesos per month; the same scale is used for administration. Technicians receive salaries on grades IV to XIII. Directors can be ranged from III to XXI, depending on the size, productivity and capacity of the company. Technicians starting at grade IV–V earn 205 pesos per month and may increase their salaries to 375 pesos per month. Directors’ salaries start at 205 pesos per month and may reach grade XXI at 700 pesos per month. These salaries represent the minimum wage and do not include added tips and profit sharing, offered according to productivity. All in all, the minimum wage for all participants in the production process ranges from 130 pesos per month, for part-time employees, to 700 pesos per month. In hard currency, that is between US$6.50 per month and US$35 per month. The average salary for full-time work in an SPE enterprise (in hard currency) is $20.75 per month. The salaries are dispensed directly by the company’s administration and no longer by the MTSS or CTC representative as was the case prior to the SPE (NEC, 2001). But these salaries reflect only the minimum wages for workers, managers and directors. What is peculiar to the SPE is the possibility – and indeed the necessity – of earning more than the salaries indicated by law. Though the average minimal salary in an SPE enterprise amounts to $20.75 per month, no one is expected to live off this small amount of money. Propaganda concerning workers’ wages, specifically those clichés stating that salaries are low because other costs are covered or subsidised by the government (e.g., housing, health care and education), has fallen by the wayside during the Special Period; this was emphasised in Chapter 3. Since the economy has been dollarised, and most material goods of value related to the increase in standard of living are sold in hard currency only, Cubans continue to be limited in their purchasing power. Again, only those with access to the US dollar can purchase materials that will improve their living conditions beyond the basic welfare measures maintained by the state. Hence, a supplementary system has been developed alongside the SPE that allows the director together with the Directorship Committee to set standards in salary increase. The salary

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increments are not uniform and are to be related directly to the productivity and profits of each company individually after the company has made its contribution to the national budget. This is where the old system of equal income for all workers is replaced by a market-like plan of worker compensation (NEC, 2001). The most essential and peculiar quality of the SPE is the link between workers’ salaries and productivity. Prior to this process, no worker (including the manager) of a company had his/her salary directly linked to the level of production or services provided by the company. This was not even so under Cubalse or CIMEX. Earlier product bonuses and holiday packages that served as material incentives did indicate a type of supplementary income. In Chapter 3, I mentioned the jabita tradition of offering workers plastic bags of goods only available in dollars. But this was not practised on a regular, not to mention a monthly, basis. Under the new system, salaries of all employees and directors depend directly on output. This implies a development of unstable salaries and a direct dependence upon global structures and financial fluctuations. For the first time, the Cuban government is exposing its workers directly to the oscillating tendencies that the domestic and world market produce. This is especially true when the state companies specialise in basic material export, like nickel. The difference here is that certain human rights considered by the PCC are guaranteed, such as housing, education, medicine and social security. But for the first time in Cuban revolutionary history, managers are being rewarded according to the results of their subordinates’ work. Not only managers, but also administrators and workers have their monthly income adjusted on an irregular basis. Nevertheless, it is the top directorship that handles accounting and reports on profit increases to the MTSS and the Ministry of Finance. One does not have to be an expert to imagine the level of corruption this new system of supplementary income might attract. But whether there is corruption or not, the fact is that no longer does central authority oversee redistribution of profits at the workplace. If the Directorship Committee does its job justly, then the results can imply a welcome jump in the standard of living for Cuban workers. If not, the Cuban worker will be the victim of the same market structures that oppress his/her counterpart in market societies. Despite the danger, the SPE’s web site organ Nueva Empresa Cubana states that the organisation of salaries is specified to reflect the application of the socialist principle

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of distribution: ‘from each according to his/her capacity and to each according to his work’ (NEC, 2001). Downsizing, wages and prices Together with the SPE’s new structural scheme there exists a policy that relates specifically to the position of contractual labour rules and personnel relations. A new contracting system has been invented – or, rather, it has been copied from the market system of corporate employment. All workers, managers, technicians and other employees beneath the director are currently obliged to sign a work contract that guarantees employment and spells out the position’s requirements and duties. The contract is based on a year’s service, including a threemonth proof and evaluation period during which the worker must demonstrate his/her commitment to the enterprise. At any point, the director is free to dismiss workers for their non-compliance with company regulation and work standards. Prior to the Special Period and the construction of the SPE, firing an employee was much more difficult, and no proof period was ever required. Additionally, the director, together with the Directorship Committee, has absolute control over benefits like paid holidays and vacations. Again, what was once controlled centrally by the state is now transferred to the will and discretion of administration (NEC, 2001). This is what was called autogestión during the fifth PCC Congress. Since downsizing is an essential characteristic of the implementation of the structural reforms of self-management and decentralisation, the SPE has had to formulate a national policy of labour dismissal that is compatible with the PCC concerns about reducing unemployment that were mentioned in Chapter 3. Workers can be dismissed from their workplace on the basis of necessary downsizing, low level of productivity or the finalisation of a contract period. In order to keep a human or socialist face on labour relations, the termination of employment is described as ‘worker relocation’ or ‘displacement’. According to this policy, the SPE takes upon itself a responsibility with which the state no longer deals: that is, unemployment benefits and guaranteeing a new job for the displaced worker. The central government, via the MTSS, continues to provide social security for displaced workers, but only through the company’s budget and for up to six months (NEC, 2001). Thereafter, if no other employment is found, the salary will be reduced to 50 per cent. If after a full year no employment or contract is designated to the

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worker, then the worker will be sent to a temporary employment agency and the company will be obliged to offer the ex-employee a three-option solution outside the sphere of influence in which the company operates. One of these options is self-employment. The options are limited and self-employment will be studied in the following section of this chapter. But it suffices to say here that no engineer in his right mind will opt for self-employment and the rigid conditions that that system entails when his/her salary and tips are linked to productivity in an efficient state enterprise, foreign company or joint venture. Therefore, the state-corporation really offers only two alternatives after the worker is dismissed from a job. Currently, the SPE is developing a ‘relocation policy’ whereby a relocated employee may have the right to find employment within the SPE system. In other words, workers entering the SPE will be guaranteed the right to remain in highly productive state corporations. But this makes desirable employment much more of a competitive market, as a manager might be relocated to a position with an inferior salary or grade. Logically, if workers’ wages are related to productivity, commodity prices in Cuba must likewise experience a transformation. Prices are determined by a committee, which is organised by representatives of the Ministry of Finance and Prices (NEC, 2001). No entity is allowed to determine its own prices if it receives subsidies from this Ministry. Once the company or enterprise is self-sufficient and has earned its budget for the following year, it may determine its own scale of prices in hard currency, but always with the final approval of the Ministry of Finance and Prices. At once, the contradiction of price and wages is controlled by the central government. Apparently, food, medicine, housing for nationals, school materials such as books and household products such as bath soap and other items that are found in the rationing system will continue to maintain their subsidised pricing as the producers of such commodities remain directly under central control. The producers of household products and services that are guaranteed by the state will be the last ones to enter the SPE, if they ever do so. So far, only a limited number of companies have been successful in the application of the SPE and have conformed to the rigidity of the programme. Again, the guidelines include: • a substantial profit gain within a period of two years; • a reduced number of full-time employees;

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• a continual decrease in the use of energy in ratio to the production of services; • an annual reduction of waste. In 1998, 300 companies attempted to insert themselves into the new system. By the end of 1999, 295 enterprises were suspended from the programme for not having kept good accounting. Nevertheless, the SPE spread rapidly within a two-year period. As of March 2001, 64 state-owned businesses have conformed to the requisites of the SPE and have passed the four principal phases. Government sources indicate that by the end of 2001, 300 companies will have applied the SPE and be working under its new market system of initiatives (Granma Internacional, 16 March 2001). According to SPE publicity, by the end of 2001, all of the nickel industry, a high portion of petroleum production and a substantial percentage of the mineral-processing industry – in short, practically all of the Ministry of Basic Industry – will be under the SPE. The Institute of Hydraulic Resources will be included as well. Nickel and electricity companies are the most successful. The new companies, for example, the new oil companies, are most likely to succeed, as they are starting from scratch and do not have an accounting history to clean up. In the 64 companies that have undergone the managerial reforms, around 2.5 per cent of the employees have been laid off and gradually relocated to other companies (Granma Internacional, 16 March 2001). SPE conformity to the pillars of the Revolution The current experience of SPE and the notions that sustained its development throughout the last half of the 1990s revalidate some of the conclusions of a number of the writers from the Frankfurt School – most importantly, that state capitalism is a viable means of economic development, since the state can be just as efficient in leading production as the private capitalist (Pollock, 1941:71–94). This discussion was opened up in Chapter 1. My argument, that state capitalism can compete in the global political economy while imitating private capitalism’s mode of production, has been confirmed. The difference between what the Frankfurt School envisioned as state capitalism and the new Cuban enterprise is that the latter entails denying what the revolutionary leadership has tried to emphasise on various occasions during its history: that is, that the worker needs to be stimulated to produce by moral incentives. All this is lost. Today,

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only real, visible and material incentives drive the producers of state corporations to increase profits and efficiency. Logically, this has meant linking income (wages) to productivity; now wages are linked to what productivity is worth on a global level. Even in Cubalse’s and CIMEX’s experience, this was never seen before. During Pollock’s and Horkheimer’s time, state capitalism was a global trend among industrialised countries. The writers never contemplated the economic development of post-colonial states. Nevertheless, the analysis of state capitalism in Stalinist Russia does offer some clues as to how a backward agricultural society can jump into a modern economy. The state of siege and wartime economy that Russia experienced was the motor in acquiring new technologies. The Soviets depended on a military–industrial complex that drove the economy to high-tech development and then, after a number of crises, to its grave. What has been experienced in Cuba is the acquisition of new technologies and modes of production that have been dependent on foreign investment and the adjustment of labour relations to the world market. Hence, through Cuba, Pollock’s vision of an efficient state-controlled economy is now being extended into the anti-imperialist context during the era of neo-liberal globalisation. The SPE is a working model that entails greater acquisition of power by the military. Just as in the wartime economies of the 1930s, when bureaucratic and authoritarian state capitalist regimes depended on the military to direct the economy, Cuba’s FAR leads the SPE or Cuban model of state enterprises. There are, nonetheless, real differences between the models that were studied by the Frankfurt School and the SPE. Most notable is the existence of the Directorship Committee, which includes workers, PCC members and CTC representatives in planning. Once again, the Directorship Committee required by the SPE can be seen as the ‘socialist’ or ‘democratic’ face of Cuba’s new economy. During the spring of 2001, Executive Secretary of the Council of Ministers Carlos Lage stated that the socialist (Cuban) model of entrepreneurial production is much more efficient than private enterprises, because the norms keep in line with social conscientiousness towards the workers. The social conscientiousness is manifested in worker participation in planning, regular CTC branch meetings and the compromise that PCC leadership at the workplace installs with regard to social justice and a collective contribution to the national economy (Granma Internacional, 16 March 2001). It is the manifestation of one of the pillars of the Revolution described in

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Chapter 2 – popular participation. This has not been seen in private capitalism or market economies of the neo-liberal era. Likewise, in PCC discourse, the essential characteristics of the SPE conform to the remaining three pillars that explain the Revolution. The most obvious is that of state supremacy. Although the decentralisation of state enterprises resembled a sort of privatisation programme in order to reduce the state’s burden of economic responsibility, what is experienced in the application of the SPE is the maximisation of state influence over the market. This time, control has shifted from the PCC and civilian planning towards military hegemony over production. Unity is another pillar that is maintained in the birth of the SPE. Again, the top managers and directors are appointed by the Executive Commission, which consists of members of the Council of State and top officers in the FAR. This strategy is used purposely in order to ensure loyalty to the party/state apparatus and avoid a divergence of interests. Whether or not a future split or divergence might emanate from the existing structures, for example, between directors and managers on the one hand and the Executive Commission on the other, is a question to be dealt with in the concluding chapter. But it suffices to say here that a split could occur when business leaders are bent on increasing their profits (therefore reducing their expenditure on labour), and when labour representation step up their demands in working conditions, salaries and other forms of redistribution. The theme of continuity, the last of the features to which the SPE needs to conform, is also noteworthy here. In government discourse, continuity of revolutionary ideas and tendencies is manifested in the endurance that the party/state apparatus experienced during the economic crisis of the 1990s. In reality, this means the continuation of the old Rebel Army’s position in the Council of State and top leadership of the country. General Raul Castro – one of the original revolutionaries – has recently been appointed as successor to Fidel Castro as commander-in-chief of the Revolution (Granma Internacional, 12 July 2001). The politics and presence of old guard cadre like Raul Castro and Armando Betancourt Pérez reveal continuity in the line of men that remain at the apex of party/state leadership. More importantly, the essence of a state-run economy can be considered, if not anti-imperialist, then at least nationalistic. The structural reforms that have been presented in the SPE indicate nothing more than the revolutionary leadership’s defiant insistence on proclaiming that a state-run economy is the only way to maintain the foundations of

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the party/state apparatus – the anti-imperialist struggle and social justice. On this point, Fidel Castro and the PCC continue to graft from historical passages and especially from the writings of José Martí, who established the struggle for national liberation and advocated a state-run economy. But whether it is historical references to a continuity in revolutionary ideas or simply contemporary inclusion of labour in the process of decentralisation, all of the original revolutionary forces have a role to play in the SPE. CUENTAPROPISMO: THE NEW SELF-EMPLOYMENT IN CUBA As was mentioned in Chapter 3, Cuba’s economic crisis during the early 1990s forced the party/state apparatus to employ a number of emergency-like policies that were thought of as quick and temporary remedies to save the Revolution during its turmoil. Among them was the official recognition of self-employed individuals. Again, where the state was incapable of providing goods and services to the general population, the black or underground marketeers stepped in on meeting the daily needs of the people. The Cuban government sought a cure for black market activity where the production of goods and services was accomplished without the state benefiting from them and where the police force was used, in futile fashion, to stop a popular means of survival. This, together with the state’s inability to provide the population with the most basic of daily needs, is what created the new system of self-employment (Decree-Law No. 141, 1993) known in Cuba as trabajo por cuenta propia or cuentapropismo. In contrast to the new state-corporate world that was represented in the last section by the boom experience of Cubalse, the self-employed sector of the Cuban labour market receives scant attention from the PCC and government propaganda. There has been no official plan for making this sector more efficient, nor have there been any additional funds invested into making the system of self-employment more accessible to other sectors of the population. Initially, the opening up to self-employment might have been thought of as the precepts of small-scale private capitalism in Cuba (Espinosa Chepe, CubaNet Independiente, 22 December 2000). With this in mind, some critics of the Revolution might have assumed that state supremacy over the market was to see its last days. The hopes of Cuba opening up to small-scale private capitalism, is constantly expressed in Miami-based newsgroups such as CubaNet Independiente (see its web site, www.cubanet.org). In a growing economy, it was

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thought, self-employment should have become a more popular means of obtaining income. Curiously enough, although the domestic economy has experienced relatively stable growth in almost all sectors, the number of registered self-employed workers has steadily decreased since the implementation of the tax regime in 1996. Whereas in 1995 there were 208,346 registered cuentapropistas, by mid-2000 the number had fallen to 109,502. 250,000

200,000

150,000

100,000 Registered Self-employed 50,000

0 1995: 2.5%

1996: 7.8%

1997: 2.5%

1998: 1.2%

1999: 6.2%

2000: 5.6%

Figure 1 Number of Registered Self-employed in Comparison with GDP Growth Rate Source: Cuban Ministry of Economic Planning and Ministry of Labour and Social Security. Informe Económico, 1996–2000; Informe sobre el cuentapropismo, 1995–20005

A sharp fall was experienced in 1996 when 19,668 cuentapropistas moved from self-employment into unemployment, the black market or back into the state sector. In 1997, when the GDP rate grew – but not as much as the year before – only 14,417 cuentapropistas submitted their registration. When economic growth slowed down in 1998, 5. The figures provided for the number of self-employed individuals between 1998 and 1999 are estimates given by the Office of Provincial Inspectors at Santiago de Cuba. The Ministry of Labour and Social Security has not provided exact figures for this period.

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over 41,000 cuentapropistas relinquished their licences. However, between 1999 and 2000 the number of self-employed individuals did not rise. On the contrary, it descended slowly and levelled out. According to government sources, the drop in self-employment is attributed to the implementation of the tax regime and new employment possibilities (MFP, 2001; Núñez Moreno, 1997:41–50). But this is only partially true. From my own surveys and interviews, in combination with government reports and other documentation, I have found that the state leadership is bent on diminishing this sector or at least curbing the number of its participants. By analysing this tendency of the state to control the self-employed sector, some important factors concerning the impact of Cuba’s insertion into the global political economy can be revealed. The new system of self-employment is very telling with respect to Cuba’s political economy. Within it are manifested the contradictions of the new mixed market, influenced by factors such as access to the US dollar, tourism, black market activity, unemployment and state supremacy. Most of the information gathered for this section depends on my own original research, which consisted of a randomsampling inquiry and a series of interviews conducted in 1998, in which 179 formal and informal cuentapropistas were interviewed. The new self-employment system presents Cuban society with a number of problems. Seven of these problems will be dealt with here. The first four are problems that can be considered unmeasurable, as the impact or damage they have produced has not been tested due to a lack (intentional or not) of government information. The last three are measurable, as they present a real, proven problem to the domestic political economy. What is cuentapropismo? The first and foremost issue is the question of defining cuentapropismo. In Latin America, self-employment is often associated with either the generation of peasantry following agricultural reforms implemented during popular regimes, who sell their own products informally without government control, or with those urban workers, who as well as having regular jobs, provide services to a small segment of the population (usually to neighbours) as a means of earning additional income (Núñez Moreno, 1997:1–3). Self-employment can also be associated with those alienated classes of society that participate in illicit activity which is usually suppressed by the state, e.g., drug trafficking, prostitution, theft, illegal sale of weapons, etc.

