Cuba’s Bold Free-Market Turn Fails to Convince US It’s Ready to Change

Article content

(Bloomberg) — Lea en español

Article content

Cuba is struggling to convince the Trump administration that its most ambitious economic reforms in decades are enough to spark the changes the US is demanding.

Article content

Article content

The 176 proposals rolled out last month are an attempt to bounce back from a dire economic crisis. But they’re also an olive branch to Washington, which is actively trying to crush the communist-run government.

Article content

Whether the measures will work in either regard depends on how they’re implemented — and whether they can appease a US administration that’s motivated as much by ideology as it is by deal-making. 

Article content

Article content

Havana is proposing to privatize state-run enterprises, swap national debts for assets, open up the market to the private sector, end price controls and minimize the government’s role as middleman in everything from imports to luring foreign investment.

Article content

Article content

They’re among the boldest moves toward freer markets since Fidel Castro seized power in 1959. And in many ways they go far beyond anything that Washington might have hoped for, according to Pedro Monreal, a Cuban economist who worked for years with the United Nations. 

Article content

Beyond abandoning Cuba’s command economy, the reforms seem designed to “get the attention of the US government,” Monreal said by phone from Spain. “They’re saying to the US, ‘We’re advancing these very bold proposals. We should talk about this.’”

Article content

So far, President Donald Trump’s team is unmoved.

Article content

A day after the Communist Party’s central committee and Cuba’s National Assembly approved the reforms in hastily called sessions, a State Department spokesperson dismissed them as “long overdue and ultimately superficial smoke signals.”

Article content

The following week, the US Treasury Department slapped additional sanctions on Cuban banks, mining operations and logistics companies, as well as Raúl Castro’s daughter-in-law. 

Article content

Article content

So much of what Cuba is proposing remains vague, said Ricardo Torres, a Cuban economist and professor at American University in Washington, and much will depend on the norms and regulations that underpin the changes. 

Article content

Another unknown is how the government plans to “sequence” the overhaul, he said. “One of the biggest lessons we learned during reforms in Eastern Europe is that some measures will need to come first for others to be viable later.”

Article content

If President Miguel Díaz-Canel’s government, for example, ends price controls before putting a social safety net in place, it could be catastrophic for those at the bottom of the social ladder, Torres said. And if the regime begins to privatize industries before oversight mechanisms are established, it’s “a cocktail for abuse and corruption and insider dealing.”

Article content

The Trump administration is trying to hasten the government’s demise. Since January, the US has cut off virtually all the island’s fuel imports — save one tanker from Russia — and has used secondary sanctions to force some of Havana’s staunches corporate allies to quit the island. Hotel operators have abandoned Cuba and major mining projects have been halted as a result.