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In Spanish economic diction this category receives the term sector informal (Marqués, 1991). The causes of this are attributed to an increase in population without a corresponding availability in formal employment. After the 1959 Revolution, self-employment in Cuba never ceased to exist. Mostly of rural origin, the self-employed were characterised as non-state workers. This group of workers suffered under many revolutionary state reforms that led to their fall in numbers. According to some official estimates, by 1988, the self-employed sector represented only 4.2 per cent of the labour market (Espina et al., 1995). Likewise, neither had underground black market activity (including theft from the state) disappeared. Government policy was never encouraging to this minority. For this reason the selfemployed, together with black marketers, were placed in the informal sector category. Today in Cuba, the term trabajo por cuentapropia (self-employed) refers only to those individuals registered with the Ministry of Labour and Social Security (MTSS) as self-employed workers who earn in either dollars or pesos and pay all required taxes (MFP, 1996). Contrarily, in my field research, I have intentionally included in my survey participants in the informal/illegal sectors, in order to gather diverse opinions and to emphasise the limitations and (especially) the possibilities of income disparity. Workers in the informal sector do not pay taxes. This is true. However, they are also subordinate to the party/state apparatus and are subject to police repression. Additionally, as participants in Cuba’s dollarised economy, they also contribute to the country’s economic wealth. When it comes to the role that self-employed individuals and informal workers play in society, there should be little reason to distinguish these two groups from each other. The only time that it is necessary to make a distinction between them is when the time comes to estimate the amount of money that the state receives in revenues from the tax system imposed upon officially registered workers. This will be dealt with later. But the parallel black market continues to flourish in Cuba. Again, there are no available statistics for this market. According to the International Labour Organisation and the Centre for Labour Studies of Cuba, for every registered self-employed worker, there are approximately 3.5 individuals conducting small informal businesses or involved in illicit activity (MTSS, 1995a). If the 3.5 per registered cuentapropista is taken as a close-to-accurate estimate, then the real number of non-state workers would have reached over 1 million or

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21 per cent of the working population by 1995. In 2000, the number of cuentapropistas (officially registered and informal) would not be 109,502, but 383,257, or 11 per cent of Cuba’s workforce. The second issue that concerns cuentapropismo is the question of recognising private incentives for work. This is more an ideological problem than a practical one, as self-employment relieved the issue of distribution of food and services. But when the ideological manifests itself in economic reality, then the problem arises of maintaining state supremacy over the means of production and services. The state has had to take measures in order to control this new sector and prohibit it from developing into a new social class (like a renovated petit-bourgeoisie). This will be discussed later. But in terms of state ideology, Che Guevara’s dream of creating a society where incentives for work are strictly or mostly moral (an idea found in the propaganda of the Campaign to Rectify Errors and Negative Tendencies during the mid-1980s) is lost. The third problem, the monitoring of business practices, puts another cost on government spending; new positions and committees for research in the self-employed sectors have had to be set up (MFP, 2001). Additionally, a group of health inspectors are employed to control standards in the sale of food. Again, there is no way of measuring this phenomenon, as the amount of money spent on police control of the self-employment system and on research is currently not available from the Cuban government. The fourth problem is the unjust, quite rigid and rudimentary means of collecting taxes. The state depends on a badly trained, inexperienced group of tax inspectors and collectors, who are often accompanied by the police, to handle the contribution the self-employed make to the national economy. It does not require much imagination to consider the possibilities of corruption, abuse against the self-employed and government losses. Measurable problems in cuentapropismo Among the real or proven problems that cuentapropismo presents in Cuba today, there is, fifth, the accelerating problem of varying levels of income. This presents not only an ideological problem, but also a concrete contradiction in the socialist project of maintaining economic equality for its citizens. Since the new law on selfemployment made cuentapropismo open to the dollar market, many individuals have begun making money at high rates. An example based on my 1998 inquiry demonstrated a grotesque difference between some individuals who earned a net income of US$500 per

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month and those state employees who earned the average and miserable US$10 per month (223 pesos) (see also, Granma Internacional, 1 June 2001:1). The difference is not only reflected in comparing cuentapropistas with state workers, but also by distinguishing those self-employed individuals earning in pesos from those earning in dollars. As mentioned in Chapter 3, there is a vast difference between the average income of those who conduct their business in the national monetary unit and those who use the US dollar for the production and sale of their services. While cuentapropistas dealing in dollars can make over $500 per month after taxes, a peso-earning pizza maker can earn as little as 150 pesos (US$6.25) per month. According to state sources, the government is prepared to acknowledge and tax self-employed dollar earners making over US$60,000 a year (MFP, 1995a). Most of the dollar-earning self-employed whom I have interviewed had family residing outside Cuba. Income disparity has been somewhat curbed by the implementation of the tax system in 1996. Prior to this (between 1993 and 1995) the difference in income levels must have been astronomical. But according to one PCC representative, today there are millionaires in Cuba, who have worked both legally and illegally in order to accumulate wealth and property. Indeed, while state workers are receiving their miserable salaries, some cuentapropistas are making tens of thousands of US dollars. The majority of those cuentapropistas interviewed stated that they did not consider themselves to compose a social or economic class different from state workers. The reason is that most of their earnings fall into the hands of the state in the form of taxes. Additionally, the cuentapropistas are forced to purchase all their input from state businesses wholesale. So even if some self-employed individuals and small business owners may have ideas about themselves that represent a certain divergence from the reality of most Cuban workers, their position in production and providing services remains subordinate to the state. Nevertheless, income disparity provides Cuban society with a class-like structure that distinguishes between those with greater economic opportunities and comfort, and those without. Essentially, cuentapropismo and the income disparity that follows undermine the Revolution’s mission to implement economic equality among Cuban citizens. The sixth problem is that of representation of self-employed interests in the party/state apparatus. The cuentapropistas have no collective voice in the national trade union (CTC). In other words,

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almost a quarter of the country’s workforce had no representation in the socialist government (Núñez Moreno, 1997:43). This is a serious problem as it alienates a large segment of the population and expels them from popular participation in the workplace and other circles. Both the number of officially registered self-employed individuals and that of unofficial informal workers have been reduced. Nevertheless, registered cuentapropistas represent 3 per cent of the working population and informal workers are 11 per cent of the workforce. That is, 3 per cent of the registered working population has no representation and in real terms 11 per cent of workers have no influence in government or decisions concerning their informal labour. The numbers are significant. This is a factor affecting yet another pillar of the Revolution (popular participation), and will be dealt with towards the end of this chapter. Though there has been documented discussion of self-employment within the PCC, in addition to one example of a self-employed interest section with observer status in Santiago de Cuba’s CTC, as of 2000 no state policy has emerged. The seventh and final problem I have encountered concerns the issue of racial relations in the self-employment system. Ultimately this is linked to the fifth problem of income inequality. This has already been dealt with in Chapter 3. State control over cuentapropismo To this day, few government reports on cuentapropismo have been made public and few, if any, of the above-mentioned problems are dealt within PCC discourse. The only interesting point of discussion presented by the government was the reduction in the number of participants in the self-employed sector. As mentioned above, the reduction in the number of officially registered cuentapropistas can be related to the overall national economic growth. But I would venture to say that there is more to it than that. Though the PCC does not make its attitude towards the self-employed obvious in public discourse, the restrictions under which cuentapropistas must operate indicate a number of considerations that should be analysed. Among them, strict control over this sector, steep taxation, the use of the police force to control it, and the link between self-employment and unemployment. Government policy towards self-employment has never been clear in discourse, but the attitude of the state leadership seems to be obvious in the laws applied to this case. State regulations concerning

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cuentapropistas are vested in a document called ‘Orientaciones a Trabajadores por Cuenta Propia’, published by the MTSS (MTSS, 1995b). This document makes clear who can and cannot participate in the new self-employment system. The rules concern the conduct of business, the procedure for the paying of taxes and monthly contributions, the number of partners a cuentapropista may have, etc. The rules are strict and sometimes complicated. For instance, a recent university graduate is barred from participating in cuentapropismo, whereas a retired or displaced worker with a university degree may set up his/her own business. At some points the rules can be fastidiously detailed. For example, elaborated or processed food (pizza, cakes, sandwiches, etc.) cannot be served on a plate or with utensils. The popular paladares, or family-run restaurants, can only have twelve seats to service their customers. These examples demonstrate what the state wants to allow in the space that it provides for private business. Since the state is proprietor of most of Cuba’s restaurants, it does not want to have a domestic competitor. Whether this control is effective or not is another question (especially when paladares are known to serve better quality food at a cheaper price), but the state’s intentions are here revealed (Pérez, 1999). Eventually, cuentapropismo proved to be a new state mechanism that recovered an excess of cash that was running through the hands of the population through black market activity. In other words, the party/state appropriated a portion of the black market. The new revenue (tax) system, run by the Office of Tributary Collections (ONAT), implemented in 1996, was the mechanism that assisted the state in reaping from this sector a considerable amount of money. In 2001, the Ministry of Finance and Prices (MPF) published the amount of state income generated by taxes on the self-employed. During the whole of 2000, the state recouped 1.05 billion pesos from taxes imposed upon this sector. That is, state income generated from the official self-employed system amounted to approximately US$50 million. The means of collecting taxes are quite rudimentary. Cuentapropistas have the option of paying their annual income tax on a yearly or a monthly basis. If the yearly basis is chosen, taxes must be paid in advance. The amount of money to be paid to the ONAT is set according to the profession and to the area in which the self-employed are conducting their business. For instance, someone operating a hostel out of his/her home in Varadero (a popular tourist area equipped with beaches and five-star hotels), will pay close to US$1,000 per

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month, as opposed to his/her counterpart in the centre of Santiago city, who would pay US$300–500 per month. On top of the monthly contribution, the cuentapropista will pay an additional tax on the ‘excess’ amount of profits made throughout the month. This profit tax is scheduled by the provincial committee of the ONAT, which obliges every private establishment to keep a book of records indicating sales or services provided on a daily basis. The register must be available to inspectors and police on demand (MTSS, 1996). Another form of control that is employed by the government is the use of the police force and the group of inspectors delegated to control cuentapropismo. The police are used in conjunction with provincial inspectors of the MTSS to implement state policy and execute controls like fines and taxes. This makes it more difficult for those who choose to participate in illegal or unregistered activity. As a tourist or dollar holder, it is not uncommon to be invited to illegal paladares, for instance, where a home-cooked meal might be served at a reasonable price. But if one goes to these illegal establishments, one will always sense the fear and secretiveness of those who are serving. At times, police raids upon houses of cuentapropistas are conducted. One of my principal problems when interviewing cuentapropistas was their fear that I might be a state inspector or undercover policeman. The fear of police repression as well as of being turned in by ‘neighbourhood spies’ is real. Another example is the control over self-employed taxi drivers who use their own cars for transportation services. Once in Cuba, tourists are welcome to travel freely throughout the island at their own expense and by using state-run transportation services, but Cuban self-employed taxi drivers are prohibited from serving tourists. As a result, police blockades and control points are seen everywhere on the roads of the island. If a foreigner is ‘caught’ in a cuentapropista taxi, the taxi driver (and not the tourist) is fined up to US$100. When it comes to prostitution, police control is not that much different from the control over taxis. Since the jineteras or jineteros (see Chapter 3) are usually at the service of foreign tourists, the police target Cuban nationals who are found in the company of European-looking individuals. At times, the police conduct round-ups of young Cubans in tourist areas on the beach, near hotels or at dollar bars. Those nationals who are suspected of sexual misconduct or prostitution are temporarily detained and may be fined hundreds of dollars (in pesos) rather than put in prison. Police control over illicit activity such as prostitution is understandable, but the penal system concerning it

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is not, especially as it resembles the kind of control put upon other forms of cuentapropismo. Cuentapropismo as a tool But there is more to placing strict controls on the cuentapropista than just bureaucracy for bureaucracy’s sake. Out of all the reforms that came out of the Special Period, this was the most backward and contradictory to the model of full employment by the state under a so-called socialist economy. It represents the most rudimentary form of dialectic digression, even if it was meant as a temporary backward measure in order to move forwards. The conditions upon which the participants work might be acceptable under emergency circumstances. However, the present self-employment regime cannot last much longer, as police oppression, theft and corruption collide with each other on a daily basis, in a growing economy where the demands for goods and services are high. One could not expect that an educated cuentapropista will tolerate the volatile conditions which cuentapropismo has to offer. No PCC programme concerning the self-employed has yet been adopted. From my inquiry into the experiences of the self-employed, one can conclude that the dip in the number of practising and registered cuentapropistas between 1993 and 2001 is not due to the betterment of the Cuban economy alone. Rather, the drop is also related to the realisation that many self-employed individuals cannot handle the pressures imposed upon them by the party/state apparatus. On the other hand, with the exception of recent university graduates, Cubans are free to choose their job occupation. Though some may have to enter the world of theft and prostitution in order to make ends meet in their household, no one is forced to apply for a licence of selfemployment. Or are they? As mentioned earlier in this chapter, the worker displacement policy dictates that a former employer (meaning the director and the Directorship Committee of the new state corporations in Cuba) has the obligation to provide the ex-employee with three options for employment alternatives. One of these three options is selfemployment. If the former employee is unhappy with the other two options, then s/he will be forced to take on cuentapropismo as his/her principal means of income. But the problems do not stop here. There is also the issue of unemployment According to figures provided by the Ministry of Labour and Social Security, 30.8 per cent of those officially registered as self-employed

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were previously considered to be unemployed or displaced workers. Another 24.9 per cent held regular state sector jobs, 23 per cent were retired state workers, and another 19.2 per cent were formerly housewives. The remaining 1.9 per cent of registered cuentapropistas were classified as having some ‘other’ economic history (source: MTSS, 1996). Whether or not Cuba’s housewives should be considered apart from the unemployed is a question to be dealt with by economic sociologists. But that over 30 per cent of Cuba’s self-employed were previously and formally considered to be unemployed or displaced workers says a great deal about the state’s purpose for maintaining the possibility of the small individual private market. Cuentapropismo is, evidently, a cure for unemployment that only recently has been recognised by the party/state apparatus. If cuentapropismo did not exist, then the unemployment rate would continue to be higher. The significance of cuentapropismo is that the state leadership underhandedly recognised that unemployment is a chronic problem in Cuba, meaning that it will never be solved under the restrictions it is facing; the restrictions have been caused by global and domestic factors which dictate or define Cuba’s new political economy. Even though the state in its discourse is bent on reducing the unemployment rate, there are no guarantees that unemployment will cease to exist (PCC, 1997). One of the measures that the government has taken in order to control unemployment has been the reduction of classroom sizes in order to open the job market for more elementary school teachers (Notimex, 1 June 2001). But this solves the problem of unemployment only among university and middle-level pedagogy-educated youth. It does not solve the problem for those workers with lower levels of education, who are subjected to the rigid framework of efficient state corporations that require fewer workers. Cuentapropismo can also be seen as a relief for retired citizens (many of whom are members of the PCC) by adding to their household income and offering an alternative activity to occupy their day (Núñez Moreno, 1997:3). But it is really the need to earn an extra dollar that turns retirees to self-employment. The same is true for housewives; why would a housewife opt to work under the strict conditions imposed upon cuentapropistas instead of working for a government business, agency or organisation? If the housewife is willing to use her home as a place of employment, or walk the streets to sell peanuts, this means that she is in search of an extra income. One may conclude that unemployment has come to Cuba to stay for a while and that

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cuentapropismo is a small remedy that the government offers to the most vulnerable sectors of society. However, if the party/state apparatus finds a remedy to unemployment in cuentapropismo, why all the control and harassment of self-employed individuals? The problem is that while self-employment is a controlled and suppressed alternative to state employment, it can offer a higher level of income than state salaries. Those who are earning hundreds and even thousands of dollars on a monthly basis can be expected to remain among those labelled cuentapropistas because they can afford it. This produces a contradiction, as it groups a number of self-employed individuals into a category which is anti-state, or in competition with the state. From the sample provided by my inquiry, I found that those who earn in dollars while receiving benefits from family abroad tended to rate the Cuban government less favourably than their peso-earning counterparts. The state is intentionally avoiding the building of a petit-bourgeois class. But while it does this, the ones that suffer the most are those poorer sectors of society that have no alternative than to turn to cuentapropismo. In short, cuentapropismo has a triple purpose that can be summed up by the following: 1. to control the level of unemployment; 2. to allow the most fortunate sectors of Cuba’s economy (i.e. those who have access to dollars from family remittances) to generate capital for the government; 3. to allow the state to appropriate or extract taxes from lucrative and morally sustainable business (i.e. not prostitution) that have traditionally been considered efficient black market activities. In the following sections of this chapter, I will demonstrate how these conclusions, together with those arrived at in the section dealing with the SPE, reveal social contradictions that might also be translated into future divergences of party/state interests. These contradictions are paramount in understanding the impact of Cuba’s insertion into the global political economy. NEW STRUCTURES While the Cuban government boasts about its social achievements and while certain personalities of the World Bank evidently open up the process of recognising alternative models for development, there exists another aspect to Cuba’s economic survival during this

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late stage of neo-liberal globalisation. It is an aspect that concerns the repositioning or rearrangement of social forces in Cuba’s political economy. This section will be dedicated to conceptualising visible emerging social structures that have emanated from the Special Period and the need to integrate Cuba’s economy further into the global context. From a critical viewpoint, it will accentuate the similarities between the Cuban model and those trends found in the global political economy. The purpose is not to discredit the socialist project of building a classless society, because the research material does not indicate the formation of new classes – though some cubanologos do share the view that there are new classes forming (Dilla, 1999). Rather, the purpose of this part is to demonstrate that certain social bloc formations can be identified and that these indicate the extent to which global trends influence or shape Cuba’s transformation. In Chapter 3, concerning the causes and consequences of Cuba’s crisis during the 1990s, I demonstrated that the revolutionary leadership expressed a genuine interest in maintaining the pillars upon which the Cuban Revolution had been built. In discourse and in action, the reforms reflected a continuous concern for the foundations that characterise the Cuban party/state apparatus: antiimperialism and social justice. This was manifested in the increased amount of expenditure that the state invested in its national healthcare system, social security, education and the political propaganda that centred on the US economic embargo. On the political scale, the party/state apparatus’ insistence on maintaining a one-party political system with autochthonous democratic reforms, in combination with the refusal to privatise major industries or sell them to foreign entities, testifies to the resistance against the foreign models that have been imposed upon most of Cuba’s neighbouring countries (Castro, 1997:4). At the same time, the crisis of the 1990s required that the party/state apparatus adjust to the new global context defined by the fall of the Soviet bloc and its parallel market system (the COMECON), and the rise in the globalisation of market trends. In order for the Cuban economy to remain competitive and survive within the new global context, it was necessary for the revolutionary leadership to adopt measures that imitate some current global tendencies and at the same time reject others. The revolutionary leadership, nevertheless, continues to claim that the changes that have taken place in Cuba do not in any way reflect or imitate the

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process of transition that was experienced in other ‘post-Socialist’ states (Castro, 1997; Monreal and Carranza Valdés, 1997). The PCC also insists that the neo-liberal formulas that were popularly taken on by neighbouring countries such as Argentina and Brazil, which promoted the reduction of state spending on social projects and human development, were not replicated in Cuba’s experience during and after the Special Period. The first task of this section is, thus, to delineate the differences between the global trends in political economy, much of which was outlined in Chapter 1, and the way that the Cuban economy is presently inverted. In order to understand PCC discourse and propaganda concerning revolutionary Cuba’s insertion into the global political economy, one can look to the collection of Fidel Castro’s speeches that condemn what he precisely refers to as neo-liberal globalisation. In his work, at conferences and in publications, Fidel recognises that some forms of globalisation are inevitable and even desirable (see Castro, 1999b). The changes in information and communication technology that have been experienced during the last two decades have made the world smaller and have also allowed for the sharing of techniques in efficient production and services. Additionally, the striving for new means of cultural expression has brought people from the far reaches of the Earth to enjoy the same music, food, clothing and material needs. What Castro opposes, as does the PCC in its discourse, is the monopolisation and privatisation of industries and markets to the point where developing countries cannot compete. He also recognises the opening of national borders for multinational corporations to penetrate the domestic markets of underdeveloped countries and the closing of doors in the technologically and industrially advanced countries of the North to products from the Southern countries (Bustamante Molina, 23 May 2001). In discourse, the essence of the PCC critique against neo-liberal globalisation stems from the resistance to the growing gaps between the rich and the poor in the international context. This gap, which is accompanied by environmental degradation, the spread of preventable diseases and organised crime, is seen as the irresponsible but logical consequence of global capitalism. In its place, the revolutionary leadership on an international level has dedicated most of its work to advocating new means of sustainable development. In Havana, Fidel Castro has opened up various forums and conferences dedicated to criticising the condition of neo-liberal capitalism. These gatherings have specialised on topics from education

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and health to the prospects for the usage of renewable energy sources (Castro, 1999b:21). There was even an International Hearings Court on Neo-liberalism in 2000, where professionals and activists, mostly from countries in the South, congregated to denounce the injustices that have been committed to the most economically vulnerable sections of the world’s population (Granma Internacional, 21 January 2000). Another example of Castro’s work can be found in his extraordinary invitation to Pope John Paul II to visit Cuba, as a result of which the pope joined the PCC in denouncing the injustices against humanity for which neo-liberal capitalism can be blamed (Granma, December 1997; December 1998; Alarcón de Quesada, 1999). Nevertheless, by taking into consideration the pillars upon which the Cuban Revolution was built, it suffices to say that the leadership’s real and central concern is the withering away of the state, or at least the reduction of state intervention in society and the national economy. This state-reductionism is what Susan George, Susan Strange and William Graf have in numerous works described as the essential and global character of neo-liberalism (Strange, 1996:3–66). William Graf calls it re-commodification, under which the state in the Third World has been forced to employ policies of non-intervention in the economy in order to receive loans and grants from the international financial institutions; namely the World Bank and the International Monetary Fund (Graf, 1995). In the works of these critics, the growth in poverty, the lack of programmes dedicated to disease prevention and the drop in investment dedicated to the infrastructure for education, transportation and other social institutions are all to be blamed on the rolling back of state activities in Third World society. In contrast, the revolutionary leadership in Cuba has resisted any measure to make the state’s role in society smaller. As was mentioned earlier in this chapter, in the section entitled ‘Social Growth’, the Cuban party/state apparatus has demonstrated a strong commitment to continuing growth and investment into the vital sectors of society, such as education, medicine and housing. For this reason and by the same logic, Cubans can boast that on their island, homelessness, illiteracy and starvation do not exist, because the state has not been reduced. The party/state apparatus in Cuba remains supreme. The PCC’s arguments against the concept of transition are similar to those against neo-liberalism. They are also based on the idea that ‘post-socialist’ states must go from one sort of political economy to another in which the state loses much of its power. In critiquing the

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so-called transition states, Fidel Castro and the PCC highlight the tragedies that have occurred in the former Soviet bloc, especially in Russia. The fall in value of the Russian rouble in 1997 and 1998, and the reports of Mafia control, organised crime and the lack of funds to pay state workers their salaries were all features that were not replicated in Cuba (Castro, 1999b:40). As mentioned in Chapter 1, the term transition has been used with reference to ongoing sociopolitical and economic shifts in various regions of the world. During the 1980s and the first part of the 1990s, transition tactics with neo-liberal prescriptions have been applied to the process of sociopolitical change not only in the former socialist bloc but in neighbouring Latin American countries as well. Moving from state-led to market-led economies that allow an optimal amount of foreign direct investment to buy up national industries and services is what has identified the concept of transition in Latin America (Jeffries, 1993). These economic structural changes went hand-inhand with the opening up to democratic rights and practices that allowed for new political parties to dominate the state. This phenomenon is what Graf called democratisation or re-commodification (Graf, 1995). From documented cases, we know that transition has had varying effects on developing countries. In Africa, transition has even resulted in state collapse (Hughes, 1992). Many of the negative effects are blatant, and in Eastern Europe transition has caused perpetual instability and social unrest. Case studies of economic transition on a national scale often conclude that economic reforms are the outcome of sociopolitical and ideological change, when, in fact, economic development historically often preceded political transformation (Carranza Valdés, 1994:7). Examples of these were mentioned in Chapter 1. Though there is a lot written on transition, its theoretical implications and processes are still not well understood. But what has occurred in countries that were supposedly in transition has been the application of a package of economic reforms. All economic reforms, in practice, end up in consolidations or replacements of political power. This notion is supported by the fact that, on occasion, economic reforms in transition economies end up diminishing the base of political power of the social forces that promote the very reforms (as was the case with Gorbachev’s Russia). The case of Eastern Europe after 1989 is the clearest example of politically inspired economic reforms leading into transition. In this instance, the demise of the socialist bloc ended up in a radical sociopolitical breakdown. On the other hand, the

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speed at which the economic reforms take place can be considered to be a political action by the economic groups that might benefit from transition. The usage of shock therapy as instituted in Russia was a prescription from the neo-liberal doctors and international financial institutions to Eastern Europe (Carranza Valdés, 1994). Such prescriptions were sponsored by specific interests groups and were therefore political tactics to implement radical and rapid change before the various antagonistic sectors of society had any time to organise a counter-position to the new structures. Nevertheless, it remains clear that political transition in the former socialist economies was based upon the development of economic interests and the application of neo-liberal ideas. In this sense, according to Cuba’s revolutionary leadership, the purpose of transition and implementing neo-liberal reforms is deliberately to reduce state supremacy and dismiss those in power in order to promote the goals of foreign entities and their political and economic interests. The problem with this view is that Cuba’s party/state apparatus has experienced some of its own economic reforms, most of which have already been discussed. Would this indicate that Cuba is no different from those transition societies? The answer is yes and no. Yes, Cuba’s experience of economic restructuring is different from the transition economies in Eastern Europe and Latin America, in that political power has not been replaced and the state has not rendered up its supremacy, neither to foreign countries nor to the market. No, Cuba is not so different from transition economies, in that there has been not a replacement, but a shift of political power within the party/state apparatus. This is evident in the military’s role in the SPE. Both instances must be given theoretical consideration. Among Cuban cubanologos, the concept of economic restructuring and reforms is viewed as different from what is going on in the rest of the world. Political economist Pedro Monreal distinguishes between the two independent, indeed different, phenomena of economic transition and institutional transformation (Monreal and Rúa, 1994:30). Each concept can be perceived as a means to economic reforms and the restructuring of state functions and institutions. Transition economies have moved almost instantaneously from a supposed socialist project to free-market capitalism. But according to Monreal, in Cuba there exists a distinct perception of change that recognises both the need for reforms and the need to maintain state power. This format negates the idea of replacing immediately the old structure with a ‘final one’. What is popularly used in describing this

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perspective is an old Sino-Cuban phrase – ‘Crossing the river by feeling the rocks under your feet’. This management of crisis is consistent with the history of the Cuban Revolution since 1959 and was manifested in the various phases of Cuba’s party/state development. For instance, when radical reforms proved to be exhausted during Cuba’s jump into ideological ‘communism’ (led by Che Guevara), the PCC instituted a system of adjustment and reforms labelled by Eckstein the ‘return to Socialism’ (Eckstein, 1994:41–59). This is also an affirmation of one of the pillars of the Revolution that I identified as continuity. Under institutional transformation, cubanologos like Monreal and Carranza understand that economic reforms do not necessarily represent transitions from one mode of production to the other, i.e., state-run to private enterprise (Carranza Valdés et al., 1997). Instead, economic reforms are essentially processes of institutional construction and reconstruction that embark upon two big spheres of action: organisational and normative. Whereas the organisational transformation refers to the restructuring of financial institutions and modes of production, normative transformation refers to legitimising the changes through reforms in the law that accommodate the country to global norms. The two aspects of state institutional transformation were implemented simultaneously and with order. Hence, it was not overnight that foreign enterprises were welcomed to invest directly and up to 100 per cent. First, there had to be a consensus that foreign direct investment was a viable means of maintaining the Cuban economy during tough times, and from that point on legal measures that would permit it were taken into consideration and implemented. However, institutional transformation in Cuba has never meant that socialism was to be given up, that the PCC would lose its influence over civil society or that the leadership’s political power would be compromised. All reforms were done in the name of salvaging Cuba’s socialist project. From this discourse, state supremacy and state-led economy are understood as being at the heart of the revolutionary leadership’s argument against neo-liberal transition. According to PCC discourse, during the past four decades Cuba’s socialist project has required that the party/state be elastic and adjustable to changes in the global political economy. The economic crisis that plagued Cuba during the 1990s was so deep that it required and pushed forward great transformations in the national economy and its organisational and legal structures. However, the revolution-

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ary leadership says that the reforms were not enforced, nor inspired, by global trends following the neo-liberal path chosen by other countries. Power, productivity and economic growth remain in the hands of the state, which receives legitimacy by maintaining the foundations and the pillars of the Revolution. Even today, the main objectives in PCC discourse continue to be self-determination for the country and socio-economic progress (PCC, 1997). When in 1993 the object of self-determination remained constant, progress did not. And so during this crisis, the participants in the fourth and fifth PCC Congresses had to find solutions that would not rock social stability. Evidently, the main solution was freeing up the market. The issue became how much of the market. In Cuba, the forces of the world market were seen as not irresponsibly unleashed, rather, they were applied to sectors of society which were prepared for a managerial revolution, decentralisation and opening up to foreign capital. Behind the banner of perfecting socialism, and the need for high productivity in order to reach the goals of socio-economic progress, Cuba’s party/state apparatus underwent institutional transformation. This was the experience that came out of the Special Period and that which was institutionalised with the SPE. The Cuban argument, so to speak, against neo-liberalism and transition from a state-led economy to free-market capitalism has been well defended. No other contemporary statesman has been able to dedicate most of his/her discourse and political thought to criticising the global political economy in the way that Fidel Castro has. Nevertheless there remain some similarities between Cuba’s state institutional transformation and current trends in the global political economy. In other words, rarely does the leadership point to the qualities of neo-liberalism that are replicated on the local terrain and implicated through institutional transformation. The similarities will eventually undermine the notion that reforms in Cuba were not inspired or moulded by global trends. Furthermore, I take issue with the idea that modes of production are defined according to who or what controls the production processes. As mentioned in the theoretical framework, whether an economic model is run by the state or private entities has little bearing on how labour and production are actually organised. In order for the Cuban state apparatus to compete on the global level and increase productivity, it has had to employ hierarchical structures that resemble those found in capitalist economies. Cuba, hence, followed the global trends. And though the revolutionary leadership continues to claim

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that production in Cuba is based on democratic socialist organisation, because it is run by the state, what really existed and continues to exist is a bureaucratic layer that controls and plans production. But the mode of production is in fact the same; more so now under the SPE than ever before. As was mentioned in Chapter 1, neo-liberalism has been studied by various social scientists, each giving it a different definition or conceptual framework. What have been pertinent to this study are the five general prescriptions that have given neo-liberalism its peculiar identity. These prescriptions are what I identified in the theoretical framework as trends in the global political economy; they are: privatisation of state corporations; fiscal reform for reducing budget deficits; flexibility of the labour market; opening to free trade; and in the case of developing countries, the opening up to foreign financial markets. The first and foremost global trend is the privatisation of state firms. The goal of this action is supposedly to eliminate inefficiency and government expenditure. But privatisation is also known as a fundraiser for the state during the process of restructuring and repayment of foreign debts. Of course this sort of income could only last as long as there are public or state firms left to privatise; it is a short-term fundraising plan, very near-sighted. The government that employs regulatory agencies to monitor the transition to privatisations needs funding. This is especially true in the case of monopolies (such as transportation and energy), to ensure and monitor quality issues and the efficiency of public service. Often, and this is true of highly developed countries as well as of the Third World, privatisation is met with popular resistance, as it tends to result in the freezing or lowering of workers’ salaries and even in downsizing. These disadvantages, among others, are what deter the Cuban leadership from privatisation. Fiscal reform has the purpose of reducing budget deficits by decreasing subsidies to local industries and social programmes in addition to creating independent national (central) banks. The only fiscal reforms that have affected social spending in Cuba are those that have resulted in greater spending in the areas of education, health care and social security. The same is true of state workers’ salaries, which have experienced a small increase. Fiscal reform in Cuba can be found in the SPE, as the practice of accountability ensures that the state will continually reduce the amount of subsidies for each state corporation. As mentioned in the section concerning the SPE, state corporations under the new system will no longer depend

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on the state to supply emergency funds or salary increases. All the fiscal management has undergone decentralisation. Those companies that cannot adhere to the new structures are condemned to dissolution. The exception has been the sugar industry, which has been taken over by direct military management. Also mentioned in the last chapter, was the party/state apparatus’ intention of creating a Central Bank. This bank, though not independent from party/state control, has made room for other private banks to be present on the island. Additionally, there are new state banks that specialise in services other than the state budget and accounts. The new banks are geared towards private investment, personal savings and credit for new entrepreneurs, including the self-employed and agricultural co-operatives. Legislation concerning new labour policies that has been introduced during transitions to neo-liberal regimes has had the purpose of providing more autonomy for employers in deciding wages and benefits. Trade unions are often stripped of their powers to negotiate with private firms. The results have additionally been a significant downsizing in the number of employees of a given enterprise and an increase in unemployment or under-employment, with workers being offered part-time or temporary jobs rather than secure and full-time positions. This flexibility has the purpose of reducing the social security contributions that employers have to make. In the name of increasing profitability and therefore attracting investment, the lower-wage workers are subjected to more elusive hiring and firing policies. The experience of the SPE and cuentapropismo has demonstrated that labour in Cuba has become more flexible. Decentralised state firms now have the authority to employ and dismiss workers at their own discretion, without intervention from the CTC or the Ministry of Labour. As mentioned earlier, the director of any given company operating within the framework of the SPE, together with the Directorship Committee (which includes a limited number of CTC and PCC representatives), are the actors in defining how workers are treated. However, Cuba’s experience does differ from transitional and neo-liberal regimes in that each state company or corporation is obligated to assist in finding employment for the dismissed worker. Nevertheless, the opening up of temporary employment agencies, as has been documented, and the conditions of labour contracted by the year indicates the level of flexible labour that is present in socialist Cuba. This trend is the most obvious of

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the similarities between Cuba’s economic restructuring and neoliberal globalisation. Trade reforms are concerned with making the private sector of the national economies more competitive internationally and more export-oriented, with updated technologies in production. Developing countries have reduced tariffs on imports, thinking that this will increase the exposure of their national production to foreign markets. But instead, the highly industrialised countries have not lowered their tariffs to a level that would allow much greater imports. Besides production for social consumption, Cuba’s national economy had always been oriented towards export. Even when the Soviet Union delivered oil to the island, the party/state apparatus re-exported some of the petroleum to other countries. During the existence of the Soviet bloc, Cuba exported its sugar for materials and industrial goods from socialist economies. But Cuba was never totally dependent on Soviet aid. As mentioned in Chapter 3, at some points during the Cold War, 40 per cent of Cuba’s trade was dependent on the West (Eckstein, 1994: 68). Since the crisis of the 1990s, Cuba’s only trade treaties have been bilateral in character. Some trade reforms allowed foreign entities to enter the Cuban market, but never without having the party/state apparatus enjoy the right to export Cuban national products (Alarcón de Quesada, 1999). However, there has been some room for free trade in Cuba’s national economy; that is, in the Free Economic Zones (FEZs) that are located near major ports. In terms of acquiring new technologies that make the Cuban market competitive, Cuba’s legislation on joint ventures and foreign direct investment in limited economic sectors has allowed the party/state apparatus to enjoy access to the most up-to-date means of communication and sharing of information. In any case, Cuba’s trade reforms are all based on fair and basically equal trade; this is what the revolutionary leadership promotes in discourse and in action. The opening up to foreign financial markets has had the objective of reducing government intervention and has aimed at the operation of free markets, in which national enterprises and the economies as a whole become heavily influenced by international or foreign financial institutions, such as the IMF and the World Bank. The advantage of this is an increase in capital inflow and the modernisation of industries. The disadvantages arise when global institutions determine the allocations of revenues, as in the Mexican crisis of 1994, when the impact of the high volatility of capital outflow affected the monetary unit and thus the purchasing power of

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nationals. Additionally, the capital outflow from host states to multinational corporate home states is far greater than the inflow. In Cuba, the party/state apparatus still controls the value of the national monetary unit, as it controls the rules of play in financing. It does so with the help of companies that wish to invest in Cuba and without the World Bank or the IMF, which propose radical changes in order to access foreign credit. The Cuban market is an attractive market for foreign investors for reasons mentioned in Chapter 3, in that Cuba is politically stable and the population is healthy and well educated (Lage Dávila, 1996). Ironically though, PCC propaganda depends on blaming the US economic embargo for the lack of access to foreign financial markets and credit. This implies, therefore, that once the US embargo has been lifted, the leadership will search for more foreign financial markets and access provided by international financial institutions. At this point, it is evident that the economic restructuring that Cuba has endured throughout the 1990s and the post-Cold War era, what Monreal and others called state institutional transformation, has replicated some global trends on domestic terrain. The reforms cannot be considered neo-liberal, primarily because the party/state apparatus did not follow through with privatisation. Nevertheless, the future prospects for employing the other global trends in Cuba seem quite bright. This is especially evident when it comes to labour flexibility and the opening to foreign financial institutions in a postembargo era. But even now, certain trends have already shaped Cuba’s political economy. In turn these global trends, which already appear to exist in Cuban society, have created structures that help define the domestic political economy and the country’s insertion in or adjustment to the global political economy. NEW STRUCTURES AND SOCIAL BLOC FORMATIONS In the study of both economics and politics, structures cannot by any means be considered permanent, as both global and local trends often change with time and are met with resistance. But I have come to identify real global trends and hard domestic structures that seem to characterise the new Cuban model. The new structures that have been imposed upon Cuban society will be defined in this section. Again, it was during the fourth and fifth PCC Congresses that Cuba’s leadership publicly recognised the need for decentralising the entrepreneurial sectors of the planned economy, improving economic

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efficiency, reducing waste and increasing profit, introducing foreign direct investment and making the labour market more flexible. However, it was the demise of the socialist bloc and insertion into the global political economy that forced the party/state apparatus to restructure or transform some of its institutions. The profound changes that the Cuban political economy experienced during and after the economic crisis of the 1990s can be summarised as: • dollarisation of the economy; • foreign direct investment and the acquisition through this of new technology; • a restructuring of production and labour relations in the new Cuban state enterprise in order to meet the demands of the global competitive market; • the provision of limited opportunities for the self-employed in order to generate new funds for the state and to reduce the level of unemployment; • increased flexibility of the labour market. The results of the policies mentioned above have been measured by the economic success and continual social growth in certain sectors that have been highlighted in the present chapter. At the same time, economic growth has resulted in some unfavourable conditions for the Cuban worker; namely, in reduced job security and purchasing power. Overall, the policies that were instituted during the Special Period, which extended into the latter half of the 1990s and the first years of the new century, can be summarised as: • making state production more efficient; • a maximisation of the country’s natural and labour resources; • income disparity and its social consequences (rise in prostitution, vestiges of racial discrimination); • the expansion of state supremacy over the market (including taking over some black market activity); • the military’s ascension into controlling the new economic sphere; • workers’ wages above the minimum salary dependent on global market structures and a reduction in job security. Out of these developed policies, which have their advantages and disadvantages, certain social forces have apparently been rearranged

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or highlighted, with the resulting creation of new structures. I call this process social bloc formation, as the above-mentioned nuances indicate that certain sectors of society attain high priority on the party/state’s agenda, and other internal structures are displaced or adjusted to new (global) circumstances. Social bloc formation is a direct result of the institutional/structural reforms that the country has undergone. It is also the clearest manifestation of the impact, or influence, that global trends have had upon Cuban society. This has been a difficult task because social bloc formation is currently taking place and has not fully solidified, but I have provided evidence enough to show that certain social structures do exist and that certain social forces have been rearranged. Haraldo Dilla, former head of the Department of Social Philosophy at the University of Havana, argues that a new layer of technocrats and business leaders has already formed in Cuba (Dilla, 1999). He calls this the ‘technocratic–entrepreneurial’ social bloc. It is a social bloc that was born out of the policies put forth by the PCC during the Special Period. This supposed new social bloc, which, as he indicates, eventually resembles a class, has three basic components. The first can be found within the circles of foreign investment and joint ventures. Today there are over 800 foreign and private firms operating in the country. As the corporations are joint enterprises with the state, the foreign owners are tied to a layer of domestic entrepreneurs and local businessmen who share their experiences, lifestyles and aspirations. The second component is comprised of the directors of state enterprises, who have achieved a level of autonomy from the government. Their functions differ greatly from those of the traditional white-collar manager of centralised state corporations prior to the Special Period. This layer is concerned with maximising profits, more so than with any other political consideration. The third component of this bloc is classified as those who have accumulated large sums of money and property, usually at the expense of state resources. Dilla argues that it is impossible to quantify the amount of capital that lies in the hands of this layer, since their possessions are not documented and have often been obtained illegally (Dilla, 1999). In the research material that was mentioned in the previous chapter as demonstrating a high and rising concentration of capital in fewer hands, Dilla estimates that 60 per cent of their cash is deposited in banks (see Chapter 3). These actors of the technocratic–entrepreneurial bloc are mostly wealthy

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peasants, commercial intermediaries or self-employed service providers (cuentapropistas). Finally, Dilla argues that there is a close connection between those from military and civilian bureaucratic circles (and family members) and this new social bloc. However, Dilla gives no evidence to defend this argument. Due to the secretive nature of information in Cuba, it is very difficult to make a connection between this emerging technocratic–entrepreneurial social bloc and their relatives in the ministries and military. But because so many members of the PCC are involved in this process, it is quite evident that there is some kind of link between the two. I would agree with Dilla’s classification of the first two components of his social bloc. State business leaders, directors of joint enterprises and those who work directly under foreign investors do share a reality that is different from that of most other Cubans. Their interests are geared towards strengthening the ties between state firms and expatriate entrepreneurs. Their primary interest is nothing other than the increase in profits and the expansion of their particular market. The case of Brascuba and co-president Adolfo Díaz, mentioned earlier in this chapter, concerning joint ventures, makes clear their intentions and their preoccupation with expanding profit margins (Granma Internacional, 21 June 2001). Most other Cubans work for subsistence. Additionally, there are those Cuban accountants and engineers who work indirectly for foreign entities via the temporary employment agencies set up by state corporations like Cubalse. Their contracts and basic salary do not differ much from those of most Cubans. However, the fringe benefits in housing, access to automobiles and tips for incentives do distinguish them from other nationals. Their right to travel with foreign business partners also affords them a freedom that other Cubans do not enjoy. The second component of the technocratic–entrepreneurial social bloc is not so different from the first. Under the now functioning SPE, directors of state enterprises have a freedom to organise and plan production that they never had before. At their command, workers may be fired or relocated to other state enterprises. They have power. Additionally, the company accountants are accountable to the new directors only. This leaves room for corruption and playing favourites within the Directorship Committee. As mentioned before, the director, together with the Directorship Committee, decides how salaries are dispersed, how much of the remaining profits will be added to whose take-home pay or reinvested into expansion projects.

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The SPE constitutes a new form of business planning in which the director behaves like a private entrepreneur. This is even more clearly the case when a company is enabled to export and conduct business in hard currency. Dilla’s third component is less credible, though I have demonstrated that there are a number of Cuban nationals who are enjoying a high standard of living due to the amount of money they have accumulated since the legalisation of the possession of hard currency. This is especially evident among the self-employed (cuentapropistas). However, since this group is not homogeneous, it is difficult to group them into a component of Dilla’s social bloc. I estimate that most dollar-earners have family abroad or access to an inflow from remittances, or are favourites of wealthy foreign investors and expatriate residents. Dollar remittances from the United States have reached US$800 million per year (Alarcón de Quesada, 1999). Obviously, this amount of money is concentrated in a smaller number of hands, otherwise Cuba would be a country of millionaires. But as far as the cuentapropistas are concerned, there is no evidence so far that this group constitutes a social class or even a component of the emerging social bloc as a whole. As was mentioned earlier in the discussion of the self-employed, most of the surviving cuentapropistas are those who have access to money coming from abroad. Others are involved in black market activity because they cannot deal with the pressures that are imposed upon them by the strict framework under which they are to operate. Yet another section of the selfemployed (albeit small) is composed of those who are trying to escape unemployment. The government’s big stick of discipline lies within the hands of inspectors, tax collectors and police actions. As mentioned earlier, this form of market opening is extremely primitive, resembling that of feudalistic societies, when the wealth of peasants and serfs was confiscated by the noble lords. Police repression and sometimes corruption is so extreme that some individuals prefer to be considered unemployed and to participate in black market activity rather than to subject themselves to the harshness of the police and inspectors. Of those with access to dollars, there are some who also turn down the opportunity for self-employment. The diversity among cuentapropistas can also be found in their attitudes towards the Cuban government, discussed in Chapter 3. This diversity is reflected among other groups within the general population as well, including members of the PCC. For these reasons

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I would not agree with Dilla that the cuentapropistas constitute a group or component within this technocratic–entrepreneurial social bloc, particularly since this social bloc is supposed to represent a bureaucratic layer that rises above the masses and organises production. I have concluded that the cuentapropistas, just like any other social group, can be divided into those that have money and those that do not. Those who lack funds or cannot handle the pressure imposed upon them by the state framework of conduct tend to leave the world of self-employment and end up in state-sponsored economic activity or illegal practices. Additionally, I have identified that those who remain successful in their self-employment are used as a tool by the government to obtain extra funds through the tax regime. One last detail that would distinguish all self-employed individuals from the other two components of the technocratic–entrepreneurial social bloc would be their lack of participation in civil politics. Although some cuentapropistas were found to be retired workers who are at the same time members of the PCC, the self-employed worker remains an individual and cannot organise his or her work with other comrades. Cuentapropistas are different from state-workers in that they do not have stable salaries and their existence is not protected by detailed law or representation within the CTC. Their peculiar position in society indicates that they do not form part of a rising class. Nevertheless, cuentapropistas are subordinate to other social structures, namely the police and the ONAT, which in turn are controlled by central authority. Cuentapropistas are a small social force of their own and are subordinated to the structures that were created to exploit their labour. Another characteristic of this supposed technocratic–entrepreneurial social bloc is their link to elites within the civil and military bureaucratic circles. Perhaps Dilla searched for evidence to sustain this argument. For one reason or another, he did not mention this in his work and hence his assumption remains questionable. In any case, the search for new structures or the arrangement of social forces should not end up in mysterious family links and ‘buddy’ socialism (sociolismo) (Eckstein, 1994:21). Rather, I would emphasise the relationship between top military officers and the directors of state corporations under the SPE. It is a relationship that includes superior and subordinate positions. As mentioned earlier, the Executive Commission appoints directors to state enterprises and monitors their work in making production more efficient. Whether or not the

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directors are the sons and daughters of the members of the Executive Commission is irrelevant. The point is that the Executive Commission exists as an entity that represents a real power over the national economy and intends on trying to bring all forces of production under its direction. The most influential group in the Executive Commission is in fact the top echelon of Cuba’s armed forces (FAR); i.e. General Raul Castro and Colonel Armando Betancourt Pérez. Ultimately, the FAR controls production and has been made responsible for reinserting Cuba into the global political economy of the twenty-first century. Hence, in addition to my modification of Dilla’s technocratic– entrepreneurial social bloc, I have revealed another social bloc that supersedes the layer of directors, local businessmen and dollar-earners. It is an overriding social force that Dilla failed to identify. The social force is composed of the top leaders of the party/state apparatus, who include old-time revolutionaries like Fidel Castro, his brother Raul and Armando Betancourt Pérez, those who are loyal to them (the Political Bureau and Central Committee) and other members of society, mostly those who fought against Batista (and over 70 years of age). I call this the old guard of the Revolution or the established military–civil bureaucracy, those who are responsible for having unified the party/state apparatus, as mentioned in Chapter 2. As long as this top layer continues to exist, the members of the Executive Commission, and thus the directors of Cuba’s new state corporations, will remain loyal to this entity. It was no coincidence that in June 2001, Fidel Castro proclaimed his brother General Raul Castro as his successor to the title Defender of the Revolution (Granma Internacional, 21 June 2001). In this sense, the constitution of the SPE and the recognition of the Executive Commission implied a re-organising of Cuban social forces, here placing the armed forces at the top of power and production. This is in contrast to previous experiences of keeping local management in the hands of party cadre who in turn were accountable to central planning only – a system that proved to be inefficient and became defunct in the post-Cold War context. It is noteworthy to mention here Raul Castro’s power over the PCC. He is second-in-command of the PCC and chair of the Party’s Camaguey provincial committee. The ascension of the FAR to power and control over production has become the most essential characteristic of Cuba’s state institutional transformation. Accordingly, it has become the party/state apparatus’ response to global pressures. The revolutionary leadership,

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which continued to maintain the policy of state supremacy over the market, ensured that the new technocratic–entrepreneurial bloc was able to employ trends in production that would allow Cuba to participate in the global market. In other words, Dilla’s technocratic–entrepreneurial bloc minus the third element (i.e. the cuentapropistas) became a tool for the party/state apparatus to update its economic practices. But only by subordinating the key players of the Cuban economy to the FAR (and thus to the central figures of the party/state apparatus) can the Revolution continue to exist. The relevance of this subordination of the emerging social bloc structure is to deter the technocratic–entrepreneurial bloc from forming an independent class of its own; a class that, in the future, might destabilise the party/state apparatus and bring an end to revolutionary Cuba as it seeks alliances outside the domestic sphere. Only in this way could the Revolution continue to exist upon the pillars of its existence. This idea will be explored further in the concluding chapter. State service workers and their position Up to this point I have concentrated on those forces of society that control production and the emergence of new structures resulting from state institutional transformations that were a response to global pressures. Additionally, I have analysed the peculiar position of cuentapropistas in Cuban society and recognised their subordination to the ONAT and the police force. Following my hypothetical assumption that these emerging social blocs were created by the party/state, there is one other sector of Cuban society that has received scant attention and deserves brief attention. Without its inclusion in my scheme of social bloc formation, the picture would not be complete. This group of people constitutes the organisers of state service workers; they are the labour leaders (CTC) and representatives of the mass organisations (i.e., FMC, UJC, FEU, CDR) that monitor the work of service professionals (i.e., teachers, physicians, university staff, sanitation workers, municipal and provincial functionaries). The relationship between service professionals and the old guard has kept constant and has not experienced much change. From time to time, state service workers’ salaries do increase, but their positions in society remain the same. State service professionals have only the mass organisations above their head, which in turn are subordinate to the party/state apparatus. No new hierarchical structure has emanated and thus they are protected. Additionally, they are protected by the

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revolutionary leadership’s propaganda machine that makes them feel that they are the most essential leaders in Cuban society. For this reason, Teacher Days and Health Worker Days are organised in every municipality. Once a year, top leaders of the local PCC cadre organise party functions in celebration of these workers’ service, and all members of the community are invited to pay respect to those who choose to continue in their work. It is extraordinary that these workers have not suffered any changes as a result of the global trends that have been adopted in Cuba. This fact goes hand in hand with the government’s discourse on not committing to a transition to neo-liberalism. Nevertheless, they retain a standard of living that has been left behind by those in the new technocratic–entrepreneurial social bloc and they remain subordinate (willingly or not) to the collective of mass organisations. It is often the case that these workers and their representatives have no access to dollar remittances and depend on solidarity action from abroad or state programmes that maintain their welfare. But because the SPE was not applied to state service workers, these workers enjoy more security than their industrial counterparts; their salaries are not influenced by the oscillating tendencies of the world market. Finally, state service workers are free to express their concerns, discontentment and support for government policies through the mass organisations. They are protected by the state and hence they are free or feel free. The collective of state service workers can be considered the party/state apparatus’ best friend. All in all I have identified three major social blocs in Cuban society. Their existence and positioning depends heavily on the new structures that were created by the party/state apparatus in order to adapt to global market trends and the new international context. The bottom layer of this model is represented by what is commonly called the working class. The 1991 Constitutional Reform slighted their standing, when the state was defined as belonging to ‘the people’ (el pueblo), as opposed to ‘the proletariat’. This layer represents a fragmented social force that is actually that which creates the wealth of society: industrial and high service workers in the SPE, state service workers and cuentapropistas. The first and last of this group are new to Cuba’s domestic economy. They are fragmented because the industrial workers and service workers under the SPE share a different reality from that of their counterparts in state service workers’ and cuentapropistas’ blocs; their real salaries are dependent on productivity, whereas the state service workers receive stable salaries regardless of

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the economic condition of the country. Additionally, state service workers cannot be displaced or dismissed from their employment as easily as the workers under the SPE. The advantage that the industrial and service workers have over state service workers is that their salaries can increase to levels way beyond the teacher’s or physician’s imagination. Cuentapropistas make up another social bloc that has the peculiar characteristic of diversity among its constituencies; their standard of living is dependent on whether or not they receive money from abroad and whether they conduct business in US dollars or pesos. Nevertheless, these three groups are subordinate to a layer above them or between them and the top leadership of the entire party/state apparatus. In the same way that the bottom layer of social blocs is fragmented, the second or intermediary group of social blocs are not necessarily linked. But what they all have in common is their position in managing the social bloc assigned to and below them and the fact that they are answerable to the revolutionary leadership. Within this group is included my modified version of Dilla’s technocratic–entrepreneurial bloc, the leadership of mass organisations, and, finally, the Police–Revenue authority. Whereas the technocratic–entrepreneurial social bloc consists of those who work closely with foreign enterprises and the directors and managers of SPE industries and services, the mass organisations continue to represent the interests of the state service workers; and the Police–Revenue authority, which consists of the police, inspectors and the tax service employees (ONAT), is the power or tool that the party/state apparatus uses to exploit the small group of legally selfemployed individuals. The top layer or social bloc is the social bloc that represents the party/state apparatus. This is a group consisting of the old guard of revolutionaries that have consolidated the power of the PCC, the military (FAR) and now the Executive Commission whose current purpose is to control, organise and make efficient Cuba’s productive forces. This group is labelled the Military–Civil Bureaucratic social bloc. It is the leading social force in socialist Cuba. The other layers of social blocs can also be considered social forces. Their mobility and behaviour in society greatly depends on their self-consciousness and awareness of their position and importance in society. But it suffices to say that their structural fragmentation will keep them in their place. This has been the first attempt at looking at social bloc

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formation and how state structures have been arranged in order to accommodate to global pressures and trends. STRUCTURAL CHANGES AND THE REVOLUTION’S IDENTITY This chapter has documented the effects of the economic and political policies that were implemented during and after the Special Period. Monreal and other native cubanologos have reiterated that the changes that have come to the fore do not represent a transition from one mode of production to another (Monreal and Carranza Valdés, 1995). What they are really saying is that the Cuban model, in both political and economic aspects, differs greatly from the undesired neo-liberal alternatives. The basis for recognising the differences stems from only two points: the issues of privatisation and reduction in public spending. The party/state apparatus in Cuba has been a wonder precisely because, in the roughest of times, the government has allocated more money than at any other time in revolutionary history to medicine, education and social security. The argument against neo-liberalism and against any notion that Cuba is currently experiencing a transition to private capitalism is well founded. Nevertheless, I have found similarities between the modes of production and new developments in the nueva empresa cubana – or the SPE – and the contradictions that are prevalent in and familiar to the rest of the world. Among them: corporate downsizing, linking wages to productivity, the weakened power of the trade union (CTC) or its transformation into a discipline apparatus, the ever increasing disparity in income spawned by the dollarising of the economy and the double purpose of Cuba’s new self-employment system or cuentapropismo. These changes were entitled state institutional transformation. The central concern of this chapter was to express how global trends and pressures shaped the institutional transformation. The apertura – or opening of the market – in the sectors of foreign investment and self-employment are only two examples of the institutional transformation. Along with them came the restructuring of production relations in what is called the SPE and the ascension of the military over production. What became evident was that the party/state apparatus was forced to create new structures in Cuban society in order to adapt to the new international context. It would be appropriate to state here that Carranza and Monreal are correct in their insistence that institutional transformation did not represent a move from one mode of production to another. But

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this is not because the state did not surrender its productive forces to private entrepreneurs and multinational corporations. In the Introduction I mentioned my reasoning for believing that the modes of production in private capitalist society, state capitalism and the Cuban model are all one and the same. The latter may or may not have more (participatory) democratic involvement in the productive process. Regardless of the scenarios, the task, in addition to explaining how global trends influenced or shaped the national political economy, was to explain how the party/state apparatus has kept Cuba’s domestic economy under its control. What has been revealed, thus far, is the repositioning of certain social forces within the party/state apparatus and the institutionalisation of new structures: specifically the military’s hegemony over an important part of the production process. The task of this last section is to explain how the new structures in Cuba’s political economy conform to the Revolution’s identity. Following the framework provided for conceptualising the Cuban Revolution, it is necessary to offer brief attention to each of the four pillars and the two foundations upon which the party/state apparatus rests: unity, continuity, state supremacy and popular participation, on the foundations of anti-imperialism and social justice, which were used when describing the make-up of revolutionary Cuba’s existence in Chapter 2. While I have not yet postulated that the pillars of the Revolution are shaking, I do think that the social contradictions in Cuba’s new model need to be reconciled with what those pillars and foundations meant. With regard to unity, this seems to be the single factor holding Cuban society together despite the social contradictions that have occurred throughout the last decade. It has been expressed in the maintenance of the unified forces that uphold the idea of a single party/state apparatus. The PCC, together with other revealed social forces (namely, the military and the mass organisations), are recognised as having hegemony over the entire society. The experience of the SPE, in which the top military leaders were repositioned to control industrial production and lucrative services, demonstrates that it is possible for a Communist Party-controlled economy to unleash certain global market features within the country, without losing or compromising social or political control. This is possible only because the military is so tightly connected to the PCC and is still under the auspices of the original revolutionary leadership. By allowing for open discussion of state plans prior to each PCC

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Congress and making public the intentions of the revolutionary leadership, the general population confided in the PCC and trusted the reforms that were to be implemented. Another issue that has kept the country unified is the continuance of the US economic embargo against Cuba. As mentioned in Chapter 3, the PCC and the revolutionary leadership have manipulated the situation in order to receive popular support for the anti-imperialist stance. Certain conditions in Cuba, namely, shortage of medicines and lack of access to international financial credit, can still be justifiably blamed on the United States. This pushes the general population to support their government against external injustice. There may never be any evidence indicating that there exist divergent opinions towards the private market within the PCC, especially when the cadre is trained to follow the collective rather than individual interests or philosophies. Perhaps there does exist a group of individuals within party circles that is preparing for Castro’s death and will impose an opposition to the PCC or the military. But before that happens, legal standards would have to be modified in order to accommodate a multi-party democracy and there would need to be a break between the immediate supervisors of production (the directors) and the Executive Committee of the SPE. Future consideration on this particular pillar and the possibility of party divergences will be offered in the concluding chapter. Nonetheless, after having reviewed the new structural reforms that Cuba has undergone, it suffices to say here that now – more than ever – the party/state apparatus is dependent on the pillar of unity. Now, more than ever, unity is an essential characteristic of the party/state apparatus. The unity between civil bureaucratic circles and the military has been the key to Cuba’s success in its insertion into the global political economy. For the moment, continuity in maintaining a one-party system is unquestionable (Castro, 2001c; 2001d). So the theme of continuity, as far as the unified party is concerned, remains intact in certain areas. Continuity in the anti-imperialist movement has remained the same. Fidel Castro continues to promote the idea of Third World countries ignoring their debt to the most industrially advanced nations and the international financial institutions (Castro, 1999b). Not only in discourse has the Cuban government promoted a reduction in US interference, but also in opposition to economic policies that would make Latin America more subordinate to the US market than it is

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today. This was evidently so in the ACLA conferences in Quebec during 2001 (Bustamante Molina, 2001). Using discourse borrowed from Martí and other national heroes, the party/state apparatus continues to oppose US hegemony over the region and the global political economy. This is what characterises Cuba as an antiimperialist state. Finally, the miraculous economic success and ongoing social growth that keeps social scientists in awe itself promotes continuity with Cuba’s revolutionary project. Some policies, on the other hand have been discontinued. This was primarily as a result of ideological confrontations with practical reality. In order for Cuba to reinsert itself or adjust to new global circumstances, it was necessary to adopt measures that would have been unthinkable during the first two decades of the Revolution. These measures include linking the most productive workers’ salaries to the world market via the SPE. Providing greater material incentives for higher levels of production was unheard of during Che Guevara’s time. Another example is the invitation of multinational corporations to invest directly and up to 100 per cent. When this law was passed in 1995, the idea that the state can satisfy all of the economy’s needs had to be revised. The Cuban party/state apparatus now depends on foreign investors to provide new technologies in the domestic market as well as infrastructure for their market openings. In tourism, foreign investors provide a treasure box from which the party/state apparatus can earn hard currencies and business intelligence. Nevertheless, discourse on continuity with the socialist project has fitted well with the adjustments that the party/state apparatus has had to endure, especially since the majority of productive forces remain in the hands of the state and foreign investors are willing to invest in Cuba. Now more than ever the party/state apparatus in Cuba is supreme. It has not been reduced and, on the contrary, it has expanded its capacity to engulf what has traditionally been considered the underground economy by providing a limited opportunity for the self-employed (cuentapropismo). Even with the presence of small private enterprises, family businesses and the peasant market, the state produces at a more efficient rate than the self-employed, so that the majority of the population still depends on the state to provide for their basic needs. Additionally, the self-employed have no access to international markets. Therefore, the self-employed do not represent a social force in competition with the state. Contrarily, cuentapropistas continue to be subordinate to the party/state apparatus and to

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contribute financially via the revenues that are paid on monthly and yearly bases. The party/state apparatus has had to share some space with foreign investors, this is true. Nevertheless, the state has allowed foreign investment into very controlled areas, spheres in which the Cuban party/state apparatus could not afford to invest. However, these foreign investments, whether they be direct and full or partial through joint ventures, have always benefited the state. This has been demonstrated especially in the fields of petroleum exploration and tourism. The revolutionary leadership’s resistance to state reductionism has been an essential aspect of keeping the Revolution intact. In discourse and in deed, the PCC has proved that it is not necessary to roll back the state’s intervention in society in order to continue economic and social growth. The leadership has gone even further than that, by pointing out the failures of transition and neo-liberal projects in neighbouring countries trying to achieve even half of what the Revolution has been able to provide for Cuban citizens. Cuba’s social record is still unmatched anywhere among the developing countries and is comparable in certain aspects to those of the highly industrialised world. Any attempt to loosen state control beyond the sphere of decentralisation could prove to be an asinine experiment that would threaten collective progress and the foundation of social justice. In the final chapter, I will explore some limits and possibilities for state supremacy in Cuba. But what can be gathered from this chapter is that the new structures that have been formed throughout the last decade can, if not tended to properly, prepare the stage for alternatives to a state-dominated economy. All this depends on how much autonomy will be allowed to the new social blocs in the future. As demonstrated in Chapter 3, popular participation, which was enhanced during the fourth and fifth PCC Congresses, continues to grow, though the general population is still not directly involved in actual economic planning. Even when the Popular Councils (Consejos Populares) – mentioned in Chapter 3 – were instituted, their role was primarily the monitoring of local projects already set in place. For this reason, I emphasised in Chapter 1 the theory that the modes of production in so-called socialist economies and private capitalism are just the same. The party/state apparatus was keen on creating new microstructures in the SPE. More specifically, the inclusion of Directorship Committees to serve both as a board and as a monitoring system within the line of production, alongside company directors,

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has been most helpful in fulfilling the discursive needs of popular participation. It is true that the role of the CTC in production planning and advocating the rights of workers has been reduced. But without resistance, the tools of voicing the concerns of the common workers were replaced, as the Directorship Committee in each business setting began to operate. In 2000, this system was implemented in 64 companies and government sources estimate that by 2001, 300 state companies or corporations will undergo this process (Granma Internacional, 16 March, 2001). The SPE represents another phase of the state-run economy, in which new structures have replaced outdated ones. As far as state service workers are concerned, their position has experienced little change. Teachers, physicians, sanitation workers, social workers and local functionaries all continue to use the mass organisations to express their concerns, support or disenchantment. The vehicles of popular participation will become more significant as the changes in Cuba’s social structures are reflected in real, material inequalities. The disparity in income between whites and blacks, as demonstrated in the experience of cuentapropistas, must be dealt with on a national level. Since the top layers of the social bloc formation do not feel these contradictions, the ideas for solutions to these problems will undoubtedly have to come from those in subordinate positions. If this is to be the case, it must be the duty of the professional cadre to raise their voices, at the workplace and through the mass organisations. This would require an enlargement of the PCC at the local level and, hence, allow more room for popular participation in national forums. In any case, the unemployed sectors of society and those individuals that continue to participate in illicit activities in order to make ends meet, can be considered as the most alienated of Cuban society. According to government sources, their numbers are falling. But the question remains, are they falling as quickly as are the opportunities to involve more youth into undesirable circumstances like unemployment and prostitution? If not, then alienation will continue to be a social structure from which socialist Cuba cannot escape. Finally, as the party/state apparatus creates new structures for controlling production, popular participation is pushed more into the sphere of social relations and correcting the injustices or contradictions that come about as a result of social bloc formation. In the near future the vehicles of popular expression might become a

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battleground for popular resistance to the implications of newly imposed (repositioned) social structures or global trends in political economy. But so far, the revolutionary leadership’s commitment to the foundations of social justice and anti-imperialism has been well defended and continues to characterise Cuba’s party/state apparatus. Cuba, in this sense, as an anti-imperialist state, is at the same time incorporated into the global political economy.

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5 Conclusions and Considerations This study has concentrated on the particular form of state resistance to global structures and processes, more specifically, the Cuban experience of resistance to trends which are currently found in the process of neo-liberal globalisation. These final pages will reiterate and extract key findings from the previous chapters and assess the attempt to answer the twofold question proposed in the Introduction of this book: Why does the Cuban Communist Party/state apparatus continue to exist? To what extent is the process of social, political and productive restructuring in Cuba shaped by global trend and pressures? Towards the end, theoretical consequences and implications from the Cuban experience and some possible future scenarios will be considered. In Chapter 1, some basic theoretical frameworks and historical themes were laid out in order to provide a basis for comprehending Cuban socialism. This was done, firstly, by assessing the international context that was identified as the world capitalist system undergoing the process of neo-liberal globalisation and, secondly, by reviewing the history of state resistance to expanding capital and imperialism. The review of state resistance to world capitalism and imperialism in the twentieth century explained the historical experience and the failing attempt to break away totally from capitalist modes of production and development. As the Soviet and Cuban experiences have shown, nation-states, which do not live in an international vacuum, cannot break away from capitalist modes of production entirely. Up until now, the only successful form of state resistance to capitalism – and now to neo-liberal globalisation – is a state-dominated economy, which has been called ‘state capitalism’ by members of the Frankfurt School and some present day left-wing radicals. Instead of having workers exploited by private capitalist enterprises, workers in a so-called socialist economy are thought to be exploited by the party/state apparatus in order to promote national development. The previous chapters of this book tested the basic theories concerning the party/state apparatus and demonstrated the results of state resistance to the process of neo-liberal globalisation. The story really began with the demise of the socialist bloc in Eastern Europe. 223

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This included the break-up of the parallel international trading system – the CMEA – and the political and economic breakdown of the superpower to which Cuba allied itself – the Soviet Union. In the minds of most state leaders, the end of the Cold War meant the end of alternatives to development through capitalist globalisation and the acceptance of the United States as the uncontested military and political hegemonic power. On the contrary, the case of Cuba has shown that a state-dominated economy is capable of surviving the process of neo-liberal globalisation and with relative economic success. In fact, by maintaining state supremacy over market forces, unity in political forces, popular participation as an essential quality and continuity in the ideas of resistance and emancipation, the Cuban political economy has actually witnessed economic growth. This was possible only by the will and consent of the majority of the population, which was ideologically prepared to make certain material sacrifices; we can recall this in the 1991 and 1998 general elections. This point requires revisiting an essential theme found in Chapter 1, ideology as consolidating hegemony. The Gramscian perspective of analysing societal structures requires paying attention to the importance of ideas, history and culture. Again, in Chapter 1, the triumph or ascent of neo-liberal practices was found in the consolidation of free-market capitalist ideas in domestic and international circles of power. On a national scale, what was found in the Cuban experience was not very different. The Cuban government could not afford to depend solely on the economic structures that the revolutionary experience developed. The PCC also had the duty to legitimise the supposed necessity of maintaining state power over market forces. In Cuba, the PCC developed a counterhegemonic bloc of 12 million citizens who oppose neo-liberal globalisation. Just like the conservative think tanks that convinced state leaders and international institutions that neo-liberal practice will bring the world to economic prosperity, Cuban socialist thinkers convinced their own people of the communist alternative. Therefore, it was not simply the pillars and the foundations reproduced throughout the past 40 years that explain the continuing existence of socialist Cuba. It was also the ability of state leaders to strengthen the ideas of resistance in the rest of the population. Additionally, by being able to witness the experience of Eastern European and neighbouring Latin American peoples in their transition, the people of Cuba were convinced that neo-liberal ideology and practice would only bring them to ruin. The maintenance of the single party/state

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apparatus and state socialist ideology was a conscious decision that was supported by the bulk of the population. For this reason, Cuba has been able to say no, to the privatisation of production and major services; to the World Bank, the International Monetary Fund and the reduction in social welfare; and to US hegemony. This answered the first half of the central research question. The study of Cuban socialism reveals that, yes, there are alternatives and that states do have the capacity to resist and publicly denounce global trends that have proved to be harmful for the world’s population. Nevertheless, all global processes eventually do have consequences upon the nation-state. No matter how much the state leadership may try, some global trends are hard to resist. In Chapter 3, the impact of the disintegration of the Soviet bloc upon Cuba was described as one that forced the Cuban leadership to search for an alternative. The alternative was not found in kneeling before the triumphant superpower after the bipolar world order had come to an end. Nor was it found in submitting to the fashionable formulas sponsored by the international financial institutions. Any viable alternative for Cuba had to conform to the confines of the party/state apparatus, its pillars and foundations. The so-called Special Period amounted to experimenting with measures, some temporary and others permanent, that expanded the state’s power over the market. After the leadership found success in maintaining state supremacy, the question was: How can a state-dominated economy become more efficient? The documents produced by the PCC’s fourth and fifth Congresses, together with the laws that were created during the dire economic crisis of the 1990s, laid the foundation for a new form of state-led development. Together with the new opportunities in self-employment (cuentapropismo) and the process of decentralisation and entrepreneurial perfection (SPE), the reforms of the Special Period, in combination with the series of newly created social blocs (in which the top layer represents an alliance between a leading managerial class closely linked to foreign enterprises and the military), demonstrate how Cuba’s new economic model was shaped by global trends. I have been able to show the inevitable shifts in production power and the consequences that global trends and forces have had for the pillars and foundations of the one-party/state apparatus. This study has demonstrated that much of the political, economic and social restructuring in Cuba following the Cold War era was done by need and not by will. The old saying, ‘If you can’t beat them, join them’, is

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manifested in this experience. The most important difference is that the changes were accomplished in the name of maintaining the essence or pillars and foundations of the Cuban Revolution. The most positive changes that took place were in the political structure of the country through the enhanced democratic structures of popular participation: the Constitutional Reform of 1991, the electoral reforms and the creation of Consejos Populares (Popular Councils), which consist of elected community leaders to plan the economic life of cities and other urban areas. SHAKY PILLARS? The economic crisis of the 1990s came down hard upon the people of Cuba. The results have been increased income inequalities, the shifting of power in production from common workers and political leaders to the military and a new class of market managers, the making of a more flexible labour force, and an overall increased dependency on international markets through the introduction of foreign direct investment, and reliance upon tourism as a major source of income. These shifts or social changes in Cuban society have made the political and economic structure much more vulnerable to certain aspects of society that were unseen or irrelevant prior to the heyday of neoliberal globalisation and ideology. Among them, a return of racist conduct, a turn to prostitution by an unknown but large number of youth, the emergence of a new consumer culture, a brief period of rampant informal economics and self-employment, to mention just a few. Unfortunately, most of these social consequences have not been dealt with extensively in this book due to the complicated nature of the themes and the background needed to study the phenomena. Nevertheless, the Cuban leadership is aware of these societal contradictions, and their concerns have been noted in government documents and research conducted by members of the PCC. Policies geared towards controlling the contradictions produced by the apertura – or opening towards the market – can be seen as those that tried to conserve the pillars and foundations of the party/state apparatus. But do these pillars stand strong? There may never be any evidence indicating that there exist divergent opinions within the PCC concerning production or markets. But it does follow logically to assume that after four decades of PCC discourse against capitalism – in its various forms – there should be those who have become discontented and even resistant to the

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reforms and new structures that have emanated from the Special Period. Certainly, Haraldo Dilla, a long-time academic socialist, has expressed his concerns about the social contradictions that were born out of the structural reforms. His and others’ objections to gross income disparities among Cuban citizens reveal the first cracks in the pillar of unity and in the foundation of social justice. The cracks in this foundation have already been described in Chapter 4. Certain pre-revolutionary aspects have returned to haunt the Cuban people. Above, these were identified as racist attitudes, income disparity, lost youth, just to name a few. I believe that these social phenomena now have a great chance to shake all four pillars and corrode the traditional values of socialist society. In government discourse of late, the Cuban leadership has been aware of the dangers that are thought to be by-products of the opening towards the market. But it takes more than just official recognition in national newspapers to combat social ills such as racism and income equalities. In order to minimise these experiences the PCC and the mass organisations need to be forced into conducting intense social training programmes to regenerate the ideas of social equality, solidarity and community among the masses. This can only be done if the Cuban people take seriously their role in the mass organisations and voice their opinions and concerns out loud. In many ways, the future of the Cuban Revolution lies in the hands of the Cuban people. However, the more individuals are divided according to income disparity, the more likely it is that there will be a growth in divergent opinions about what social justice really means. This leads any observer to question the other pillars and the one other foundation of the Cuban Revolution, anti-imperialism. The second pillar that is at risk is that of continuity. Principally, the theme of continuity was related to ideas: the emancipation of peoples, national sovereignty, a single political party to gear the masses against capitalism; in short, the ideas that were heralded by the Rebel Army and those sectors of society that supported the Revolution of 1959. There are certainly many other important ideas that have not been dealt with in this study, but these were the main ideas that are continuous in Cuban political discourse. However, external and internal changes have redefined this particular pillar. Antiquated ideas of emancipation, in other words, ideas that were developed at a certain historical moment, do not necessarily follow through with the times. For example, during the first radical years of the Revolution, work through moral incentives was an important feature of the

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transformed political economy. But in various phases, the Cuban leadership has retreated on this matter. Somehow, the need to make the national production process more efficient has instituted a new value in Cuban society. That is the recognition that workers must be rewarded with material incentives. This was already demonstrated during the 1970s in the institutionalisation of the Revolution and the ‘retreat to socialism’. But this study has gone beyond this. More than just paying workers according to productivity, economic leadership – meaning managerial direction – is stimulated with more pay than that of subordinates. How, then, does the spirit of Che Guevara follow through in Cuba’s economic restructuring today? It does not. Hence, the continuity of ideas becomes dependent on how the leadership directs the country throughout the toughest of times, i.e. from the economic crisis of the 1990s into a growing Cuban economy filled with many social contradictions. But what happens when the old guard of the Revolution are gone? Have they left the new generation of revolutionaries something to continue? The answer to this last question is yes. That is, efficient state management of public enterprises and political discourse against imperialist forces. During this era of neo-liberal globalisation, both of these values remain revolutionary and important in the search for alternatives in the global political economy. However, anti-imperialism and public ownership of the means of production do not equal socialism. Apparently the socialist project of workers’ emancipation is discontinued, while the leadership and their concern for the economic betterment of the island has remained constant. Unfortunately, the new generation of revolutionaries is learning how to achieve economic growth for the party/state apparatus at any cost. Again, there is a correlation between sacrifices that the Cuban leadership is willing or forced to make in order to achieve economic growth and the attitude of state leaders in other countries when adopting neo-liberal policies and selling off services like health care or transportation. Both methods, neo-liberal policy and state-corporate efficiency, are used in the name of bettering national economies and making them more competitive in today’s global market. State supremacy seems to be the one pillar that remains constant. While leaders in other countries end up privatising state enterprises, the Cuban party/state apparatus, on the contrary, expands its productive capacity. Of course, in order to achieve state enterprise expansion, foreign investment becomes a necessary evil. But what

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are the limits to foreign direct investment? So far, it has been clear that all the sectors of society, excluding the health system, education and the military, are open to foreign/private investment. Investments have been made in tourism, petroleum exploration, nickel production and tobacco. These examples are viewed as beneficial to Cuba, in that foreign investment brings in new technologies and hard currency. The question is, what happens when foreign enterprises want to invest in or appropriate services that are provided to the general population, like the energy sector or water? Will that top echelon of revolutionary leadership be willing to sell these services off? What then will happen to state supremacy and the concept of public ownership of most of the country’s resources? Beyond this concern is that of private company leverage on the party/state apparatus in joint ventures and labour flexibility. In the race to cut costs, especially during times of global economic crisis, foreign corporations will always want to find the cheapest source of labour. Here, the state proves to be not so supreme. Continuing a pattern of dependency on – and further integration into – the global market, Cuba’s party/state apparatus is finding itself engaging with foreign enterprises at the bargaining table. Meanwhile, labour’s presence within the party/state apparatus is becoming less relevant. Not only does this go for workers found in joint ventures and foreign direct investment initiatives, but within the completely statecontrolled enterprise itself. This was demonstrated in the experience of the SPE. Popular participation proves to be another shaky pillar. This is already evident in labour flexibility and the new hierarchy imposed through the SPE. Although workers are given between two and four seats on Directorship Committees of state enterprises, profit and efficiency become the primary goals. The vulnerability of working people’s collective interests becomes immense when a few workers are separated from their colleagues in order to engage in profit considerations together with management. This is especially true when the concerned corporation is inserted into the competitive global market. If the participation of worker representatives in the SPE is sold to the people of Cuba as a satisfactory and reassuring means of maintaining popular input into the political economy, then it is the technocratic–entrepreneurial bloc that has consolidated the Revolution under its firm hand. The same has become true on the local level with the creation of Consejos Populares, which guide and implement municipal economic projects. After these changes, the

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workers and general population will have no interest in participating in the decisions that affect their daily lives. Unless, that is, participatory democracy is reduced to representation in the electoral process, as it is in most forms of democracy around the world. If that is the case, then this pillar will be doomed, because all representatives will be held responsible only in the approving of laws that will assist in the forming of Cuba’s new economic model; all this under one, ‘united’ political party. The last theme that must be dealt with is the Revolution’s foundation of anti-imperialism. This is the one theme that does remain constant in the Cuban government’s political discourse as well as in practice. Cuba’s revolutionary experience has been marked by a 40year struggle against political, military and economic aggression coming from the United States, currently the world’s only superpower. Considering the geographical proximity of the United States, it is a wonder that the revolutionary leadership and the Cuban people have resisted the intentions of right-wing forces and the harsh and cruel economic embargo which has impeded the country from gaining access to essential goods. Because of its alignment with the Soviet bloc during the Cold War, the Cuban party/state apparatus was able to resist with military as well as economic leverage. From 2001, all military support from Russia has been cancelled. Now, especially during the US ‘New War Against Terrorism’, Cuba is isolated in the face of US aggression and left to fend for itself. But regardless of the situation, both the Cuban people and government leadership have demonstrated their dedication to the value of sovereignty of all nations and peoples by participating in and even sponsoring gatherings, conferences and other events that call attention to the imperialist character of global capitalism and the process of neoliberal globalisation. Nevertheless, during the process of neo-liberal or corporate-led globalisation, imperialism – and therefore also resistance to it – has taken on a new definition. Previously, imperialism was thought of in terms of civilisations embodied in nation-states, and the imposition of the values and structures of certain nation-states upon others. But this all changes when multinational corporations and their allies in government become much more powerful than the state itself. Interestingly, Cuban political discourse tackles neo-liberalism as an unsustainable and unfair practice and ideology imposed by the United States, the technologically advanced countries of the North and the international financial institutions like the IMF and the World Bank.

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Indeed, no one can question the power that these global structures have upon the poorer countries of the South and the negative effects that have come out of the neo-liberal triumph. However, it would also seem logical to tackle the very same corporations that sponsor neo-liberal ideology and practice through government lobbying. When it comes to criticising multinational corporations, the PCC becomes shy. To be sure, the revolutionary leadership has denounced monopoly structures and financial speculation, but never the corporations that practise them. The fact is that the party/state apparatus is in no position to make enemies out of the multinational or transnational corporations, because Cuba depends on many of these for foreign investment and the acquisition of new technologies. One case in point is the joint venture Brascuba mentioned in Chapter 4. The Brazilian partner, Souza Cruz Tobacco, is not only a private company, but also a subsidiary of the British American Tobacco Corporation (BAT Group), one of the largest tobacco enterprises in the world. Hence, the tendency of anti-imperialism has been modified. Previously, it was a necessary stance in the fight against global capitalism. Today, in Cuba, it is a movement to strengthen popular influence upon nation-states of all countries to control markets and make room for a fairer trading system. For the PCC leadership, this is not a contradiction, but, again, a modification in the discourse. The enemy is not private capitalism or large corporations, but the governments that allow large corporations to behave as they will. POSSIBLE FUTURE SCENARIOS Cuba’s experience during most of the 1990s and the start of the new millennium has demonstrated new possibilities in state-led economies. The government has proved to be flexible and economic efficiency has overridden traditional PCC ideology, or at least adjusted it to accommodate income disparity and the disposal of workers at management’s command. Disturbing as it may sound, in a state-run economy labour can also become flexible, it can even allow for private enterprise to exist in the form of self-employment or as state partners in the form of foreign investment. Decentralisation plans that allow business leaders to become more autonomous in directing their lines of production can also exist without threatening the base of political power in central government. This was demonstrated through the military’s influence over the new state corporations. The information provided in this book on the new Cuban economic model might be

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disheartening for left-wing romantics, as income disparity and unemployment represent new contradictions. Cuba has become the exception that proves the rule. But the study should not be as disturbing to ‘anti-globalists’ as it is to orthodox economists who have insisted that state-led economies are doomed to fail. The Cuban experience has established the fact that a state-led economy can work and that in certain instances the state can resist some global trends. However, after having revealed the effects of global structures and pressures upon the one-party/state apparatus, some consideration on the future of this form of state resistance should be given here. During the preparation of this book, many colleagues and friends have asked me the question: What will happen after Fidel Castro passes away? This question, now very popular, comes as no surprise as even many cubanologos, who have dedicated their life to studying the Revolution, are left with the same question in their own research. In Chapter 1, I delivered an explanation of why this study would not concentrate on the personality of the historical leader. I suggested that political and economic structures and ideas have more impact on societies than individuals. Intriguing as the above question may be, it is only appropriate to stick to the method employed throughout the entirety of this work. Therefore, I will conclude with some considerations on the future of the Cuban revolutionary experience based on my own findings in the analyses of global and domestic political, economic and ideological structures. When looking towards the future of Cuban state resistance to neoliberal globalisation, two elements should be taken into account. First, since the drastic changes brought upon the island during the 1990s were induced primarily by the collapse of the Soviet bloc and the alternative international trading system (CMEA), all post-Cold War studies show that any attempt at speculating about future scenarios for Cuba will have to consider the trajectory of international relations and the global political economy. Secondly, the Cuban party/state apparatus, born out of domestic historical movements and established on the above-mentioned pillars and foundations, has its own internal dynamics that, as demonstrated above, are also changing due to the repositioning of social forces and political and economic restructuring. With these in mind and taking the present condition of both the global political economy and the structural transformations in Cuba as a given, this study will conclude with two sorts of future scenario. One involves change in the Cuban

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government and the collapse of the party/state apparatus, meaning structural change and the breaking with the pillars and foundations of the Revolution. The second involves the continuance of the party/state apparatus, keeping it intact. This will require attention to future changes in response to the global political economy and recognising the possibility of a future triumph of the alternative global movements mentioned in Chapter 1 of this book. A DISINTEGRATION OF THE PARTY/STATE APPARATUS? The disintegration of Cuba’s one-party state apparatus can come about in either one of two ways or a combination of both. The first is through mounting pressure from the outside and/or US military coercion. The final preparations for this book coincided with the monumental US ‘New War Against Terrorism’, in which US military forces are found to be expanding their hegemonic reach simultaneously to all the corners of the Earth. This fact, in combination with Russian President Putin’s announcement that the final vestiges of military intelligence co-operation between Russia and Cuba have ceased to exist, puts the island into a vulnerable predicament. As no country has been willing or able to contest US hegemony, the threat of US intervention in Cuba is alive and strong. Hence, this will be the easiest scenario to imagine. Although the revolutionary forces in Cuba would certainly put up a strong fight against US imperialist interests and the consequences would be bloody, this scenario would not end up so differently from those examples that have already taken place. US military forces would occupy the island, establish a government favourable to US hegemony – probably from the pool of anti-revolutionaries based in Miami, Florida – and open the market to US corporations and international financial institutions. Again, before this happens, the aggressor would be met by great resistance and a long battle against the majority of Cuban people who support their government, the idea of national sovereignty and the fruits or social conquests born out of the Revolution. The second possibility in considering the break-up of the Communist Party/state apparatus is the internal corrosion of the pillars and foundations upon which it is built. Taking into account the reality described in this study, this possibility seems to be more of a real threat than US military intervention. Both Cuban government leadership and the Cuban population as a whole should be more concerned with the internal contradictions that social, political and

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economic restructuring have brought forth than with the always present external danger. I should repeat, as income distribution gaps increase with the dollarised economy and the possibility of linking wages to productivity, so will the ideas of individuals concerning the definition of social justice. Furthermore, the repositioning of social and productive forces in the country leaves room for a widening gap in interests between labour and management in the SPE. As a consequence, the global trend of labour flexibility has been instituted in Cuba. This threatens the pillars of unity and popular participation, and forges cracks in the foundation of social justice. In order to save these qualities, the established military–civil bureaucracy (the old guard of the Revolution) – mentioned in Chapter 4 – and the technocratic–entrepreneurial bloc would have to assert their commitment to social justice by periodically revisiting the impact of all reforms and economic action. But as the old guard of the Revolution die off, there exists a greater likelihood for a future division in economic interests among top business leaders and loyalties between the general population and competition in the global market. Since this internal threat is real, it should be dealt with immediately. If not, market capitalism will slowly eat away at the fabric of revolutionary Cuba like a growing cancer. I would conclude that the only way to treat the problem of shaking pillars and cracking foundations is for the general population to be mobilised within the framework of the present party/state apparatus. In other words, Cubans should be motivated to participate in the mass organisations and confront the contradictions that are brought about by economic reform without delay. Naturally, this would entail heavy conflicts among the new social blocs of Cuban society, which might precipitate the demise of the present order. The third possibility in the fall of the party/state apparatus reflects a combination between the other two. That would entail US government or other intelligence in its working with dissenting sectors of the PCC and the technocratic–entrepreneurial social bloc. Intelligence does not necessarily have to come from the CIA or from any other government. A change in alliance among business leaders might also originate in private/corporate intelligence, which throughout the experience of neo-liberal globalisation has proved to be just as detrimental. A corporate conflict, either among state-owned businesses or between foreign enterprises, could bring on economic and social instability to Cuba. As has been the case with most countries of the South, social crisis would eventually invite foreign intervention.

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MAINTAINING CUBAN SOCIALISM It is hard to think that the delicate balance in which Cuban society is now standing can last for a long time. The contradictions are much too large. However, the Cuban people should receive the grand award for being the most resistant to global changes and the most flexible in making necessary adjustments. Having gone from a prosperous Cold War to a ‘new world order’ has not changed the essential characteristics of the Cuban party/state apparatus. Starting with Solidarnosc in Poland and the fall of the Berlin Wall, the world has seen the collapse of the entire so-called socialist bloc in Eastern Europe. In Cuba, however, you might almost say: ‘The Berlin Wall did not fall on us.’ Something must have been different about Cuban socialism. The difference should be primarily attributed to the pillars and foundations that culminated in what is known as the Revolution. Additionally, the Cuban Revolution was born out of an autochthonous struggle, not imposed by a military superpower. This may explain the affinity that the Cuban masses have with their leaders. But how and why should the current condition of the party/state apparatus remain the same for some time? With all the contradictions that it entails, the Cuban model of economic development and political participation is still better off than many of the neo-liberal economies in neighbouring Latin American countries. At least the people of Cuba realise the differences. Homelessness, illiteracy, and street violence still do not plague Cuba. If a hurricane hits the island, the military is prepared to concentrate its efforts on relief. For these simple reasons alone, there are many advantages to keeping up with the contradictions that Cuba’s new economic model entails. As long as the Cuban government continues to approve annual budgets that reflect an increase in public spending on social services, Cubans will be content with their Caribbean welfare state. The maintenance of the party/state apparatus can take one of two courses in the future; both depend on economic questions. The principal concern becomes the US economic embargo against the island because it is precisely this that the PCC points to in order to excuse Cuba’s material shortcomings. In Chapter 3, I explained that the embargo has had its effect on social development in Cuba, especially in the health-care sector. As long as the embargo continues to be imposed upon the people of Cuba, the government can maintain legitimacy in the face of US aggression. Hence, the future of Cuban

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socialism can be conceived of as an anti-imperialist state with an economic embargo or one without. Again, with the US economic embargo, the Cuban government receives favour in the eyes of the Cuban masses. Why should the population support a foreign government that imposes misery and delay in economic growth against a government that is willing to provide free health services, education and housing? But it does not stop here. The party/state apparatus also receives support from the international community within structures like the United Nations, as well as from international solidarity groups including some that are inside the United States itself. Whether it be through a romantic vision of revolutionary Cuba or through encounters at international political rallies, many people around the world uphold an admiration for the Cuban government. The tens-of-thousands-strong reception for Fidel Castro at the World Conference Against Racism in Durban, South Africa, in 2001 is a case in point. Fidel Castro has been a hero to many in the South since his rebel days in the Sierra Maestra. But he continues to be received by masses worldwide because he preaches against present-day Yankee imperialism while tackling the presentday economic embargo. People do not support Cuban solidarity efforts that fortify the country just because the long-bearded law student can still speak on for hours on end in a charismatic way. They do so because Dr Fidel Castro represents a party/state apparatus – a real movement – that has been able to resist superpower pressure, accommodate itself to the new world order and maintain the faith that there are alternatives to the process of neo-liberal globalisation – regardless of the contradictions that alternative might entail. My purpose here is not to idealise the embargo as a tool for legitimacy, but to explain the role it can play in support for the party/state apparatus. In any case, if the US economic embargo continues to be a threat to economic development for the party/state apparatus, the Cuban government will have to continue its search for substitutes. It has already done so in the case of tourism, but it will most likely have to do so in the health sector; for instance, by fortifying beneficial bilateral agreements on pharmaceuticals between Cuba and South Africa or Brazil. Additionally, the Cuban government will have to step up its efforts in building stronger regional ties with its neighbouring countries in order to purchase US-patented materials more easily. Here the Cuban government will be found seeking more fair trade deals with other countries and integration into economic communities of states like the CARICOM and the Association of

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Caribbean states. Also, it will seek a stronger alliance with the industrialised countries of the South (South Africa, Brazil, India) in international trade structures like the WTO. To conclude this future scenario of maintaining the party/state apparatus with the economic embargo, it should not go unremarked that things cannot really get worse. As I mentioned in Chapter 1, the US government is already making concessions to Cuba, when US farmers and agricultural producers are demanding the right to sell to neighbouring countries. A one-party/state future for Cuba without the US economic embargo is a more complicated scenario. Perhaps this scenario should have been placed in the section concerning the possibilities of a disintegrated Cuban socialism, because the chances of maintaining the pillars and foundations – in a word, the raison d’être – of the Cuban anti-imperialist state, would be quite slim. If the US economic embargo against Cuba ever falls, this would mean that the party/state apparatus would have to maximise its control over imports so as not to allow Cuba to be flooded by US products. This would be the most difficult task ever required of the revolutionary leadership, much more difficult than legalising the possession of hard currency or US dollars. Imagine an anti-imperialist, so-called socialist state only 90 miles away from the largest economy on the face of the Earth with its door open to US investment. However would the central government try to handle such economic pressure? This study has already looked at the cracks, splits and shakes in the Revolution’s pillars and foundations after moderate apertura towards the global market. But it is almost unimaginable to conceive of a one-party/state-led economy surviving the flood of big multinational corporations such as McDonald’s. There is no way Cuba’s state corporations could compete with them, regardless of the efficiency that state-owned companies pretend to have developed. The foreign private enterprises would outnumber the state companies, especially in services. Additionally, with the New Law on Foreign Investment, which by the way contains a nondiscriminatory clause with regard to the country of origin of private enterprises, the party/state apparatus would be forced into making concessions to the principal enemy, the United States. Cuban business leaders in the technocratic–entrepreneurial bloc would be pushed further away from the Cuban working class and the pillar of unity would see its last days. The only way to avoid such disaster would be for the governmental leadership to maintain strict controls over every single financial transaction and reproduce a discourse against global capitalism. This would result in the government’s turning its

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back on some of the reforms that came out of the Special Period. This leaves this concluding chapter to yet another future scenario. A third scenario would be global in nature. This would be a rediscovery of the state as the most essential and irreplaceable player in the global political economy, where power is taken back by the state and where people demand that the state intervenes in society. In many respects, after the terrorist attacks against the United States on 11 September 2001, states have come to play a more important role in domestic and transnational security matters. It would only take an economic crisis of the same calibre to push states into becoming more dominant players in financial markets. Some would even have us believe that the current ‘war against terrorism’ is really a solution to the economic downturn experienced in the United States. In any case, I would venture to say that there is always time and room for the state to come back. If this were to happen, Cuba’s efforts of maintaining state supremacy over market and other social forces would be applauded as the example to follow. Unless, of course, the superpower dealing with its own economic problems finds an excuse to destroy Cuba the way it did Afghanistan. This third scenario would also include the possibility of state corporate development, where state corporations would develop into globally competitive entities offering products or services unmatched by private multinationals. A future scenario might entail health management organisations of the North, including health insurance companies, offering their clients the right to fly to Cuba for medical attention because Cuban health care is high quality and costs less. At that point, the Cuban government would have to consider creating a separate health-tourism corporation that deals with foreign patients or even expanding its services to the point of becoming a publicly owned multinational corporation. In a friendly international environment, this could very well happen. There is a fourth scenario that might seem far-fetched for most observers but only requires a little imagination. That is the total collapse of the international capitalist system or a worldwide revolt against it. During the past couple of years, the world has witnessed mounting forms of resistance to the process of neo-liberal globalisation in a variety of ways. As I mentioned in Chapter 1 of this book, these struggles have been found among popular and intellectual groups in domestic settings as well as on a global level. While neoliberal ideas have nestled into the structures that comprise national economies and governments in most countries, the progressive forces

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of the left have been largely spread amongst organisations concerned with topics such as fair trade, the environment, indigenous and women’s rights, and labour. But more recently, in some countries, these new social movements have taken political shape in order to counter neo-liberal ideology and practice. There is no room in this book to discuss the examples. However, one can look to the rising political movements such as the Worker’s Party in Brazil or the struggle against the Free Trade Agreement of the Americas in order to find the possibilities of resistance and global solidarity. These represent the possibility of bringing an end to neo-liberal globalisation as we know it today. Finally, the fall of neo-liberalism should also be taken into consideration. Though no global order has ever come to pass without the backing of intellectual and social movements, it would not be crazy to imagine a radical change in the structures and ideology currently governing the global political economy. Also coinciding with the writing of this book was the economic crisis in Argentina, which was induced by the irresponsible application of neo-liberal practice forced down that country’s throat by international financial institutions such as the World Bank and the IMF. It would only take a couple more of these scenarios at a single moment, with movements of resistance again taking to the streets and building their own alternative structures, to destabilise the entire global economy. In this last scenario, nation-states might return to the experiences of pre-neo-liberal days and revert to the state-capitalism of yesteryear, in which large enterprises and the capitalist mode of production would have to contend with a social contract. In this case, Cuba would be among the first and most prepared to take on a comfortable position in that new world order. But the ever growing global movement for socio-economic justice seems to be demanding more than just a return to state-led development. It is asking for more popular participation. If this movement succeeds in reaching that ‘Other Possible World’, then Cuba’s party/state apparatus would have to take the Revolution a step further.

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Index Compiled by Auriol Griffith-Jones Agricultural and Industrial Bank 138 agriculture 73, 130, 140, 154, see also sugar ANAP (National Small Peasants Association) 65, 77 anarchists 50–1 Andropov, Yuri 98 Angola 80, 100 ANPP (legislative body) 120, 121, 130 anti-colonialism 43–5 anti-imperialism 28, 32, 236; as foundation of Revolution 42, 82, 218–19; risk to 227, 230–1 Argentina 197, 239 Army 64, 100, 167–8, see also FAR Artex (SA) 129 Assemblies of Popular Power 121 Association of Caribbean States 236–7 Authenticos (Partido Revolucionario Cubano Autentico) 53, 56, 57–8

Brazil 16, 197, 239 Brezhnev, Leonid 98 British Empire 47 Brooke, General John Rutter 48 Brutents, Karen 98 Bulgaria 95 business management: decentralisation of 129–30; organisational changes 124–5, 165–8, see also SPE business practices, monitoring of 188

Bacardi Rum 113 Baires, El Grito de 46–7 Baker, James 103 Baliño, Carlos 50; and URC 52 Banco Central de Cuba 138 Banco International de Comercio (BCI) 137 Banco Nacional 125, 137, 144–5 Banco Popular de Ahorros 137 banking reforms 137–8 banks: foreign and private 138, 203, 204; lending 154; technological infrastructure 138, 154 Batista, Fulgencio 53; and communist movement 54–6; populism 55–6; as President (1952-59) 59–61; radical opposition to 60–1 Bay of Pigs (1961) 69, 77 black market 131, 146, 187; and corruption 92, 93; and economic reforms 124, 126, see also selfemployment Blas Roca 54; Fundamentos del Socialismo en Cuba 69 Bolshevik Revolution (1917) 17, 19, 51 bourgeoisie, as leaders 29 Brascuba, joint venture 157–8, 209, 231

CADECA SA. 138 Campaign to Rectify Errors and Negative Tendencies (1986) 92–4, 99–100, 166; contradictions in 93–4; moral aspects of 92, 93, 188 Canada 68, 134, 140–1 CANF (Cuban-American Foundation) 111, 112 capital accumulation, and income disparity 144–5 Cardenas, President of Mexico 56 CARICOM 236 Castro, Fidel 3, 37, 60, 232; and 26 July Movement 61–6; and collapse of USSR 99–100, 225; conversion to Marxist-Leninism 69–72; exile in Mexico 62–4; and Gorbachev 101; ideology of 1959 Revolution 67–9; llamamiento at 4th PCC Congress 120; named as Prime Minister 66; popular support for 67, 117, 236; and ‘push to communism’ 70–3; rejection of neo-liberal economics 32, 197–8, 199; resistance to globalisation 2, 6n, 8, 197, 218–19; state transformation (1959) 66–9 Castro, Raúl 37, 63, 66; and SPE 166–7, 168, 175, 183, 212 CDR (Committees for Defence of the Revolution) 75, 77 CECE (State Committee for Foreign Economic Cooperation) 121 Centre for Labour Studies 187 Cespedes, Carlos Manuel 53 Chavez, Hugh 16 Chibás, Eduardo 58, 60 Chile 15 China 68, 96, 107 CIA 32

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CIMEX, SA, state corporation 171–3 civil society 15, 77–8, 201; and WTO 6n, 11, see also OPP class see social bloc formation Cliff, Tony 21, 23–4 Clinton, Bill 111, 113 Club of Socialist Propaganda 50 CMEA or COMECON (Council of Mutual Economic Assistance) 1, 3, 20, 35; Cuba’s membership of (1972-91) 79–81, 82; demise of 94–7, 224 Commonwealth of Independent States 104 communist movement: and 1959 Revolution 65, 69–70; Batista and 54–6; and Cuban nationalism 53–4, 69 Communist Party of Cuba (URC) 52 Communist Party of the Soviet Union (CPSU) 29 competition 124, 126 Consejos Populares 122, 129, 220 Constitution of 1940 55, 56–7 Constitution of the Republic of Cuba (1976) 75–6; reforms (1992) 120–1, 214 constitutions 43–4, 47; (1902) and Platt Amendment 42, 48–9 continuity: and new structures 218–19; as pillar of Revolution 41, 83, 183–4; risk to 227–8, see also anti-imperialism corruption 58, 59, 93–4; police 210; potential for 178, 209 Council of Mutual Economic Assistance (CMEA or COMECON), disintegration 37 Creoles, white elite 43, 44, 48 CSC (Credit and Services Cooperatives) 130 CTC (Cuban Workers’ Central) 55 and n, 59, 68, 70, 75, 77; reform programmes 74–5; role reduced 221; and self-employment 133, 189–90; and SPE 182 Cuba 2–5, 43; aid from USSR 100; decentralised bureaucratic state capitalism 25–6; economic recovery (1996-2000) 13, 38, 127–9; effects of US embargo on 114–17, 206; expected fall of socialism in 3–4, 110–11, 224–5; human development standards 162–4; independence (1898) 47–8; independence movement 42–8; political isolation 117–18; possible

future scenarios 231–3; present contradictions in 195, 231–6; ‘push to communism’ 70–3, 201; relations with US 117, 234, 235–6, 238; relations with USSR 36, 79, 80–1, 97–9, 100–3; ‘retreat to socialism’ (1970s) 89, 201; state-led economy 31–4, 73–5, 82–3, 86; structural changes 195–222; as Third World superpower 80, 86; US military occupation (1898-1902) 48–9; withdrawal of Soviet troops 103, see also economic crisis (1990s); economy; party/state apparatus Cubalse, state-owned corporation 130, 168–71 Cuban Committee for Democracy 112 Cuban Democracy Act (Torricelli Act) (US, 1992) 111, 114, 117; effect on Cuban health care 116 Cuban Revolution (1959) 63–7; ideology of 67–9, 81–3, 224–5; new model reconciled with 217–22; pillars of 41–2, 83–5, 181–4, 196, 216–22, 226–31; popular participation 36, 64–5, 67 Cuban, Spanish and American War (1898) 32, 47–8 Cuban Trade Union 36 Cubanacan (tourism SA) 93, 129–30, 135, 137 Cubanet Independiente, Miami newsgroup 184 cuentapropismo see self-employment currency: exchange rates 125–6; legalisation of US dollar 124–9; need for hard currency income 38, 90, 115; value of peso 127 Czechoslovakia 95, 96, 100 decentralisation 25, 73, 129–30; of foreign trade 124; of state enterprises 183, 204 Decree-Laws: No.77 (New Law of Foreign Investment) 133–4, 171, 237; No.84 (banking reform) 137; No.140 (legalisation of dollar) 125; No.141 (legalisation of selfemployment) 39, 132–3; No.187/98 168 dependency theory 30 development theories 26–7, 30–1; dependency theory 30; modernisation theory 30 Díaz Suárez, Adolfo 157, 209 Dilla, Haraldo 208–9, 227

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Index diplotiendas see dollar markets Directorio Universitario 65, 67 dissidents, as election candidates 121–2 dollar markets (diplotiendas) 128–9, 145–6, 169 dollar-earners, as social bloc 210 downsizing 179, 204 drug trafficking 100, 148 Eastern Europe: collapse 1, 5, 10, 86, 103; and failure of socialism 17, 35–6; trade imports from 94–5; transition 96, 196, 199–200 Eastern Liberation Army 43 Economic Council on Latin America (ECLA) 30 economic crisis (1990s) 20, 37, 86–9, 139–40, 206–7; background to 89–90; effect of collapse of USSR 105–6, 108; effect of US embargo on 109–17; effects of integration 90–2; energy shortages 106–7; social strategies 142; state budget deficit (1992) 108; zero option period 104–8, see also Campaign to Rectify Errors; Special Period economic development 29–30, 31; Leninist model 19, 24; in Special Period 123–5; Stalinist 19, 20 economic growth 2, 153–8, 224; 1970s 89–90 economic planning 73, 74, 75, 121; five-year plans 94, 96, 115, 123–4 economic transition 199–201 economy: availability of US goods 114–15; and dollar markets 128–9, 145–6; inherent weaknesses 140; integration into Soviet Bloc 79–81, 82; liquidity rates 141–2; productivity 91–2, 105, 141–2; recovery (1996-2000) 38, 127–9, 138–9, 140–2; state management of 31–4, 73–5, 82–3, 86; state subsidies 165, 203–4, see also living standards; sugar education 134, 158, 159–60, 214; public expenditure on 143, 163 egalitarianism 70, 142, 151; and new social structures 196, 208–13 Egypt 68, 81 Eisenhower, Dwight, US President 68 El Salvador 80, 98 elections 121; 1952 (annulled) 61; (1944) 57–8; (1992-93) 121–2; popular participation in 85, 121

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elites: party/state 211–13, 215; white Creole 43, 44, 48, see also social bloc emigration: 1993-4 crisis 111–12; of gusanos 69; Mariel exodus (1980) 112 employment: offers of 179–80; temporary agencies 174, 204; in tourism 135–6, 160–1 energy use 156, 162 environment, and privatisation 9, 10 ESCD (Enterprise for Service for the Diplomatic Corps) 169 Ethiopia 80, 86, 99 FAR (Revolutionary Armed Forces) 75, 167, 168; power of 212–13; role in SPE 182, 200, 212, see also SPE FE (Familia en el Exterior) (relatives abroad) 145, 147, 189, 195 FEZs (Free Economic Zones) 138–9, 172, 205 financial markets 12, 205–6 First War of Independence (1868-78) 43–4 fiscal reform 12, 203–4 FMC (Federation of Cuban Women) 36, 75, 77 FONU (Workers’ Front for National Unity) 65 Food and Beverage Company 170 food consumption 161 food distribution 72, 130; crisis (1992) 107; guaranteed minimum basket 146, 158, 180; rationing 73, 87, 92 foreign debt 90, 106 foreign direct investment (FDI) 25–6, 38, 201; contribution to economic growth 157–8; and employment of blacks 149; Foreign Investment Code (1982) 89–90; Helms-Burton Law (1995) 112–14; joint venture arrangements 92–3, 134, 157–8, 172, 205, 231; legalised (1995) 25, 125, 133–9, 171, 237; in newly independent states 29–30; and oil and gas extraction 156–7; and profit ratio 133–4; revisions 122; in tourism 135–7 foreign policy: independence of 68, 80–1, 99; Latin America 80, 99; regional links 236–7; relations with USSR 36, 80–1, see also trade FORMATUR, tourist sector training school 136 France, FDI in Cuba 134, 158

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Frankfurt Institute of Social Research (Frankfurt School) 21, 23, 24–5 Free Trade Agreement of the Americas 239 Gaviota (SA) 129 George, Susan 6–7 Germany, reunification 96 globalisation, alternatives to 8 Gorbachev, Mikhail 35, 99, 101, 103 Gramsci, Antonio 7, 224 Granma, rebels’ boat from Mexico 63 grassroots movements 5–6n, 8; growing influence of 239 Grau San Martín, Dr 53–4, 56, 57–9 Grenada 86 Guatemala 63n Guevara, Ernesto ‘Che’ 63 and n, 70, 92, 188, 228 Guiterras, Rafael 50 gusanos, mass emigration of 69 Haiti 43 Havana, bus drivers’ strike 53 Havana Golf Club 170 Havantur 172 Hay, John, US Secretary of State 48 Hayek, Friedrich von 7 health care 80, 158, 214; effect of US embargo on 116, 143; public expenditures 143, 160, 163–4 Helms-Burton Law (1995) 112–14, 116 Hermanos al Rescate 113 Hong Kong 31 housewives, as cuentapropistas 194 housing 159, 161 Hungary 95, 100 ILO (International Labour Organisation) 187 IMF (International Monetary Fund) 11, 163, 239; Cuba’s refusal to deal with 12, 83, 111, 206, 230 import substitution 66–7 incentives for workers 74, 178, 209, 227–8; potential for corruption 178, 209; and self-employment 188, see also jabita income disparity 132, 144–6, 226, 227; cuentapropistas 147; and those with family abroad (FE) 145–6 independence movements 20, 28–9, 33–4; Cuban 42–8; newly independent states 29–30 Index for Gender Development 162 Index of Human Poverty 162 India 81

Industria Militar 167 infant mortality rate 80, 116, 143, 163 informal economy 14, 15; Cuba 39, 186–7, see also black market; selfemployment Institute of Agrarian Reform (INRA) 65 institutional transformation 200, 201–2, 216; and social bloc formation 208 Inter-American Development Bank 15 international financial institutions (IFIs) 10, 205–6 International Monetary Fund (IMF) 11 International Socialist Tendency 21, 24 International Sugar Council 68 INTUR (State Institute of Tourism) 121 Italy, FDI in Cuba 134 Izquierda, Ala 53 jabita incentives 136, 146, 178 Jamaica 86 Japan 30, 68 jineterismo 150, 192 John Paul II, Pope, visit (1992) 117, 198 JUCEPLAN (Central Board of Economic Planning) 75, 121 Karl Marx Club 50 Kennedy, John F., US President 68 Keynesian economics 7, 31 Kornai, Janos 35 labour: contractual rules 179, 204; effect of privatisation on 9–10; productivity 91–2, 105 labour force, education and skills 134, 159–60 labour market flexibility 12, 174, 204 labour movement: Castro and 68–9, 71; and neo-liberal globalisation 14; under Machado 52, see also CTC labour organisation: reforms 74–5, 124, see also self-employment; SPE Lage, Carlos 159, 182 land reform 60, 71, 72, 73 Latin America 10, 99, 109; neo-liberal globalisation in 14–16 Lenin, V.I. 18, 19, 24 liberation movements 31, 33–4 Liga de Instrucción, La 46 literacy 70, 80, 163 Maceo, Antonio 42, 43, 44, 64 MacEwan, Arthur 6

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Index Machado, President Gerardo 52, 53 Mandela, Nelson 135 Maradona, Diego 135 Marinello, Juan 56 market economy, domestic 128–9 Martí, José 32, 42, 45–6, 47; influence of 51, 61, 69–70; and US influence 48 Marx, Karl 18 Marxism 50–2 Marxism-Leninism, and antiimperialism 28 Marxist socialism 17–20 mass organisation see OPP Matanzas province 71 medical schools 81, 116, 143 Meléndez, Ernesto 96 Mexico 16, 63–4, 134, 205 middle class, lacking in Cuba 42–3, 60 military-industrial complex 166–7 Ministry of Basic Industry 181 Ministry of Economy and Planning 121 Ministry of Finance and Prices 121, 180, 191 Ministry of Foreign Investment and Economic Co-operation 121, 139 Ministry of Labour and Social Security 121, 173; registration of selfemployed 187, 191; and SPE process 174 MINTUR (Ministry of Tourism) 121, 135 Moa Nickel Company 140–1, 156 modernisation theory 30 modes of production: military 167; in state and private capitalism 20–1, 26, 181, 216 Moncada military barracks, attack on (26 July 1953) 61–2 Monroe Doctrine 42 Municipal Assemblies 121, 122 National Bank of Cuba 125, 137, 144–5 National Confederation of Cuban Workers 52–3 national development theory 26–7, 33 nationalisation 60, 71–2 nationalism, and communism 53–4 nationality, development of Cuban 44–5 natural gas 156, 158 NEC (Nueva Empresa Cubana) 168, 176, 216 neo-liberal globalisation 1, 5, 223; compared with new Cuban

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structures 216–17; global trends 12, 197, 203, 206; hegemony of 6–8; possibility of collapse of 238–9; in practice 8–13; resistance to 5, 8, 164, 197, 224–5, 230–1; social consequences of 14–16 neo-liberalism 6–7, 239 newly independent states 29–30 Nicaragua 80, 86, 98, 99 nickel 91, 95, 105, 106, 134; industry growth 140–1, 156 Non-Aligned Movement 29, 81, 86 Ochoa, General Arnaldo 100 OECD (Organisation for Economic Cooperation and Development) 79 oil refining industry 79, 90, 93, 205; reduction in Soviet deliveries 101, 105 oil reserves 156 ONAT (Office of Tributary Collections) 191, 211 OPP (Organs of Popular Power) 75; membership of 77, 78–9; and Popular Councils 122, see also ANAP; CDR; CTC; FMC; UJC Ortodoxos (Partido del Pueblo Cubano Orthodoxo) 58, 60; and 26 July Movement 61 Palma, Tomas Estrada 48 Paris Club, debt rescheduling (1986) 92 Paris, Treaty of (1898) 48 Partido Obrero Socialista 50–1 party/state apparatus 29, 31, 34–40, 86, 150–1; and market practices 119, 173–4, 183–4, 206–7; and pillars of Revolution 218, 219–20, 225, 231; possibility of future collapse of 233–4; theoretical foundations (Cuba) 36–7, 198, see also PCC PCC (Communist Party of Cuba) 2, 34, 70; constitutional position of 75, 76; continuing strength of 150–1; and global economy 197, 201–2; and institutional transformation 201–3, 218; and pillar of unity 218, 226–7; Statement of Social Policy 158–9 PCC Congresses 88; 1st (1975) 73; 3rd (1986) 91–2, 99–100; 4th (1991) 87, 105–6, 120–1; 5th (1997) 38, 165, 167 Peña, Lazaro, CTC 55, 59

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Pérez, Colonel Armando Betancourt 168, 175, 183, 212 perfeccionamiento 166 peripheral states, in world systems theory 33 petit-bourgeoisie: as leaders 29; and ‘push to communism’ 72 Petras, James and Henry Veltmeyer, Globalisation Unmasked 17, 33 pharmaceuticals 93, 116, 236 Platt, Senator Oliver 49 Poland 100; Solidarnosc 133, 235 police force: control of black market 125, 131, 134; corruption 210; repression 192, 210; to control cuentapropismo 187, 188, 190, 192, 210; and tourism 136, 192 Pollock, Friedrich 21–3 Popular Councils 122, 129, 220 popular participation 239; in Cuban Revolution 36, 64–5, 67; lacking in USSR and Eastern Europe 35–6; and new structures 220–2; as pillar of Revolution 41, 84–5, 183; risks to 229–30, see also OPP poverty, Latin America 15 PRC (Cuban Revolutionary Party) 46, 50 prices: and wages 180; world market 124 Prío, Carlos, President 59 private corporations: power of 8, 230–1, see also TNCs privatisation 2, 8–11, 12, 14–15, 203 property: private 71, 122; rights for foreign investors 133 prostitution 192–3; and tourism 148, 149–50 PSP (Cuban Communist Party) 32, 57, 59, 67 Puerto Rico 46 PURS (United Party of Socialist Revolution) 70, see also PCC ‘push to communism’ 70–3 racism 147–8, 149, 227 Reagan, Ronald 98 Rebel Army, formed in Cuba 63–4 Reciprocal Trade Agreement (1934) 59–60 referendum, on constitution (1975) 75–6 regionalism 30 Revolutionary Offensive 70, 72 revolutionary socialism 16–17 Rodríguez, Carlos Rafael 96

rural workers, and 1959 Revolution 64–5, 71 Russian Federation 104, 199, 200 RVE (agency for recovery of state assets) 169 Santiago de Cuba, Rebel Army in 64 SAs (Sociedades Anonimas) 93, 129, see also SPE Schools of Revolutionary Instruction 69 SDPE (System of Economic Management and Planning) 73, 74, 121, 169 Second War of Independence (1895) 46–7 Second World War 19, 56 see also PCC self-determination, national 28–9, 30 self-employment system (cuentapropismo) 38, 39, 124, 130–3, 184–95; decline in 185–6, 185, 193; defined 186–8; disproportionately white 148, 190; dollar earnings 210; eligibility for 191; and income disparity 147, 188–9; and perception of state 195; problems of 187–90; and representation in CTC 133, 189–90, 211; as smallscale capitalism 184; social diversity within 209, 210–11; state control of 186, 190–3, 194–5; taxation of 132–3, 186, 189, 191–2; and unemployment rate 143–4, 193–5 service sector 153, 155 Sheritt Company, Canada 140 Shmeliov, Nikolai 100 Singapore 31 slavery 43, 44 Smith, Adam 27 social bloc formations 206–13, 225; cuentapropistas 209, 210–11, 215; and future of Cuba 234; MilitaryCivil Bureaucratic 211, 215; party/state elite 212–13, 215; and popular participation 220–2; state business leaders 208, 209; state service professionals 213; state service workers 213–16; technocratic-entrepreneurial 208–9, 211–12; workers under SPE 214–15 social development, international reports 162–4 social expenditure 142–3, 203; reductions in 2, 93–4

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Index social indicators 142–4, 220, 235; and commitment to social growth 158–62 social justice 42, 159, 227 social welfare: continuing commitment to 144, 158, 235; unemployment benefits 179 socialism: and state capitalism 23–4; as transitional phase 17 socialism in one country 18, 20 Sofia, Bulgaria, CMEA meeting (1990) 95–6 Sol Melía Group 158 South Africa 236, 237 South Korea 31 Spain 43, 48, 50–1, 134, 158 SPE (sistema de perfeccionamiento empresarial) 166–8, 216; applications to join scheme 180–1; company management 176–9, 204, 209–10; conformity to pillars of revolution 181–4, 202; Directorship Committee 175, 176, 178, 182, 209, 220–1; Executive Committee for 174, 175, 183, 211–12; process of 174–5 Special Period (1991-96) 37–8, 87, 106; political reforms 118–20, 164–5, 201–3, 207; response to new world order 119, 152, 225, see also economic crisis Stalin, Josef 18, 19, 20 Stalinism 51 standard of living: 1950s 65; during CMEA years 80, 86; recent improvements 161–2 state 34; and neo-liberal globalisation 13–14, 198, 238–9; shift of power from 1–2, 8, 12, 198–9, 238 state business leaders 208, 209 state capitalism 20, 21–4, 31, 182, 223; bureaucratic 23–4; decentralised bureaucratic (Cuba) 25–6; democratic 22–3; totalitarian 22 state institutions 89; reformed 121–2, 123–4, 164–5, 201 state service workers 213–16, 221 state socialism 1, 16–17 state supremacy: and means of production 122; and new structures 219–20, 225; as pillar of Revolution 41, 84, 183; risk to 228–9, see also party/state structure state-owned corporations 38, 168–74, see also SPE Strange, Susan 13–14 strikes 52–3, 61

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structural adjustment programmes (SAPs) 11 student organisations 53, 57, 65 sugar 43; continued dependency on 49, 60, 66, 72; deals with USSR 56, 68, 72–3; and economic crisis (1992) 107; productivity 72–3, 154; strikes (1933) 52–3 sugar prices 73, 89, 90–1 taxes 9; collection of 188, 191; personal income tax regime 132–3 technocratic-entrepreneurial social bloc 208–9; links with elites 211–12 technology: access to 174; bank infrastructure 138, 154 Teran, Carmen Martinez 155 terrorism, US war against 230, 238 TNCs (transnational corporations) 10–11, 14, 231, 237 tobacco production 60, see also Brascuba Torricelli, Senator Robert 111 Total-Elf 158, 172 tourism 26, 38, 60, 93; dependence on 155–6; and dollar markets 128–9; employment in 135–6, 146–7; FDI and 135–7; incomes from 132, 146; industry growth 141, 146–7, 155; and social problems 136, 148–50; to produce hard currency 125 trade: Cuba and world markets 31–4, 66, 89–90, 92; debt 90, 91, 95; effect of collapse of communism 86–7, 94–7, 105–6; reforms 12, 205–6; regional 236–7; with Russian Federation 104; with US 109, 111; US embargo 3, 89, 109–17, 206, 235–7; with West 89, 205, see also CMEA; oil; sugar trade unions 204, see also CTC transition states 96, 196, 199–200 transport, crisis (1992) 107 Trotsky, Leon 18 Trotskyites 21, 51 26 July Movement 61–6, 67–8 UBPCs (Basic Units of Co-operative Production) 130, 138, 140, see also economy UJC (Union of Young Communists) 68, 75, 77, 136 unemployment 107, 143–4, 179; cuentapropismo and 143–4, 193–5; options 179–80, 193; reduced 160–1 Uniones Agropecuaria Militar 167 United Kingdom 158

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United Nations 30, 68, 236; General Assembly 29; and illegality of US embargo 114 United Nations Human Development Report (UNDP) 162 United States 3, 19–20, 49, 109; and Bay of Pigs 69; Cuban Democracy Act (Torricelli Act) 111, 114, 116, 117; and Cuban independence (1898) 47–8; and Cuban Revolution 67–8; embargo on Cuba 3, 89, 109–17, 206, 235–7; expectation of fall of Cuban socialism 110–11; and future of Cuba 234, 235–6, 238; hegemonic position of 102, 219; Helms-Burton Law (1995) 112–14, 116; migration policies 111–12; military occupation of Cuba (18981902) 48–9; ‘New War Against Terrorism’ 230, 238; Reciprocal Trade Agreement (1934) 59–60 unity: and new structures 217–18; as pillar of Revolution 41, 83–4, 183; risks to 226–7, see also party/state structure urban workers 64, 71 URC (Union Revolucionaria Comunista) (Communist Party of Cuba) 52, 54–6, see also PSP US dollar 91; legalisation 125; role in economic reforms 124–9, 145 USSR 56; disintegration of 1, 3, 17, 36, 86–7, 96–109; dismantling of 103–4, 199, 200; economic models 19–20; and end of Cold War 98–100, 102–3; military aid from 80, 99, 100; perestroika and glasnost 35–6; relations with US 98–9; sugar deals with Cuba 56, 68, 72–3; trade with Cuba 79, 90, 95, 105, see also CMEA; Russian Federation

Vanguard Peasant and Worker Movement 71 Vega, Juan José 137 Veloz, Augustín Martín 50 Venezuela 16, 134, 158 wages 15, 161; linked to national productivity 74, 178, 182; and prices 180; SPE salaries 177–8 Wallerstein, Immanuel: and development theory 30–1; Eurocentricity 32–3; world system theory 26–7, 29, 33 Weaver, Richard 7 Wilson, Woodrow, 14 Points 27, 32 women: employment 161; FMC 36, 75, 77 Workers’ League of Oriente 50 Workers’ Party, Brazil 16 working class 49, 60; movements 46, 50–2 World Bank 11, 164; Cuba’s refusal to deal with 12, 83, 111, 206, 230; praise for Cuba 164, 195 World Conference Against Racism (Durban 2001) 236 world markets 27–8, 30; Cuba’s relations with 31–4, 66, 89–90, 92, 123–9; Eastern Europe and 35–6; effect on future of Cuba 236–8; and trade deals with Russian Federation 104 world system theory 26–7, 29, 33 World Trade Organisation (WTO) 6n, 11; General Agreement on Trade in Services 11 Yeltsin, Boris 96 Zanjón, Pact of 44 Zapatista movement, Mexico 16

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